Care: Older People
Lord Lipsey Excerpts(6 years, 8 months ago)
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Lord Lipsey
To ask Her Majesty's Government what assessment they have made of the deferred payment scheme for funding older people's care.
Lord Lipsey (Lab)
My Lords, it is hard to recall the shock at the time, but it is only a few weeks ago that the Conservative Party decided that it would not have a large overall majority after all. The form this took, you will remember, was a pledge in the manifesto that everyone would have to spend themselves down to £100,000 before they got help with care costs. I think I knew what they were doing when they did it because I happened that afternoon to be on a platform for the dementia society’s conference with the Health Secretary, Jeremy Hunt. He made a short reference to this proposal and I was asked what I thought of it. I said, in the words of Sir Humphrey, “Very brave, Minister”. I may have misdetected it but I thought he went a little bit pale.
Why do I start with that story, which has absolutely nothing to do with deferred payment? It is very difficult to see why they did this. It could have been an accident. It could have been an outburst of honesty with the British people, which was laudable if not successful. I have another theory: that this Government have learned from long experience that you can do anything you want on care and nobody much notices—perhaps there would be more people here tonight if that were not the case. The case of deferred payments seems to me to be an extremely strong example on which the Government now need to focus and come clean with people on what they are going to do and put it into place.
Let me tell you a story—I am starting off down nostalgia lane. In 1999—I have the right decade, I think—I was sitting on the Royal Commission on Long Term Care. In parenthesis, one of my colleagues was Lord Joffe, whose death was recently announced, and who was one of the truly great and lovely men that I have had the pleasure to meet in my life. The majority of the commission—it beggars belief when you hear it now—wanted all social care to be free. That was their recommendation. I cannot really within a 10-minute speech spell out the number of noughts on the end of the cost of that proposal. It was bonkers for two other reasons. First, nearly all the extra money was going to the better-off, not the worse-off. Secondly, and to Joel and I more importantly, it did not provide an extra penny to care services. It simply made it easier for people to pay for care. Well, that is very nice and desirable if you have the money, but it is very different from providing the care services that our country desperately needs. So we did not go along with this and signed a note of dissent, as it was called.
I comfort myself that history shows that it is only minority reports or commissions that have any effect, looking back to Webb and the Poor Laws. There was one on the fire brigade, where the main dissident report was written by the chairman. Only minority reports have any effect, and that was true in one sense in this case. We never got free care and I am very glad that we did not.
However, Joel and I, when writing our dissenting report, were aware that people were suffering considerable distress as a result of the means-tested system. In particular, it caused people to sell their houses to pay for care. So without conceding the free care principle, we felt that something should be done about that.
I quote paragraph 57 on page 123 of the Note of Dissent: “We therefore propose that the state offers a virtual guarantee that no person will have to sell their home against their will. This will be put in practice by a state-sponsored loan against the value of the home of any older person in need of care who does not want to sell”. I think that that was right in principle because going into a home is for many people a dreadful thing to have to do. It is made worse if you know that your house is going straight on to the market with no chance of ever getting it back.
However, let us face it, there was a lot of politics in that. We wanted to fend off free care for all and in order to do that we thought it right to do something that would make redundant the headlines which the Daily Mail used to specialise in: “Homes sold to pay for care”. There was a general acceptance of that. The Labour Government legislated in due course. They did so ineffectively and left it to local authorities to put the schemes in place. Many local authorities did not get around to it, so it did not work. The Conservative Government seemed not even to have noticed that that had been done. David Cameron, who some will remember was then the Prime Minister, went around saying that the Government would legislate so that,
“no one will have to sell their home to pay for care”.—[Official Report, Commons, 8/5/13; col. 25.]
The 2014 Act was brought forward and it did indeed establish a national scheme for deferring payment for care, except that it did not apply to people with more than £23,250 in non-housing assets. That is a terrific limitation and it destroyed what the scheme was meant to do. You would be absolutely mad, if you possess a large house, to let your other assets run down to £23,250 so that the income on that sum would have to pay for all the other little things in life you might like. It made the proposal completely defunct. That point was hammered home in this place. I remember making a speech about it at Third Reading with strong support being expressed across the House. The noble Earl, Lord Howe, gave the impression, although I may have been naive, that this would be dealt with and they would up the £23,250 limit. In the light of that, I withdrew my amendment. They did not; they stuck to it and the figure did not change. Of all people’s word to break, they broke the word of the noble Earl, Lord Howe.
