Ready for Ageing?
Report
Introduction
1. The UK population is ageing rapidly, but we
have concluded that the Government and our society are woefully
underprepared. Longer lives can be a great benefit, but there
has been a collective failure to address the implications and
without urgent action this great boon could turn into a series
of miserable crises.
2. The Committee focused on the implications
of an ageing population for individuals and public policy in the
near future, the decade 2020-2030. Key projections about ageing
include:
· 51% more people aged 65 and over in England[1]
in 2030 compared to 2010
· 101% more people aged 85 and over in England
in 2030 compared to 2010[2]
· 10.7 million people in Great Britain can
currently expect inadequate retirement incomes[3]
· over 50% more people with three or more
long-term conditions in England by 2018 compared to 2008[4]
· over 80% more people aged 65 and over
with dementia (moderate or severe cognitive impairment) in England
and Wales by 2030 compared to 2010.[5]
3. Longer lives represent progress, and the changes
do not mean a great economic or general fiscal crisis.[6]
Moreover the contribution to our society made by older people,
which is already impressive, will be even greater as a result:
30% of people aged over 60 volunteer regularly through formal
organisations.[7] However,
as well as opportunities, the changes create major challenges
for individuals, for employers, for our welfare services, and
for the Government and all political parties. Others have looked
at aspects of these changes, but the Committee's approach was
holistic: surveying the landscape to highlight key issues for
our society and encourage public debate.
4. To make a success of these demographic shifts,
major changes are needed in our attitudes to ageing. Many people
will want or need to work for longer, and employers should facilitate
this. Many people are not saving enough to provide the income
they will expect in later life, and the Government must work to
improve defined contribution pensions, which are seriously inadequate
for many. People need help to make better use of the wealth tied
up in their own property to support their longer lives.[8]
5. The National Health Service will have to transform
to deal with very large increases in demand for and costs of health
and social care. Overall, the quality of healthcare for older
people is not good enough now, and older people should be concerned
about the quality of care that they may receive in the near future.
England has an inappropriate model of health and social care to
cope with a changing pattern of ill health from an ageing population.
Further fundamental reform to the NHS in the next few years would
be undesirable, but radical changes to the way that health and
social care is delivered are needed to provide appropriate care
for the population overall and particularly for older people,
and to address future demand.[9]
6. Social care and its funding are already in
crisis, and this will become worse as demand markedly increases.
The split between healthcare and social care is unsustainable
and will remain so unless the two are integrated. Sufficient provision
of suitable housing, often with linked support, will be essential
to sustain independent living by older people.[10]
7. An ageing society affects everyone: these
issues require open debate and leadership by the Government and
all political parties. The challenges are by no means insuperable,
but no Government so far has had a vision and coherent strategy;
the current Government are no exception and are not doing enough
to ensure our country is ready for ageing.[11]
How will we support ourselves
through later life?
8. Living for longer is to be celebrated. But
our society needs to review how to pay for the risks and costs
associated with lives that may be 10 or more years longer than
previously: people can outlive their pensions and savings, suffer
ill health and need social care. The Government cannot carry all
these risks and costs, but there is much the Government can do
to help people prepare: to make it attractive and possible to
work for longer, to address the major deficiencies in our pensions
system, to make it easier to harness the value in people's homes
to support some of the costs and risks of later years, and to
help people understand those costs and risks. The Government
should help people be better informed about healthy life expectancies,
pension projections, the likelihood of needing social care and
its cost, and how best to use their own assets, so that individuals
and families can analyse their own situations and make their own
informed choices (see Annexes 3 and 6).
LATER WORKING
9. By 2030, men aged 65 in the UK will expect
to live another 23 years, to 88, and women another 26 years, to
91.[12] As people live
longer they will need enough income to support a good quality
of life; it would be naive to think that this can simply come
from taxpayer-funded sources. But many are not saving enough to
pay for a decent standard of living over a much longer retirement.
People should therefore be enabled to extend their working lives
if they wish to do so, as a vital part of the response to increased
longevity.[13]
10. Working for longer would increase income
from work, potentially increase savings, and reduce the time of
dependence on those savings. Working for longer can often improve
health and brings social and intellectual benefits. More people
working for longer also help sustain economic growth and improve
the country's fiscal position. Employing older workers can benefit
employers by using the experience and knowledge of people who
still have much to contribute.
