Reform of funding for old age care

From today's CityAM Forum:

It is easy to see why politicians want to delay reform [of the funding of old age care]. Many people believe that the state will cover the cost of care as it does with the "free at point of use" NHS. Yet the reality is different and many people only discover they need to pay for care when they or a family member enter it. It is a rare politician who will acknowledge that families have to pay for care and, indeed, that for the future system of care to be affordable contributions will have to increase.

The obvious source for contributions is the equity in assets like housing. Yet too often discussions on elderly care reforms are concerned with protecting children’s inheritances. So England persists with a system that is patently unfair, where too many people only find out they are required to pay for care in a moment of crisis. The political consensus favours people being caught short rather than admitting to the reality of hard choices.

The largest chunk of that "equity in housing" is of course not the bricks and mortar, which at best hold their value: depreciation and maintenance net off with normal price inflation. So what is the largest chunk and why? For possible answers, let us refer to two earlier articles...

March 2011: The importance of urban centres to progress – economic, cultural, scientific, social and political – cannot be underestimated. Across all continents, 23 megacities—metropolitan areas with at least 10m inhabitants—generate 14 per cent of global GDP, according to McKinsey. The world’s top 100 cities generate $21 trillion of GDP, 38 per cent of the total.

The 600 largest urban centres generate $30 trillion, 60 per cent of the total, yet house just 22 per cent of the world’s population. But what is most impressive is that the London urban zone is the world’s third largest by GDP, beaten only by Tokyo and New York.*

November 2011: The US’s share of population in larger metropolitan areas rose from 30 per cent to 55 per cent from 1951-2009, focused in suburbs. Relentless long-term decline saw our metropolitan areas’ population share fall 22 per cent from 1951-2009.

In the first part of the 2000s, almost 1m people left our large cities [in the UK]. Only high immigration prevented serious declines in population. This matters, as larger cities improve worker productivity. A meta-analysis found a doubling of urban population raises productivity about 6 per cent. So someone going from a town of 50,000 to a city of 800,000 raises their productivity 25 per cent – and vice versa.

* Well duh, London pop. 7.8 million, Tokyo 12.8 million, New York 8+ million.