I did not have to do much research to know what would happen. What has happened is that we now have a totally failed system. The Government estimated that the new scheme would bring the uptake of deferred care up from 4,000 in 2012 to 12,300, but it has not. In fact the uptake figure hovers at around 3,600; that is, even less take-up than before. The research to show that was carried out by the think tank Reform, which is not unsympathetic to the Government. That number is simply those who are eligible but who choose not to claim it—one third of the number that the Government said would. There are also all those people who are completely excluded from it by the arbitrary rules that the Government have set. Those were Cameron’s words backed by his party and both Houses of Parliament but they have been completely overruled and ignored.
I believe that Parliament was misled and that the time has come to do something about it. I believe—I hope the Minister will confirm this—that the Government are reviewing the deferred payments scheme and its impact. On the facts as we have them, I do not think there can be any doubt about what the conclusion of such a review should be. Of course, this is all part of the broader picture on social care. I, for one, welcome the review that has been carried out in the Cabinet Office, and the fact that we did not dash into that manifesto pledge and that proper, serious consideration is being given to this issue by proper, serious people on the basis of proper, serious research.
I beg the Government to look at this again, because you can make a case for the scheme or you can say that people should have to sell their houses to pay for care, but I say in all seriousness that I think it is unforgivable to mislead older people. They find this system extraordinarily complicated and extremely hard to get their heads round in any case. To leave them in the state of confusion that now exists as to whether or not they can get deferred care payments seems to me—I hesitate to use this phrase—an act of cruelty. The Government can put this right. It does not cost anything, because this is merely money that is lent to them being paid back. They should produce a clear, workable scheme so that those who do not want to sell their houses to pay for care will not have to, as David Cameron said.
Health and Social Care
Lord Lipsey Excerpts(7 years, 5 months ago)
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Lord Lipsey (Lab)
My Lords, this is the second Thursday in a month in which the House has focused on the potential downsides of Brexit. Last time we were talking about higher education, and now it is health and social care. There are many other subjects of a similar nature that we could debate. I am tempted to suggest that we run the whole series and at the end of it cock a snook at the popular press by publishing a little account of the debates called “Why the British People Was Wrong”.
I will concentrate my remarks on social care. Of course, the health and social care workforces overlap. There are nurses who work in the health service, nurses who staff nursing homes and nurses who work in the community, although health workforce planning seems to ignore the fact that there is a need for nurses elsewhere. But social care is different from health in one particular regard: most of it is not provided by people who were trained for years and years to do so. Of course, there are very important skills required of people in the social care sector but most—not all—can be acquired in relatively short periods. That makes a big difference to planning.
What will be the impact of Brexit on the social care workforce? We do not know. We do know that nationally 6% of social care workers come from the European Union; that rises to 12% in London. Will they be available in future? Well, that depends on two known unknowns. The first is whether the Government eventually accede to the soft-Brexit option of continuing with free movement of labour. Secondly, and if they do not, is how they decide to prioritise two of their objectives: keeping a healthy social care workforce by letting the workers in—or if they are already here, letting them stay—or keeping the immigration figures down. I fear that we will not get a clue this afternoon as to which of those options the Government will choose.
What we know as a certain fact is that the demand for such workers is going to rise. It will rise simply because of the demographics, as the number of old and very old people rises. We also know that there is much uncatered-for need at the moment. Research published last week by Age UK shows that, since 2010, nearly 400,000 more people aged over 65 are living with some level of unmet need, while the numbers getting care from local authorities in their own homes have fallen by something like 25% over the past four or five years.