11. Making working for longer possible will require
changes to attitudes, as well as policy and practice (more fully
explored in Annex 5):
· The Government and employers need to work
to end 'cliff-edge' retirement, by enabling more people to work
part-time and to wind down work and take up pensions flexibly.
It should be beneficial to defer taking state and private pensions.
Employers need to be much more positive about employing older
people. The Government should publicly reject the 'lump of labour
fallacy' that wrongly argues this will disadvantage the young.
· We must abandon the idea of a fixed retirement
age implicit in many pension structures, employment practices,
and tax and benefit thresholds: people should decide for themselves
how and when they retire. Incentives in the tax, benefit and pensions
systems to retire early should be reviewed.
· Employers should help older people adapt,
re-skill, and move to more suitable roles and hours when they
want to do so, and should support those with caring responsibilities
for older people to work part-time or flexibly.
· The Government should, with employers,
help support those in manual or low-skilled jobs, who might need
to work longer but have most difficulty in doing so. Welfare to
work policies should also address the needs of older people.
· Age is no longer a good indicator of people's
needs or income, so the Government should review whether age alone
is a sensible determinant for tax liability, access to services
or benefits.
REFORMING PENSIONS AND SAVINGS
12. The UK has a worrying under-saving problem.[14]
The Pensions Commission chaired by Lord Turner of Ecchinswell
began a period of reform and when complete, this will represent
progress. State pensions will be linked to earnings (at a minimum),
preventing further erosion; pensions auto-enrolment will extend
private pension coverage to many who are currently not covered;
and the single-tier state pension will rationalise state provision
and make it more generous for those with intermittent employment
histories (see Annex 8). The Committee welcomes these positive
steps.
13. But despite this, the current system of state
and private pension provision is not adequate as many people,
young and old, expect far more pension than they will get. While
the poorest will be protected at a basic level by state provision,
and the richest can afford to save enough in private schemes,
there is a substantial gap for much of the rest of the population.
14. Under the current defined contribution pensions
system, the individual does not know what income the pension will
provide and therefore what he or she is saving for. Defined contribution
pensions now dominate private pension provision, with risks and
uncertainties, and are inadequate for many, especially women.
15. The Committee has concluded:
· The Government were right to raise the
state pension age, but they are now adopting a timetable of increases
slower than that recommended by the Turner Commission and will
have to revisit this with rising healthy life expectancy. Those
who work beyond state pension age should clearly benefit if they
defer taking their pension.
· Auto-enrolment is a big step forward for
people who would otherwise not be saving for a pension. However,
while helpful, auto-enrolment alone will not solve the problem
of under-saving. The scale of pension saving encouraged by this
scheme, eventually 8% of an individual's earnings, will still
result in a pension significantly below many people's expectations
unless people save considerably more in addition.
· But saving more is made less likely as
the current defined contribution pensions system is not fit for
purpose for anyone who is not rich, or who moves in and out of
work due to bad health or the need to care for others.
· The Committee urges the Government,
pensions industry and employers to tackle the lack of certainty
in defined contribution pensions and address their serious defects
to make it clearer what people can expect to get from their pension
as a result of the savings they make.
USING THE VALUE IN OUR HOMES
16. Many older people have seen the value of
their homes increase considerably but have not viewed this as
a partial solution to some of the challenges of living longer.
The Committee considers that it is reasonable to expect those
who have benefited in this way to support their own longer lives.
People need to be able to use their assets to help pay for the
cost of their social care, and to release money to adapt their
homes and to support their incomes. Some schemes exist, but are
little used.
17. People with housing equity should be enabled
to release it simply, without excessive charges or risk. The Government
should work with the financial services industry to ensure such
mechanisms are available, and to improve confidence in them.
We explore this in Annex 7.
Living independently and well
18. Older people are diverse; most enjoy life
and want to live independently, in their own home for as long
as possible. But eventually almost all of us will need healthcare,
and two thirds of men and 84% of women currently aged 65 will
need some social care before they die.[15]
INCREASING PRESSURES ON HEALTH AND
SOCIAL CARE
19. The NHS is facing a major increase in
demand and cost consequent on ageing and will have to transform
to deal with this. Because of this rising demand, without radical
changes in the way that health and social care serve the population,
needs will remain unmet and cost pressures will rise inexorably.
