It can sometimes feel like the communal and housing needs of the older generation are overlooked by the Government, so it was pleasing to see the publication recently of a report into social care by the Health Select Committee.
The report was the result of an inquiry by an influential group of MPs who summarised that older people are being let down by fragmented care services and “passed like a parcel from one part of the system to another”. The Government was criticised for letting funding for NHS care, social care and social housing come from different services and called for a more joined-up approach from a single commissioning process.
The MPs involved in the compilation of the report urged the Government to recognise the widening funding gap in social care services between the number of people who need care and the amount of money currently in the system to deal with their rising needs and accept the recommendations in the Dilnot report for a series of caps on care costs.
The latter suggestion would certainly allow older people to start planning ahead for their retirement once a level has been decided upon, but won’t help them actually generate the funds required.
This is where equity release can help plug the gap, and I along with all stakeholders in the sector would welcome the Government properly throwing its weight behind this important means of funding.
A lack of assistance from Westminster has long been regarded as one of the reasons the equity release market has never really kicked on to the next level and the Government’s continued reluctance to acknowledge the usefulness of such products as an option for homeowners is still frustrating, particularly in light of people being forced to work for longer against a backdrop of declining State pensions.
Equity release may have a reputation in some quarters as a way of affording oneself a life of luxury in one’s golden years by funding cruises and conservatories, but in reality it is just as likely to be used to help pay for necessities such as care costs and day-to-day expenses.
Indeed, recent research published by Age UK found that a quarter of all retired people in this country are living in ‘fuel poverty’, many of whom will be homeowners with residual equity in their properties.
If the report is acted on by the Government, then it will represent an enthusiasm on its part to start addressing this funding shortage and also an opportunity for the financial services industry to help proffer solutions once the full scale of the gulf is identified.
The report calls on the Government to clarify the potential market for financial products designed to pay for care and a clear idea of this audience would benefit all involved.
The equity release market has been impeded for too long by a lack of public and political understanding of the true benefits of the solution it can provide and a concerted campaign by the industry, in conjunction with Government support, would go some way to helping the sector realise its potential.
In the same way that some people try to brush thoughts of funding their retirement under the carpet, the Government cannot continue to ignore the funding gap issue and the sooner it embraces the potential of equity release, the better.