I am an economist, so if this were about most industries, it would not cause me tremendous bother. If the supply of labour falls short of demand and need, the straightforward solution is to raise wages. In social care, that would have another great advantage: it would be some recognition of the real contribution that social care workers make. Unfortunately, there is a fatal Catch-22 in the higher wages logic: about half of old people in care homes are paid for by local authorities. Local authorities are also in high degree responsible for the care workers who look after people in their own homes. But consistently, year after year, the Government have forced councils to cut their spending so as not to have to cut their own. Defence’s 2% of GDP is sacrosanct; aid, as the House debated last Friday, must be 0.7% of GDP every year; health spending is protected in real terms. So the whole of the cuts falls on local authorities, and social care is overwhelmingly the biggest thing on which they spend money.
Council spending has been slashed by eye-watering amounts. There have been little handouts here and there, as the Minister will remind us. Councils are now able to increase their precepts by 2% a year to meet their costs although, of course, that greatly favours those areas with a lot of richly expensive residential housing and gives least to those areas which have less expensive residential housing—which of course are the areas where the greatest need for social care provided by the state exists. This is just one of several sticking-plasters being applied to a gaping wound.
Ministers claim that there is not unlimited money, and they are right. But are they using the money they have right? I want to draw the House’s attention to one rather shocking example. Recently, virtually unnoticed by the public, the press and Parliament, the Government increased spending on an area of social care in an expensive way by increasing the nursing care allowance. Now, to a degree, I contradict myself here, because the nursing care allowance—a non-means-tested payment towards the costs of those with substantial nursing needs who self-fund their care—was a recommendation of the minority report of the 1999 royal commission, signed by Lord Joffe and myself. Just as the British people was wrong, we was wrong about that. It has been a great waste of money.
I must also make a confession. If the Government had acted on my advice, I would be worse off, because I found the other day that I was the beneficiary of a handsome cheque paid from my mother’s estate. The money came from the Government and was the backdated value of the new allowance, which rose from £112 a week to £156.25, and covered the period from April to July, when she sadly died. I am not an extremely rich man, but anybody who thinks that I am in the greatest need of government benefits of this kind is really barking up the wrong tree. We are not the top priority. The top priority is those in the bottom half of the income distribution who need this care most and are being deprived of it. We found yesterday in the Autumn Statement that there was little money for the much talked-about JAMs, but there appears to be plenty of money for jammy sods like me. This preposterous propriety comes at a cost—wait for it—of £190 million a year. The Government are now looking at increasing the money still further. I have a great admiration for the Minister, but I am surprised that he can hold his head up in the face of these facts.
To sum up, in social care only two alternatives can be contemplated. One is to ensure that Brexit does not cut the social care workforce by allowing people who come now to come. The other is to fund social care more fully so that providers can afford to pay what it takes to attract the workers they need. Otherwise, and of necessity, we will end up in a position to which we are already heading at a rate of knots—that the welfare state, in so far as it looks after the old and needy, effectively ceases to exist.
NHS: Health and Social Care Act 2012
Lord Lipsey Excerpts(7 years, 8 months ago)
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Lord Lipsey (Lab)
My Lords, like the noble Lord, Lord Kakkar, I sit on the Select Committee on the sustainability of the health service, chaired by the noble Lord, Lord Patel. Last week, I came out of St Thomas’ Hospital, where I had had a TAVI—an operation on a heart valve—to sit down to the backlog of papers from the committee. The first paper I picked up said quite clearly that unnecessary treatments should be eliminated—for example, TAVIs, which are completely ineffective. All I can say is, in that case I have had the mother and father of a placebo effect.
I mention this simply to say that in the general gloom that so easily pervades debates on our health service, we can forget what it is really like. My experience was marvellous—clinical marvellousness, caring marvellousness—and I was in and out, after a general anaesthetic, within three days. So let us not play down what our health service is delivering. It is because it delivers these things that it is so precious and our people will never let it go.
I am very grateful to my noble friend Lord Hanworth for introducing this debate. I think he sometimes got a little carried away with his own rhetoric. The moment at which he accused the party opposite of cunning concealment by putting their proposals in a pamphlet struck me as one example. In general, I cannot share his view of the 2012 Act and its consequences any more than I can share that of the Secretary of State who introduced it. My take is that only three years have gone by since its provisions came into force and it is clearly too early to form any sort of verdict, particularly since there is a much more important effect, which is the amount of spending that is taking place and the staff and resources available. It is far too early.
