22 October 2009
Putting our long-term health in the hands of the financial
services industry
The City of London Corporation has today released a discussion
paper, ‘The Role of Private Finance in Paying for Long Term Care in
an Ageing Society,’ to discuss the potential role of the financial
services industry in providing a long-term, sustainable solution to
the problem of funding long-term care amongst an ageing UK
population.
The UK currently spends around £19 billion a year on long-term
care with additional support provided through the benefits system -
the public sector provides 65% of this funding of which £7 billion
is spent on the UK’s older population aged 65+.
An aging UK population who are living longer than ever before,
combined with assumptions that the price of care and support
services will continue to increase, means that the total public
expenditure, in England alone, could reach £24.1 billion in
2026.*
The Lord Mayor of the City of London Corporation Ian Luder, who
commissioned the report, commented:
“The current system by which the UK provides health care for its
elderly citizens is unsustainable in the long-term, or even the
medium-term.
“Unfortunately there are no easy answers to this problem.
“However, with the UK public finances in such a perilous state,
it is clear that the private sector will have a far more prominent
role to play if we are to avoid a funding crisis of epic
proportions in the very near future.
“This is an opportunity for our financial services industry to
show its positive side, to begin to repair its tarnished reputation
and to forge a new relationship with the people of Britain – a
mutually beneficial relationship built on trust and social utility
not on accusations of greed and dishonesty.”
The report provides a response from a private finance
perspective to the recent Government Green Paper on the future of
long term care, Shaping the Future of Care Together,’ that was
released in July.
According to the Green Paper there are five key problems with
the present system. It penalises people who have saved for their
old age; the threshold for care is set too high; social care
provision is uneven across the country; the system is too complex;
and services are poorly organised and not ‘joined up’ at the point
of delivery.
The author of the report, Professor Les Mayhew added:
“Alongside climate change, the ageing population is one of the
most pressing issues of our time – not just in the UK, but
throughout the developed economies.
“There is no doubt in my mind that the financial services
industry has a key role to play in the future provision of
long-term care for older people that need it but, in order to do
so, businesses must have confidence that the system in which they
are operating is clearly defined and immune from political
considerations.
“The government’s recent green paper places this critical issue
firmly on the legislative agenda and must be seen as a positive
step forward.
“However, any decisions we take will have a lasting impact on
our future health and prosperity and so must be subject to careful,
and transparent, public debate – this report represents one part of
that debate and is designed to ensure we reach a fair and optimal
solution that benefits all parties.”
The report outlines a number of potential solutions to the
current problems surrounding the provision of long-term care to the
elderly. These include ‘Long Term Care Bonds’ to encourage the
lower-paid to save something for their frailest years; top up
insurance, disability-linked annuities, immediate needs annuities,
accelerated life insurance and equity release. Professor Mayhew
also points out that government still has an important role to play
in devising a fairer system of means testing, providing greater
access to financial advice and changing the system by which care is
provided.
During the course of his research, Professor Mayhew drew on his
recently completed pieces of work for the Department of Health and
for the Cabinet Office that were used to provide input into the
Government’s Green Paper.
*Source: Funding adult social care in England, Kings Fund, March
2009
Ends
Notes to editors
Download a copy of The Role of
Private Finance in Paying for Long Term Care in an Ageing
Society
About the City of London:
The City of London supports and promotes the Square Mile as the
world’s leading international financial and business centre and
provides local government and police services for workers,
residents and visitors. It also provides valued services to London
and the nation as a whole including management of Guildhall Art
Gallery, the Barbican Centre, the Central Criminal Court at Old
Bailey, 10,700 acres/4,240 hectares of open space (including West
Ham Park, the City Gardens, Hampstead Heath, Epping Forest), three
wholesale food markets and acts as London’s Port Health
Authority.
About Ian Luder:
Alderman Ian Luder is the Lord Mayor of London.
Download his biography
About Professor Les Mayhew:
Professor Mayhew is a part-time Professor of Statistics at the Cass
Business School, a part of the City of London University of which
the Lord Mayor is the Chancellor, and director of the newly
established Risk Institute. He is an Honorary Fellow of the Faculty
of Public Health and Honorary Fellow of the Institute for
Actuaries. His research interests include risk, pensions, and
health and long term care, for which he currently has research
grants from the European Union, EPSRC and Institute of
Actuaries.
Press contact
Sanjay Odedra
Tel: 020 7332 1835
Mob: 07954 327370
Email:
sanjay.odedra@cityoflondon.gov.uk
James Abbott
Tel: 020 7332 1754
Mob: 07831 543188
Email:
james.abbott@cityoflondon.gov.uk