20. A rapidly ageing society means many more
older people living for more years, often with one or more chronic
long-term health conditions; a consequence of this and other pressures
is a large increase in health and social care costs. Predicted
increases in demand for health and social care from 2010 to 2030
for people aged 65 and over in England and Wales include:
· people with diabetes: up by over 45%
· people with arthritis, coronary heart
disease, stroke: each up by over 50%
· people with dementia (moderate or severe
cognitive impairment): up by over 80% to 1.96 million
· people with moderate or severe need for
social care: up by 90%.[16]
21. The treatment and care of people with long-term
conditions accounted for 70% of the total health and social care
spend in England in 2010, so the large increases in the number
of older people with long-term conditions will create significant
extra costs.[17]
22. The Nuffield Trust has recently estimated
that under the current healthcare system, the NHS in England will
see a funding shortfall of £54 billion by 2021/22 if NHS
funding remains constant in real terms, if no productivity gains
are made, and if trends continue in current hospital utilisation
by people with chronic conditions and in healthcare costs.[18]
If the English NHS achieves unprecedented productivity gains of
4% a year in every year from 2010/11 to 2014/15, they predicted
that this funding gap would be reduced to a potential shortfall
of £34 billion. For comparison, the total budget for the
English NHS in 2010/11 was £107 billion.[19]
If the system did not change and a shortfall on this scale materialised,
it would have particularly serious consequences for older people,
who are the biggest consumers of NHS spending (see Annex 10).[20]
The Committee has concluded that the current healthcare system
is not delivering good enough healthcare for older people and
is inefficient; there is an urgent need to change the current
system to provide better healthcare more efficiently and this
should help with the predicted funding shortfall.
23. At the same time, public expenditure on social
care and continuing healthcare for older people may have to rise
to £12.7 billion in real terms by 2022 (an increase of 37%
from £9.3 billion in 2010), just to keep pace with expected
demographic and unit cost pressures (see Annex 10).[21]
24. Social care funding is already in crisis,
and this will become worse as demand markedly increases. Many
people needing social care now are not getting it as eligibility
thresholds are tightened because of reduced local authority funding
(see Annex 10). The Government's response to the proposals made
by the Commission on Funding of Care and Support (the Dilnot Commission)
is welcome and necessary but in our view will not be sufficient
because it will largely benefit higher income groups by protecting
them from depleting their housing assets rather than address the
current funding crisis (see Annex 11). It does not bring extra
funding into the system to tackle the current funding crisis or
address the problem of expanding need in the coming decadesalthough
we acknowledge that this was not the task given to the Commission.
25. There should be a sharing of responsibility
for social care between individuals and the state. The implementation
of the Dilnot Commission proposals makes this sharing explicit
and puts a limit on individual risk. But many people do not have
families who can provide care, nor the money to buy it, and cannot
cope without careand this situation will worsen as demand
rises (see Annex 10). If the neglect of social care continues
and these people are not properly supported in the community,
they will end up with more severe needs, or will suffer crises
and go into hospital, driving up healthcare costs.
CARE AT HOMEWHENEVER POSSIBLE
26. The Committee received expert evidence that
a new system of health and social care is needed to:
· be more focused on prevention, early diagnosis,
intervention, and managing long-term conditions to prevent degeneration,
with much less use of acute hospitals (see Annex 12)
· be centred on the individual person, with
patients engaged in decisions about their care and supported to
manage their own conditions in their own homes so that they can
be prevented from deteriorating
· have the home as the hub of care and support,
including emotional, psychological and practical support for patients
and caregivers
· ensure older people only go into hospitals
or care homes if essential, although they must have access to
good specialist and diagnostic facilities to ensure early interventions
for reversible conditions and prevent decline into chronic ill
health.
27. A remarkable shift in NHS services will be
needed to deliver this. Older people with long-term conditions
need good, joined-up primary care, community care and social care,
with effective out-of-hours services. Such services make it possible
to minimise hospital stays. Time in hospital is often not what
older people want or need, and is expensive.
28. This shift in NHS services would help move
demand, and funding, from acute and emergency services (which
consume nearly half of the NHS's budget[22]).