However, Sir Muir Gray of Oxford University, a most distinguished witness who appeared before our committee on Tuesday, said:
“I speak as a veteran of 22 re-organisations, most of which have made no difference at all”.
I expect that this one will be broadly the same. Talking to people who understand, work in and know the work of the health service, there is a consensus that it works not because of the Ozymandian bureaucracies erected by Governments—and endorsed by Parliaments, let us remember—but in spite of these bureaucracies, which mostly serve only to add cost and complexity.
I will say a word or two about the sustainability of the health service. This language has become embedded in all sorts of words. We even have sustainability and transformation plans—words which fill me with gloom at their lack of transparency. The trouble with sustainability is that it suggests black or white. We either have a health service that works or a health service that has collapsed, in which case we have to have a new system: private healthcare as in America, a Bismarckian system as in Germany, or whatever. But, of course, it is not like that at all.
First, we have to ask what it is about the health service that has to be sustained. A phrase that is trotted out as if it were obvious the whole time is, “free at the point of use”. We do not have a health service that is free at the point of use. Lots of healthcare is paid for, as the noble Lord, Lord Colwyn, made clear in his speech on dentistry. We have north of £500 million of prescription charges—which, incidentally, are becoming quite a barrier to some people taking the care they need—for across-the-counter medicines. John Appleby of the Nuffield Trust suggested to the committee that private spending on health in this country amounted to 1.5% of GDP. It is not as big as public spending, but it is a pretty big chunk. So let us be clear that there is a wide range of “free at the point of consumption”.
Another phrase is “a national health service”. We do not have a national health service. The provision of specific treatments varies hugely from place to place, in a way that is very difficult to account for—factors of fourfold and even tenfold, as Sir Muir explained to our committee. Different social classes get widely different provision and as a result have widely different expectations of life. For example, in some areas 78% of people die at home and in others 46%; that is the range of experience.
There is a more sensible way of looking at sustainability. Somehow or other, the supply and demand for healthcare has to be balanced—that is inevitable. The main factor affecting supply is how much money the Government, and by extension society—taxpayers—are prepared to raise to pay for it. Healthcare is a menu with prices and we can imagine a health service in which people can choose only thin gruel and one which provides caviar for all. It depends almost entirely on how much money people are prepared to put in.
The real question is therefore not whether we have a health service that is sustainable, but what kind of health service we want. When we have decided what we want, are we prepared to pay for all of it, some of it, or rather little of it? Importantly, how can we get the maximum of what we want for the minimum we put in? I am afraid that those people who think there is a magic wand that can be waved and surgeons can double the number of operations they do in five minutes are barking up the wrong tree. From these core questions, the 2012 Act was essentially a distraction. I hope your Lordships’ committee may do a little better.
Residential Care: Cost Cap
Lord Lipsey Excerpts(8 years, 5 months ago)
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Lord Lipsey (Lab)
My Lords, I declare my interest as unremunerated president of SOLLA—the Society of Later Life Advisers. I do not know how many noble Lords had a chance to catch the serialisation of the new book, Alive, Alive Oh!, by the inspirational Diana Athill, on Radio 4 this week. Diana Athill is someone who chose to go into residential care and has never regretted that decision. There is a strong tendency, in my experience, to think of residential care as a second best—what you fall back on when you can no longer safely stay in your own home, or your relatives cannot or will not support you. That lay behind Gordon Brown’s infamous plan to make care free at home while it was still charged for in residential homes. However, that view of the world ignores the loneliness, discomfort and lack of physical support that so many old people struggling on at home experience, whereas good residential homes—the CQC rates three in five as good or outstanding—provide many things that old people such as Ms Athill value: company, comfort, care and community activities.
The puzzle for me is why more people do not opt for residential care. Fear of the unknown is, I am sure, part of the answer. But a major factor is cost. People worry that if they go into a home, the assets they hoped to leave to their children will be denuded. That is why there was almost universal support for the Dilnot report, which advocated making the means test less onerous and capping care costs. That support included the party of government, the Conservative Party. Its manifesto said:
“We will cap charges for residential social care from April 2016”.
