Tax breaks of up to £20,000 is one suggestion for families who want to extend their homes in order to accommodate elderly relatives, says Iain Duncan Smith. He has warned that the cost of care for the elderly has placed a demographic timebomb on the British public's finances.

Mr Duncan Smith says the poorest pensioners are likely to feel the worst of a failure to tackle the issue. 2.5 million pensioners are said to be living below the poverty line, with almost a quarter of single female over 60's having no savings at all compared to a fifth of single males. The extension of what has been dubbed 'granny mortgages' which allow elderly people to release equity in their homes more easily, is one of the proposals to be examined.

The Centre for Social Justice will concentrate on pensioner poverty and the types of care which can be provided to the elderly - indeed this will all be discussed in a meeting which will take place today. Social care jobs and home care from relatives will all be reviewed. They commented: “Britain is facing a demographic timebomb over the next 20 years, which will place further strain on cash-strapped public services.”

According to a study commissioned by Downing Street and the Department of Health, they believe that rather than extra spending being seen as dead money, social care expenditure should be seen as "a form of social and economic investment''.