This should allow more investment in services which prevent older
people from going into hospital. Some of this released funding
should flow into improving social care. It is obvious that if
more older people could be treated in the community rather than
admitted to hospital, expenditure on hospitals could be reduced.
Improving the quality of hospital-based treatments through specialisation
and rationalisation would also raise standards.
29. To meet the needs of the population, and
to achieve this shift in services, the health and social care
system needs to work well 24 hours a day, seven days a week.
The Committee was heartened by the Secretary of State for Health's
commitment to a 24/7 NHS, and calls on him within 12 months to
set out how this will be made real. For this to have value, there
will also have to be 24/7 community-based healthcare and social
care.
30. The inter-dependent nature of health and
social care means that the structural and budgetary split between
them is not sustainable: healthcare and social care must be commissioned
and funded jointly, so that professionals can work together more
effectively and resources can be used more efficiently. The Government
and all political parties will need to rethink this issue.
We note the Government's commitment to introduce a national minimum
eligibility threshold for social care from 2015: we consider that
the consequence of this must be that the Government will address
the public funding needed to make it possible, but we consider
that health and social care integration is the longer-term solution
for social care funding. The health and social care systems
also have to plan more systematically for changing long-term needs,
so the Government should consider introducing a 10-year spending
envelope for the NHS and publicly-funded social care.
31. The Government need to develop a new basis
for health and social care for our ageing population and create
a vision so that other decision-makers can work to bring it about.
Ministers told us the Government do not believe in top-down command
and control, and that the decentralisation of budgets and responsibilities
to over 200 clinical commissioning groups and new Health and Wellbeing
Boards would drive the necessary changes. The Committee has concluded
that organic, bottom-up change has benefits, but that it will
not by itself bring about the major changes to health and social
care services that an ageing population will need (see Annex 12).
The Government must set out the framework for radically transformed
healthcare to care for our ageing population before the general
election in 2015. All political parties should be expected to
issue position papers on the future of health and social care
within 18 months, and address these issues explicitly in their
manifestos for the 2015 election.
32. Our older population should be concerned
about the quality of care that they may receive in the near future,
because the current system is in trouble now. It will require
substantial changes to address both present needs and future demand,
and this challenge is combined with an impending funding crisis.
Nothing like enough is being done to face up to these challenges.
PERSONALISED CARE
33. The local delivery of health and social care
does not serve older people well: services operate independently
of each other and are peppered with negative incentives. The Committee
congratulates heroic professionals such as those in Torbay and
the North West London Integrated Care Pilots who are striving
to make this poor system function.
34. The Government must act now to challenge
the barriers that make it difficult for professionals to deliver
the kind of personal, integrated care that our older population
wants, such as by doing away with restrictions on sharing data
between care professionals, and encouraging less risk-averse attitudes.
This will require support for a transparent, good quality market
in privately provided social care (see Annex 14). The Committee
heard exciting examples of how person-centred commissioning, a
single point of contact for care, pooled budgets, new payment
systems and new technology can bring improvement. A culture that
facilitates experimentation is needed, so that local authorities
and clinical commissioning groups are pushed to innovate to find
the best local solutions.
35. Publicly funded care alone has never met
all the needs of older people who are frail, vulnerable, ill or
isolated. As our society ages, more informal care from family
and friends will be required, and more volunteers. The number
of disabled older people in households receiving informal care
in England will need approximately to double over the next 20
years so the Committee calls for employers to make it easier for
employees to provide informal care (see Annex 5), and for the
Government to promote how crucial this is.[23]
36. Older people contribute greatly to society,
including through volunteering and informal care. Increasing lifespans
offer a great opportunity for older people to play an even greater
role in public life (see Annex 15). We recognise the very valuable
work already done by a number of charities to support older people.
Central and local government should work together with the
third sector to increase volunteering especially by older people
to support older people.
HOUSING AND WIDER PUBLIC SERVICES
37. A better health and social care system to
support people to stay living independently needs adequate housing
and support in the home. The work done by housing adaptation and
repair charities is commendable, but needs to become universal.
The housing market is delivering much less specialist housing
for older people than is needed. Central and local government,
housing associations and house builders need urgently to plan
how to ensure that the housing needs of the older population are
better addressed and to give as much priority to promoting an
adequate market and social housing for older people as is given
to housing for younger people (see Annex 16).
