The Rt Hon Damian Green MP and chair of the all party political group on longevity makes the case for care insurance that in some cases could be funded by equity release.
At the recent Equity Release Summit I spoke about intergenerational gifting. This is an opportunity to spread wealth, but the way it is done presents two significant dangers. The first is that the older gifter will get something wrong in their personal calculations, which leaves them, after they have given some of their wealth away, much less comfortably off than they had planned.
The second is more of a political danger, which is that we widen the divisions in society. Essentially those whose parents had the housing wealth and were able to pass it on give their children a permanent advantage in life. It’s a natural human thing to want to do, but it means we will end up with a more stratified, immobile social structure. You can’t run a dynamic economy or a fair society on that basis.
The best present that the older wealthier generation can give to their children and grandchildren is to spend some of that wealth in looking after themselves, precisely so that they don’t become a burden on younger generations.
It’s less obvious than handing over the deposit for a house, or agreeing to pay school fees, but it is equally effective, and doesn’t give rise to unfairness. Specifically in respect of social care, I think the Government’s attempt to solve it by raising taxes on younger working people, and then spending as a Health and Care Levy means that they take the political hit for the tax rise, but don’t generate enough money to fix the care crisis.
I argue that creating an insurance product, which would have to have some state backing and guarantees, which people could buy to pay whatever care costs they need, would be the best way to use a small percentage of the housing wealth that has accrued to the Boomer generation.
Those who don’t have any of course would need state support as now. But for hundreds of thousands of families, knowing that you have such a policy so you won’t be faced with unpredictable and potentially catastrophic costs would be a huge relief. And of course one way of paying the premiums, which would be hefty, is through equity release.
- The views of contributors are not necessarily shared by the Council.