That was the election manifesto that the people endorsed in May, and which was torn up by the Government in July. They sneaked out, on a Friday afternoon, an announcement postponing the cap until 2020. They reneged on their pledge once; can anyone in this House be confident that they will not renege again come 2020, when there are so many attractive things that they can spend money on to buy another election victory?
The Government sought to blame local authorities for this delay. It is true that local authorities were very concerned and had difficulty implementing the cap—for one reason only: the Government were setting onerous conditions on how they should implement it, without providing them with a fraction of the money that they needed to put it in place. Personally, and as an old defender of local government, one of the things that I do not like about this Government—I do not dislike everything about them—is a strong tendency to blame local authorities for things that have come about simply because central government has denied them the funding that they need.
The postponement of the cap was not the only thing that the Government did. They smuggled out the abandonment of another Dilnot proposal even more surreptitiously so that no newspaper to this day has noticed it—a proposal that is even more important and desirable than the cap. That was the raising of the cap for the means test. At the moment, you start to get some state assistance at £23,250; you get all your care paid for when you have only £14,000 left. Dilnot recommended raising that to £118,000. Before the election the Government said, “Yes, we’ll do that”, and after it said, “No, we won’t”. People who have worked hard all their lives have the prospect of seeing their wealth evaporate as they sit in residential homes. No wonder not many want to go into one.
The Government did that, but they did not drop the taxes that they imposed to pay for it. To take one, they froze the inheritance tax threshold for three years to get the costs. That raised £690 million over three years. We do not have that back now that it is not being spent on this subject; they have kept it. I have heard of stealth taxes and of death taxes, but this is the first example in human history of a stealth death tax.
Finally, we have heard a lot in this debate about underfunding. I agree that those of us who attack cuts are often guilty of not saying how the cuts that we do not want to make will be paid for. I have one suggestion where substantial sums can be raised in this field and used to improve the quality of care. I do so with a clear conscience because it is a piece of government spending amounting to about £500 million a year, for which I was very largely responsible. When I was part of the minority report of the Royal Commission on Long-Term Care of the Elderly—its distinguished chairman will speak to the House later—we wanted to go some way to meet the belief of the majority in free care for all. We therefore suggested that nursing care should be free for those who need it—strictly nursing care. There was a logic to that because nursing care is very like what you get in the National Health Service for free.
As I have gone on, in view of the shortage of resources I think that this was a rather unwise suggestion. Almost all the money involved goes to people who are rather well off; it is not like the means-tested money that goes to people who are less well off. It is indiscriminate and mostly helps the rich. So far as I can find out, because it is paid to care homes, very few people know that they are getting it anyway. If it were abolished—not for existing recipients, of course, but for new ones—the Government would save in excess of £500 million a year, which could be used to up care home fees, make them more viable and make the standards that they provide better for all our older people.
Care and Support (Business Failure) Regulations 2014
Lord Lipsey Excerpts(9 years, 3 months ago)
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Lord Lipsey (Lab)
My Lords, it is a great pleasure to follow my noble friend Lady Wheeler, who has achieved the rare feat of matching the Minister in both her knowledge of the subject and the eloquence with which she expressed it. I shall raise one or two points on just two of today’s regulations. The first is the market oversight criteria regulations—which, in principle, I strongly support. A few alarm bells began to ring in my skull when I saw that the body to be responsible for this is the CQC. My mind drifted back nearly a decade, I suppose, when we were in this Room debating the amalgamation of three regulators, proposed by the then Government, into the CQC. I remember speaking with all the eloquence that I could muster to explain why this was going to be disastrous, and the noble Lord, Lord Darzi, the then Minister, explaining with great eloquence why I was completely wrong. After that, the noble Lord and I would go outside and he would say, “I totally agree with you, David; this is an act of absolute madness”. I am afraid that for years so it proved.