38. Other services such as urban planning, banking
and product design will need to adjust to an older population
and an older consumer base, and will have an important role in
preventing the social isolation of older citizens. Older people
must be involved in their design (see Annex 17).
Fairness
39. There are likely to be considerable increases
in public and private spending over the next two decades on services
that are particularly important to older people: healthcare, pensions
and social care. This is not a bad thing; over time, an increasingly
affluent society (as, on the whole, we expect to become) is likely
to want to spend more on improving the lives of its citizens,
and an older society is likely to want to spend more on the priorities
of older people. This increased spending can only be financed
by individuals directly, or through taxes, social insurance, or
cuts elsewhere: it must be financed fairly.
40. The welfare state has largely meant people
paying in when they are young and drawing out when they are older;
this should continue. But we have to be wary of shunting too many
costs onto younger and future generations. In particular, the
property boom has led to a very large transfer of wealth to older,
better-off homeowners, which has increased housing costs substantially
for younger generations. Younger generations will benefit from
being part of a richer society in many ways in the future, but
they will also have to service large public and personal debts
and may often have poorer pensions (see Annex 7).
41. It does not seem fair to expect today's younger
taxpayersespecially those not born to better-off parentsto
pay more for the increased costs of an older society while asset-rich
older people (and their children) are protected. For this reason
too, an effective equity release market to unlock the housing
assets held by older people is important.
42. Fairness within generations is also important:
people's later lives are affected by their socio-economic background,
and men's and women's experiences of older age are markedly different.
Older women are the primary users of health and social care and
particularly lose out when it comes to pensions (see Annex 7).
These divergences must be taken into account.
43. There is a potential for inequalities in
our society to increase considerably as the population ages because
of inequalities in health, savings and pensions, with a growing
divergence between those for whom longer life is comfortable and
those for whom living longer involves greater exposure to risks
while they have few assets to draw upon.
Are the Government ready for
ageing?
44. The Cabinet has not assessed the implications
of an ageing society holistically, and has left it to Departments
who have looked, in varying degrees, at the implications for their
own policies and costs. The Government have not looked at ageing
from the point of view of the public nor considered how policies
may need to change to equip people better to address longer lives.
45. The ageing of the population is inevitable,
and affects us all. The major changes this Report proposes may
take a decade to bring about, and should inform the priorities
for the next spending review. The Government must make the case
to the public as to why changes are needed. If a government tries
to move some age-related benefits onto different eligibility criteria
without setting out a vision for our old age and committing to
make major improvements in some areas, significant opposition
would be inevitable. Our society is intelligent and pragmatic
and is capable of understanding the arguments for change.
46. The Government should set out their analysis
of the issues and challenges, and their vision for public services
in an ageing society, in a White Paper to be published well before
the next general election. There needs to be cross-party understanding
of the importance of these choices, and an effort to seek as much
consensus as possible. Progress will not be made if the solutions
chosen by the Government change with each administration. So the
Government elected in 2015 should, within six months, establish
two commissions based on cross-party consultations: one to work
with employers and financial services providers to examine how
to improve pensions, savings and equity release, and one to analyse
how the health and social care system and its funding should be
changed to serve the needs of our ageing population. Both commissions
should be required to report within 12 months and to make clear
recommendations for urgent implementation. We also conclude that
when political parties are working on their manifestos, they ought
to consider the wider implications of the ageing society for the
balance of responsibilities between individuals and the Government.
Principal conclusions and recommendations
47. The Government and employers need to work
to end 'cliff-edge' retirement, by enabling more people to work
part-time and to wind down work and take up pensions flexibly.
It should be beneficial to defer taking state and private pensions.
Employers need to be much more positive about employing older
people. The Government should publicly reject the 'lump of labour
fallacy' that wrongly argues this will disadvantage the young
(paragraph 11).
48. The Committee urges the Government, pensions
industry and employers to tackle the lack of certainty in defined
contribution pensions and address their serious defects to make
it clearer what people can expect to get from their pension as
a result of the savings they make (paragraph 15).
49. People with housing equity should be enabled
to release it simply, without excessive charges or risk. The Government
should work with the financial services industry to ensure such
mechanisms are available, and to improve confidence in them (paragraph
17).
