'Homes to close and jobs to go in the most radical shake-up of residential care for older people ever undertaken in County Durham, it was announced today. . . "

I could almost predict some of the attention-grabbing headlines when we announced our £10m plans to create a new generation of residential care services for older people in County Durham.

Factually, this statement is correct. If, after widespread consultation, the plans do go ahead, homes will close and, regrettably, jobs will be under threat. Not surprisingly, the plans will run into opposition - from employees and from relatives of older people who are resident in our homes and probably from some of the residents themselves.

Sadly, as the saying goes, you can't make an omelette without breaking eggs.

But scratch the surface of the headlines, and you'll find an ambitious plan that will provide older people in County Durham with some of the best-equipped and most modern residential care services in the country.

To embark on such an ambitious scheme, to create the next generation of residential care services for older people, will inevitably mean the existing system of care has to be dismantled. It simply does not allow us to respond to the changing needs of an ageing population.

This is not a question of taking money out of social services. It is not about budget cuts, service cutbacks, making economies, reducing levels of care or whatever else you want to call it. We are not seeking to opt out of providing residential care for older people and pass the responsibility elsewhere, as other local authorities, faced with the same problems, have already done.

It is about improving services for the current generation of older people and modernising them to meet the expectations of the next. It is about shifting away from institutionalised care. It is about moving on from tucking vulnerable older people away into residential and nursing homes to spend the twilight of their lives.

It is about spending £10m on developing a wider range of care for older people to cater for different levels of need. It is about giving older people a better quality of life, more say in how and where they spend it, and preserving their dignity.

The days of traditional residential homes, as we know them, are numbered.

Middle-aged people today - tomorrow's older generation - want more from the autumn of their years than being put away out of mainstream life in an institutionalised home, as many have seen happen with their parents. And quite right, too.

Durham County Council has the highest proportion of supported older people in institutionalised care - residential and nursing homes - of any shire county in the country. Almost 80 per cent of our entire budget for providing care for older people is spent on institutional care.

Reliable forecasts predict that, over the next 15 years, the demand for older people's support services will grow by at least 33 per cent.

If we are to deal effectively with that, we must plan a shift of financial resources, away from supporting a relatively large number of people in institutional care to supporting them more through community-based services. And there is an added complication to maintaining the status quo.

Upgrading our residential homes to meet new national standards would cost the county council £60m. That's £60m not to improve people's choice, increase their sense of independence or maintain their dignity, but just to create the right dimensions in terms of floor-space and basic amenities where people could continue to 'grow old peacefully without being a nuisance to anyone'. We believe our older people deserve more than that.

I know relatives are going to say: " My mother/father is perfectly happy where they are. They know the staff, and the staff know them. They don't want disruption at their time of life. Leave them in peace."

The truth is that some disruption to residents of our homes is inevitable, even without our new proposals.

To meet the new standards required of us by law, we would have to engage in a massive programme of works to our existing homes which would inevitably mean residents moving out into temporary alternative accommodation and then moving back again.

Finally, we have a statutory obligation, under Best Value legislation, to ensure that every service we provide compares favourably in terms of cost, quality and effectiveness with that available from other sources, including the private sector.

A Best Value review of County Durham Care's residential care home service found that, although it provided good quality care, it cost £79 more per bed per week than the independent sector - an annual difference of around £3.5m.

Clearly, that cannot be allowed to continue and we are obliged by law to address that differential. The proposals on which we will be consulting encompass that responsibility.

By shifting investment from residential care into other approaches that will help vulnerable older people stay in their own homes, we estimate we will be able to provide the same volume of services, in some cases of a much higher quality, for almost £2.5m less than at present.

That extra money can then be invested in new and existing services to ensure that we can continue to provide appropriate care for older people as the demand increases in line with current forecasts.

Whatever changes are finally agreed after consultation with all interested parties, including older people and their relatives, staff and trades unions, they will be phased in gradually, over a period of around three years.

We are looking to implement a long-term and lasting modernisation programme, not an overnight 'facelift'. There will be no sudden upheavals.

I am sure that everyone interested in the welfare of older people shares a common aim - to develop and provide a standard of care that recognises older people still have a right to a dignified and meaningful quality of life and a right to one that is flexible enough to meet current expectations and future demand.

With the help and co-operation of everyone concerned, I am confident this is something we can and will achieve.