Written evidence submitted by ARCO (Associated Retirement Community Operators) [ASC 016]

About ARCO

1.1  The Associated Retirement Community Operators (ARCO) is the main body representing the housing-with-care sector in the UK. We support more than 30 not-for-profit and private organisations to develop and operate high-quality housing-with-care settings. Housing-with-care, otherwise known as extra care, retirement communities or retirement villages, is distinct from both care homes and retirement housing, combining self-contained homes for sale, shared-ownership or rent with 24-hour onsite staffing, CQC registered domiciliary care and a wide range of communal facilities.


The key features of housing-with-care are detailed in the middle column of the diagram below:


How has Covid-19 changed the landscape for long-term funding reform of the adult social care sector?

2.1 The Covid-19 pandemic has made the already urgent task of adult social care reform even more pressing. It has demonstrated the importance of creating a long-term, sustainable system that can properly support older people to stay active, healthy and independent for as long as possible, and receive high-quality care and support when needed. If the Covid-19 pandemic, and all the sacrifices it has necessitated from older people in terms of shielding and self-isolation, does not provide the impetus for long-term funding reform of the adult social care sector, then nothing will. Now is the time to act.

2.2 There are critical questions that require debate and close consideration with regards to the long-term funding of adult social care. How much Government funding is required? Where should the balance lie between the individual and the state in providing funding?

2.3 Just as crucial as these questions about “how much?” funding there should be for adult social care, are questions about “where?” this funding goes towards. What kinds of adult social care settings are best suited to provide the independence, care and support that our ageing population needs? Should a reformed model of funding for adult social care simply prop up the existing social care system, largely split between care homes and homecare, or should it aim also to promote innovation and the growth of new models of care?

2.4 We believe the latter to be true. That, alongside care homes and homecare agencies which have shown their brilliance during the pandemic, we also need to develop a wider variety of care options for older people to promote choice. Housing-with-care settings, which sit in between care homes and homecare (the in-depth characteristics of housing-with-care are included in point 1.1 of this response), have shown their great benefits for older people during the course of the Covid-19 crisis. As well as keeping residents safe and well through everything from the delivery of food and essentials to individual apartments through to high quality care when needed, housing-with-care settings have helped reduce loneliness via a range of online and socially distanced activities and events. This builds on the long-standing benefits housing-with-care has shown for the health and wellbeing of residents, and in significantly reduced costs for the NHS and social care system.

2.5 Given this, we believe it should be the aim of long-term funding reform for adult social care to not only put the social care sector on a sustainable footing financially, but to re-imagine the ways in which older people are cared for, and the settings in which care takes place. Care homes and homecare will always have a central role – but our ambitions must be much wider than that.

How should additional funds for the adult social care sector be raised?

3.1 A long-term funding model for adult social care requires both state and private funding to ensure older people of all income backgrounds can access high-quality care when needed. It is important that the adult social care system provides attractive, aspirational options for asset rich older people to put money towards, while also providing good care options for asset poor older people who cannot afford private care.

3.2 The make-up of the housing-with-care sector reflects this balance that must be struck. Currently, approximately two-thirds of the sector consists of properties available for affordable or social rent, 10% for shared ownership, 1% for middle market rent, 15% for middle market purchase, and 8% for high end purchase. The sector therefore spans extra care housing through which asset poor older people can receive high-quality care funded by the state, through to private retirement villages at which asset rich older people can self-fund their care. To ensure that those older people who can afford to pay for their care have attractive options through which to do so, and those older people who require help have excellent state-funded options available, it is vital that a long-term funding solution for adult social care strikes the right balance between private and government funding.

3.3 For the housing-with-care sector, one half of striking this balance is ensuring state funding for affordable extra care housing. In recent years, the delivery of extra care housing for affordable rent has slowed due to a challenging revenue funding settlement. For example, funding for providing complex services for older people has been reduced or withdrawn, local authority social care packages have come up against the pressures on social care budgets, and changing Government priorities on rent and service charge adjustments have created a high degree of uncertainty for operators, holding back investment. To overcome these challenges, we propose increased revenue funding via additional intensive housing management payments, ensuring clarity over the future approach to funding settlements on rents and service charges, and considering the financial means and status of housing-with-care residents in future reforms of universal and means-tested benefits.

3.4 The other half of striking the balance for housing-with-care is ensuring the right legal and regulatory framework is in place to enable the private payer part of the market to thrive. As illustrated in point 3.2, the biggest gap in housing-with-care provision lies in the middle market, the growth of which depends not on state funding but on legal and regulatory reforms. Three key reforms that ARCO is calling for on behalf of the sector are for the introduction of sector-specific legislation on fees and regulation (as proposed by the Law Commission), the definition and categorisation of housing-with-care in the current and future planning system, and the development of sector-specific tenure models that go beyond property ownership. ARCO is calling for the swift formation of a cross-government Housing with Care Task Force to bring departments together to find solutions to these issues. This would bring the clarity and certainty to unlock the billions of pounds in investment waiting to come into the sector from the likes of Schroders, Legal & General and AXA, and for operators ready to build many more housing-with-care schemes across the country.

3.5 Marrying these two elements of the housing-with-care sector – ensuring attractive options for those who can pay for them and providing excellent state-funded care for those with more moderate means – will help create a social care system that provides high-quality care for all. There is a strong progressive force in bringing both private and state funding into the housing-with-care sector. By creating attractive settings that older people want to live in and are happy to spend some personal funds on, significant cost savings are made for the wider social care sector, freeing up more resources to be spent providing excellent state-funded care for those who need it.

How can the adult social care market be stabilised?