50. The NHS is facing a major increase in
demand and cost consequent on ageing and will have to transform
to deal with this. Because of this rising demand, without radical
changes in the way that health and social care serve the population,
needs will remain unmet and cost pressures will rise inexorably
(paragraph 19).
51. To meet the needs of the population, and
to achieve this shift in services, the health and social care
system needs to work well 24 hours a day, seven days a week (paragraph
29).
52. The inter-dependent nature of health and
social care means that the structural and budgetary split between
them is not sustainable: healthcare and social care must be commissioned
and funded jointly, so that professionals can work together more
effectively and resources can be used more efficiently. The Government
and all political parties will need to rethink this issue (paragraph
30).
53. The Government must set out the framework
for radically transformed healthcare to care for our ageing population
before the general election in 2015. All political parties should
be expected to issue position papers on the future of health and
social care within 18 months, and address these issues explicitly
in their manifestos for the 2015 election (paragraph 31).
54. Central and local government, housing
associations and house builders need urgently to plan how to ensure
that the housing needs of the older population are better addressed
and to give as much priority to promoting an adequate market and
social housing for older people as is given to housing for younger
people (paragraph 37).
55. The Government should set out their analysis
of the issues and challenges, and their vision for public services
in an ageing society, in a White Paper to be published well before
the next general election (paragraph 46).
56. The Government elected in 2015 should,
within six months, establish two commissions based on cross-party
consultations: one to work with employers and financial services
providers to examine how to improve pensions, savings and equity
release, and one to analyse how the health and social care system
and its funding should be changed to serve the needs of our ageing
population. Both commissions should be required to report within
12 months and to make clear recommendations for urgent implementation.
We also conclude that when political parties are working on their
manifestos, they ought to consider the wider implications of the
ageing society for the balance of responsibilities between individuals
and the Government (paragraph 46).
1 Due to the effects of devolution, our focus is primarily
on England, although many of the issues that we have highlighted
may apply throughout the United Kingdom: see Annex 1. Back
2
Central Government (Department of Health (DoH), Department for
Work and Pensions (DWP) and Department for Communities and Local
Government (DCLG)), written evidence. See Annex 2. Back
3
Department for Work and Pensions, Estimates of the number of
people facing inadequate retirement incomes, July 2012. Back
4
The King's Fund, supplementary written evidence. Back
5
Professor Carol Jagger, Newcastle University. Back
6
See Annex 4. Back
7
See Annex 3. Back
8
See Annexes 3, 5, 8, 7 for each point. Back
9
See Annexes 9 and 10, 12 to 14, 13, 12 to 14 for each point. Back
10
See Annexes 9 and 10, 12, 16 for each point. Back
11
See Annexes 7 and 18. Back
12
Office for National Statistics (ONS), Pension Trends - Chapter
2: Population change, February 2012, data for figure 2.5. Back
13
See Annexes 4 and 5. Back
14
Department for Work and Pensions, Estimates of the number of
people facing inadequate retirement incomes, July 2012. Back
15
Impact of changes in length of stay on the demand for residential
care services in England: Estimates from a dynamic microsimulation
model, Personal Social Services Research Unit (PSSRU) Discussion
Paper 2771, 2011, J-L Fernandez and J Forder. The gender breakdown
was supplied by the authors. Back
16
Professor Carol Jagger, Newcastle University. Back
17
Department of Health, Improving the health and well-being of
people with long term conditions: World class services for people
with long term conditions - Information tool for commissioners,
January 2010. Back
18
Nuffield Trust, A decade of austerity? The funding pressures facing
the NHS from 2010/11 to 2021/22, December 2012. Back
19
Nuffield Trust, A decade of austerity? The funding pressures
facing the NHS from 2010/11 to 2021/22, December 2012. Back
20
Department of Health, Resource Allocation: Weighted Capitation
Formula Seventh Edition, 2011, Table 6 and Appendix
I. Back
21
Nuffield Trust with PSSRU at the London School of Economics (LSE),
Care for older people - Projected expenditure to 2022 on social
care and continuing health care for England's older population,
December 2012. Back
22
Department of Health, Resource Allocation: Weighted Capitation
Formula Seventh Edition, 2011. Back
23
Central Government (DoH, DWP and DCLG), written evidence. Back
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