I regard the CQC as on probation. It has new management. David Behan, the chief executive, is a man for whom all of us, I think, have the greatest respect. There are examples in which the CQC is improving its practice but it is still only on probation, which in itself does not provide me with the complete reassurance that I should like. More seriously, it is all very well having market oversight, but you need the resources to do it. I have done a little back-of-the-envelope calculation based on the Explanatory Memorandum, which suggests that the CQC will spend £6,000 per chain monitoring whether it is in financial trouble. Frankly, £6,000 does not buy much of a top accountant’s time. So while I should like to think that the CQC will pick up readily in advance of crises that there are problems, I doubt whether it is resourced to do so. The Minister and the Government should satisfy themselves that this job will be done and is not just a paper exercise so that, if something goes wrong, they can say that they did something about it. In practice, that will not be effective.
It is not entirely accurate to say that the eligibility criteria regulations translate into legislation the present criterion of substantial. Indeed, it has been argued that this is a slightly more liberal definition than the present substantial definition of what creates eligibility. But it is also not wholly inaccurate. I do not have any objection to this. I have read the useful briefing provided by the Care and Support Alliance but I am not convinced that, given the shortage of finance, to which I shall return in a moment, it would make sense to impose a much looser definition of eligibility and substantial, as recommended by Dilnot—particularly in view of the financial situation in social services.
I know that figures get bandied about for ever on this. I chose to take one from the Department of Health’s publication of March 2014 in which it said that spending on adult social services had fallen by 8% in the previous two years. Since the Government say that that is true, it must be true. Incidentally, we are seeing a folly in public finance which deserves to be highlighted. When you ring-fence one bit of public finance or guarantee it in real terms, that leads to more pressure on other forms of public finance. Because healthcare is ring-fenced and maintained in real terms—I am not arguing about whether the numbers are right—social services ends up taking more of the brunt.
Care Sector
Lord Lipsey Excerpts(9 years, 5 months ago)
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Lord Lipsey (Lab)
I, too, thank the noble Baroness, Lady Kingsmill, for initiating this debate and for her excellent report. There is another vote of thanks that I want to give, which on my part is even more heartfelt: I want to thank the 700,000 people working in the residential sector in particular for what they do for our elderly people.
Of course I know that there are a few bad apples in the barrel. The most profoundly frightening statistic that I have come across in some time is one that says that 54% of people fear going into a residential home because they think that they will get poor or even cruel care—that is the newspapers for you. Then I think of St Luke’s Hospital in Oxford, where my 92 year-old mother is. It is a special place. It is not a special place because it is a special building; to call it workaday would be generous. Nor is it in a special place: it is in a suburb of Oxford. It is special because of the people who work there. There is a highly educated and absolutely delightful couple from Botswana; the Nepalese Gurkhas, with whom the home has a connection; the Filipinos; and the eastern Europeans—a staff of people dedicated to care.
The number of care workers in residential homes is going to have to increase by about a third by 2025 to cope with the demands. Where are they going to come from? I understand why our politics is turning the way that it is on immigration—of course I do. However, weight has to be given to the fact that not only are we providing a home for people from abroad but they are providing services that we as a society desperately need—services that there is not, at present pay rates, a huge queue of British people dying to perform.
My point is that in most areas of public life there is quite a lot of controversy about what needs to be done—sometimes partisan and sometimes not. However, the Kingsmill report has to be taken with Camilla Cavendish’s wonderful report, with bits of the Burstow report on the residential sector and the earlier reports that have been mentioned today. They nearly all say essentially the same thing: the pay is too low. The too-low pay may have even come below the minimum wage and does not approach the living wage. Care workers are forced, often illegally, to pay for their uniform and for training and to spend time on duty even if they are not actually working at the time. Training is inadequate and career prospects are poor. It is hard for a care worker to graduate to becoming a nurse. To me, it is quite wonderful, despite all this, that we have a workforce at all, let alone one that is as conscientious as the great majority of it is.