4.1 Housing-with-care should be prioritised as a stable force within the wider adult social care market. This is firstly due to the demand for housing-with-care from older people, far outstripping current supply. A survey by ARCO members in October 2020 revealed that 85% of housing-with-care operators had seen an increase in sales and lettings when compared with the same month in the previous year, with 55% of respondents saying that sales and lettings were at least 30% higher than in 2019, and 25% reporting figures as much as 50% higher. 65% of operators stated that the most common drivers of this increase were a desire for more company and social interaction, and people realising that the houses they were previously living in were not suitable anymore. The high level of interest in housing-with-care expressed by older people was shown further in December 2020, in a survey by ARCO and Later Life Ambitions. This found that 70% would be interested in moving to somewhere with care and support available, as an alternative to a care home. Enacting measures to grow the housing-with-care sector would therefore be a stabilising force for the adult social care system, with no doubts as to the demand for this form of provision from older people.

4.2 Growing the housing-with-care sector would also represent stability due to the large backing that the sector has from institutional investors such as Schroders, Legal & General and AXA – helping to provide financial sureness. Housing-with-care operators such as Inspired Villages, Retirement Villages Group and Audley Group already benefit from this backing and provide services for thousands of older people between them. Many more billions of pounds are waiting to come into the sector if only clarity and certainty was provided by the planning system, consumer regulation and tenure models. If these problems are solved then the sector can aspire towards its aim of 250,000 older people living in housing-with-care by 2030, which would result in £70bn of revenue and £40bn of investment. A further reason for the housing-with-care sector’s stabilising force within the adult social care market is therefore the financial backing that already exists for the sector, removing concerns about where money may come from to boost its growth.

How can the adult social care market be incentivised to compete on quality and/or innovation?

5.1 Quality and innovation will be fostered by an adult social care system built upon diversity and a variety of options for older people. The right framework should be put in place so that different types of care setting, including care homes, housing-with-care and homecare, can thrive and meet the needs of our ageing population. If the promotion of different options becomes the norm in the social care system, then providers will have an incentive to try different things and offer something new to older people, enabling individual needs to be more closely met. As illustrated by point 4.1, a large number of older people themselves have expressed an interest in moving to housing-with-care if only there were good local options available. The innovation offered by housing-with-care is therefore an adaptation to the changing demands and needs of older people.

5.2 In this vein, housing-with-care represents a new model of care that has emerged in recent years in the UK to offer something different alongside the existing provision of care homes and home care. However, the growth of housing-with-care is currently disincentivised by a lack of any sector-specific regulation or legislation, which is hampering new investment from coming into the sector, and operators building new schemes. If new, innovative models of care are to gain a footing in the adult social care system, then the regulatory and legislative framework needs to be in place to support them. For housing-with-care, this requires clearly defining and categorising housing-with-care in the planning system, strengthening consumer regulation for the sector, and developing appropriate models of tenure. As stated in point 3.4, we believe a Housing-with-Care Task Force is the best vehicle to achieve these changes.

5.3 Taking an international perspective helps show just how impactful sector-specific legislation and regulation is for the growth of housing-with-care. In New Zealand, Australia and the US, at least 5-6% of over-65s have the opportunity to live in housing-with-care, compared with just 0.6% in the UK. This is largely down to the sector-specific legislation and regulation that each country has introduced, such as the Retirement Villages Act 2003 in New Zealand, which provides clarity and certainty around the sector’s definition, consumer rights, planning and much more. Providing a legislative and regulatory framework in the UK would enable the innovation of the housing-with-care sector to thrive and provide more choice to hundreds of thousands more older people.


Open letter sent to the Prime Minister on 29th March 2021, signed by over 40 MPs, Peers and campaigners calling for the 2020s to the “decade of housing-with-care”.


Dear Prime Minister,

Older people in the UK are living longer – but not healthier for longer.

That is why we need to find a modern solution to the modern phenomenon of longevity. Representing a broad coalition of older people’s representatives, policymakers, private sector and civil society leaders, we are calling on you to expand the supply of housing and care options in the UK.

Just as previous decades saw the expansion of the care home and home care sectors, there is now a new consensus that the 2020s need to be the decade of housing-with-care (such as extra care housing and retirement villages providing care and support) – not least because of how this sector has proved itself in successfully shielding residents from Covid-19 over the last twelve months.

Yet this option is only available to a tiny fraction of the UK’s population – only 0.6% of the over-65s live in housing-with-care settings, about one tenth of the levels seen in countries such as the US, Australia and New Zealand. Increasing UK provision to only a third of these levels would result in more than a £100bn of economic activity, create 40,000 jobs, save the NHS and social care systems billions of pounds and see more than 100,000 family homes freed up. 

Proposals for social care funding reform have been repeatedly pushed back, but we say that expanding social care options must start now: by creating a world-class system of housing-with-care that couples a focus on independence and prevention with a safety net of care services and consumer protection. This would sit alongside and complement existing care options such as care homes and home care, creating more choice for older people.

To achieve this, we must look beyond the remit of the Department of Health and Social Care: multiple departments and ministries will need to work together to join up planning policy, funding (for those with moderate means) and a regulatory framework in a true cross-governmental effort, for example in the form of a task force. Crucially, this would be a low-cost initiative bringing transformative effects, at a time when the Government has been spending to fight Covid-19 and boost the economy.

Announcing this commitment and setting up the mechanisms for growth would be a profoundly positive statement of the Government’s intent to improve choices for our ageing population. The decade ahead can and must be a brighter one.

Yours sincerely,



Researchers & academics


Trade associations

Organisations representing the interests of older people


Charities delivering services to older people

Health & social care infrastructure investors



April 2021