Demographics
Are we ready to care for an ageing population?
Kenneth MacKenzie, managing partner, Target Advisers, considers the implications of our ageing population, including the background to and the scale of the problem in the UK, the challenge ahead and the potential opportunities it brings to the care home sector
People are now living longer across the developed world. Of course, this is great news. While the fragility of life is a reality, the prospect of us all, on average, having more years in which to enjoy the fruits of our labours is a fine prospect. When people write about the demographic time bomb, the focus is typically on the growth in the number of people aged over 65; this group is set to grow by 50 per cent over the next 20 years. However, as you go up the age range, the statistics are much more compelling for those who invest in the provision of care homes for the over 85s. This group is set to double over the next 20 years and treble over the next 30, and about 15.8 per cent of those aged over 85 will spend their final days in residential care. So, how will we cope with our ageing population? The over 65s are estimated to be in possession of £1 trillion in net equity. They are of the generation that has greatly benefited from the home ownership that has developed since the Second World War. Houses acquired during the Margaret Thatcher era when council houses were sold off across the land have made many people much wealthier than they might
otherwise have been. Of course the pound in 2016 is very different in terms of value to the pound of 1980, but home ownership grew from 55 per cent in 1980 to include 64 per cent of the population in 1987. By the time Margaret Thatcher left office in 1990 it had reached 67 per cent.
This same generation also benefitted from the favourable tax treatment of pension contributions for much of their lives, and mortgage interest was allowable for tax. However, further down the line, we are starting to see the impact of less income as they leave paid employment, increased costs as they start to use the NHS more and greater cash outflow as they draw on their old age pensions.
Health and welfare
Of course, a longer life span means more years during which pensions need to be paid. Retirement age is 65 and average life expectancy is about another 20 years, but funding these pension payments has been totally overlooked in most government balance sheets of assets and liabilities. Sensibly the
government has had the wisdom to raise the pension age, and in particular the age at which pensions are paid out. George Osborne announced in 2014 that increases in life expectancy will automatically trigger an increase in the state pension age, which is likely to rise to 70 within 50 years. The Office for Budget Responsibility found that without these measures, Britain’s debt would be £1.14 trillion higher in the next 50 years as the economy struggles to cope with the rise in the number of pensioners and the decline in the number of people working. About 40 per cent of the National Health Service budget is spent on the over 65s, a cohort of 11.4 million people and only about 17.7 per cent of the total population. This figure is set to rise by 50 per cent over the next 20 years to in excess of 16 million people. Therefore the budget required will also need to increase hugely.
A longer life span means more years during which pensions need to be paid 26
We are all living longer. Many people of course live into older age with comorbidities; in fact the number of people living with three or more conditions simultaneously is rising at an astonishing rate, from 1.9 million in 2013 to an estimated 2.9 million in 2018. However, screening programmes have reduced conditions associated with high cholesterol, as well as incidences of heart attack, stroke and cancer. New drugs also continue to be developed, although by around the ninth decade many people begin to experience greater frailty. By this age, dementia affects 30 per cent of the remaining population. The number of over 85s is forecast to treble by 2045 and with it the number of people with dementia. This is already bringing fresh challenges to the healthcare sector. The success of the NHS at extending life has led to a need to do less for more, with general hospitals and A&E departments becoming short stay high acuity services, with bed capacity cut to
www.thecarehomeenvironment .com • May 2017
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