There is total consensus on what is needed. Why does it not happen? The reason is money. I will give three examples. There is a huge shortfall in the amount paid in fees by local authorities for people in residential care—it is way below what would be an economic rate. Laing and Buisson calculated that for 2008-09 the total sum involved was £540 million. Unfortunately, it will not even give a Member of the House of Lords the current figure that it has calculated for use in this debate; I suppose that it makes its money by selling it. The figure is not likely, however, to be any smaller than that, so the fees are already inadequate. There is going to be an additional problem because, when the Dilnot report takes effect, those who are paying for themselves are going to find out what the council is paying for its own residents and they will say, “Why should I pay more than them?”. That will put more downward pressure on the fees, so the homes will not have the money to pay their staff properly.
Secondly, there are huge demographic pressures, with the number of 85-plus year-olds in 2030 likely to be more than twice what it was in 2011. We live longer, which is great for us, but somebody has to pay. Thirdly—and this annoys me, so I will not labour it—it is very distressing that the Government prefer to cut council budgets, even when those council budgets are the only thing that keeps care going, rather than cut their own budgets, because they feel that they would get the blame for that. No money, no improvement for care workers. Indeed, it will get worse. In addition to the cost of all this, we have the cost of Dilnot, which I on the whole support, although it is a much lower priority to pay better-off people a share towards their care than to provide the basic care that the poorest in our community need.
At the end of the day, there has to be more money for care. When that money is forthcoming, there has to be better treatment for the workforce as a key priority. I hope that this debate and the unanimity that I expect to diffuse it will persuade the Government that eventually, however reluctantly, they and particularly the Treasury will have to face up to this unpalatable fact.
Care: Financial Services Industry
Lord Lipsey Excerpts(10 years, 2 months ago)
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Lord Lipsey
To ask Her Majesty’s Government what plans they have for the role of the financial services industry in funding care provision in the light of the Dilnot commission reforms.
Lord Lipsey (Lab)
My Lords, I declare my interests as unremunerated president of the Society of Later Life Advisers and a member of the advisory committee of the Equity Release Council.
The request for a debate on this was sparked by the publication on 21 January, jointly by the Department of Health and the Association of British Insurers, of a document called Social Care Funding: Statement of Intent. To be more accurate, it was sparked by the reporting of that document the next day in the Financial Times, which said that the statement meant that,
“government hopes of early products covering the cost of long-term care for the elderly”,
had been dashed. That was based on one conclusion of the report: it was unlikely that prefunded products to pay for long-term care would emerge, at least in the immediate future—that is, products that people had paid for during their working life. I am myself a journalist, but I am afraid that that really was news only to the FT. There have been no such products for a very long time, and they are even less likely in the light of the Dilnot cap on care costs. The fundamental reasons are very simple: they are supply and demand. From the point of view of companies providing them, they are very difficult policies to produce, because they require you to assess many years in advance how long people will live for, how long they will claim off the policies for and how much the cost will be. That is on top of all the usual problems of moral hazard with any insurance product. To put it technically, they are virtually impossible to price.
Even if those products were on offer, who on earth will buy them? We know that people during their working lives do not much care to think about their last years of life. We know that roughly only one in three people goes into residential care and is therefore most likely to benefit from prefunded products, and we know from talking to independent financial advisers that if you try to raise this sort of product with people during their working lives, they are not interested. They are interested in their pensions, yes, but not in care products. So they have never been a possibility and nothing in the Government’s plans has ever assumed that they were a possibility or were going to happen. If I were an insurance salesman, which thank God I am not, I reckon that I would have a better chance at selling heating to the denizens of hell than I would of selling these products on earth, if they existed. They are unsuitable and unsaleable—what is to like?
The FT missed the real story in the account, which is that there are two classes of product that are saleable and suitable and would supplement the recommendations of Dilnot as interpreted by the Government. One is point-of-use products whereby, if I go into a home tomorrow, I can insure myself so that my care costs are covered, however long I live. The second product is the enhanced annuity—that is, I start off with one pension and then, as I develop greater care needs, that pension is enhanced. I want to say a word or two on each of those products, which are essential in complementing the Dilnot proposals.
Point-of-use policies already exist. It is a small and specialised market, with about 7,000 policies extant and about 1,000 sold a year with three firms providing them. However, very few elderly people know of their existence. That is a point that I shall return to later—not, I think, greatly to the Minister’s surprise. They have a very important part to play in the Dilnot settlement. Dilnot caps costs at £72,000, or at least that is the story. But in reality, for many of the better-off people who go into a residential home it does not cap costs at £72,000 at all. They have to pay £12,000 in living costs on top of the £72,000 but, more importantly, that is £72,000 at the rate that a local authority will pay for a home. To cite the example of someone whom I know and love, who is in a home in Oxford that costs roughly £1,000 a week, she is marvellously cared for but the local authority will not fund £500 so there will not be £500 to count towards the cap. If she wants to protect herself so that she can stay in that home for the rest of her life, as she would like, one way in which she can ensure that is by buying one of the private policies. But Ministers have spoken rather with forked tongues about this. I do not mean the Minister here in particular, but Ministers from the Prime Minister onwards who have tried to obfuscate the fact that the cap covers only the cost of a home at the rate provided by the local authority. Really, the Government have to come clean with the public about what the cap is so that they can protect themselves, and know that they need to protect themselves, if they wish to.
On care annuities, the Government have a bigger role to play. There are a lot of difficult issues here. For example, there could be tax difficulties. If you have an enhanced annuity that raises your income to a level where you are paying higher rate tax, that would be quite a difficulty. Indeed, the tax situation on these annuities is not altogether clear, partly because the Inland Revenue likes to ensure that annuities are taxed. Although they are allowed to rise in line with prices, they are not necessarily allowed to rise in line with needs. The Government have more work to do before those policies can be safely marketed, sold and developed as they should be to help people as their needs grow.
I conclude with two final sine qua nons—I am sorry, that is naughty. I have used two Latin tags in one speech, but your Lordships’ House will forgive me if nowhere else will. Those sine qua nons must be met if the financial services industry is to fulfil its potential as a complement to the post-Dilnot world and not as a substitute for the government cap or assuming that the Government will pay for everything, which is the world that we are, thank God, finally leaving.
My first point concerns regulation. I am afraid that I could speak for a long time on that but, fortunately, this is a time-limited debate. In particular, I am not convinced that the standards required of independent financial advisers operating in this field are sufficiently high. Too many advisers sell too much on the basis of too little knowledge. The standards are simply not high enough. I exempt, as of course I would, SOLLA-qualified advisers, who are very fully trained and equipped—but others are not.
There is also a worry that needs a good deal of thought, and I do not have the solution to this one yet. There is something about in the industry that I would call the fear of FOS—the Financial Ombudsman Service. Many advisers who could play a very useful role for society and themselves by getting into this business are frightened that, although they sell the policies reasonably honestly, they will be found to have mis-sold them by FOS and will be forced to pay huge amounts in compensation. That is something that the Government need to look at, to see if any reassurance can be provided if we are to have the advisers available to provide the advice that people need.
The second sine qua non is the provision of information from the Government about precisely what the scheme does and does not offer as well as what it remains for individuals to provide for themselves. Does that make three Latin tags? On the subject of information, we made very good progress during the passage of the care Bill, and I thank the Minister and his ministerial colleagues for being so open-minded about this. The Government are committed to a national information campaign and to monitoring progress in public understanding, as well as to obliging local authorities to play their part in what we hope will emerge as a holistic system of advice and information. But the devil lies in the detail. I think that it is on balance right that the detail is not in the Bill, but getting the rules absolutely right is essential and giving local authorities the resources that they need to fulfil their advice functions is also essential.
There are also in the advice field complexities entirely of the Government’s own making. It is absolutely crackers to have one date on which the deferred payment scheme is introduced, whereby people do not have to sell their house, and a quite separate date when the Dilnot scheme comes into effect. Can noble Lords imagine how in that intervening year a financial adviser is to explain, let alone provide sound advice, to a client? It is simply impossible. What happens if someone comes to him a few weeks before the new benefit rules come into effect? Does he tell them to take out a deferred payment or not, when that benefits scheme may pay a lot of those costs? This is simply mad. The Minister will be glad to hear that if he agrees to reconsider his policy on this—and I hope that he will discuss it with his colleagues—the Government would actually save a bit of money.
I conclude as I began. The private financial services market has an important role to play as a supplement to Dilnot and providing a holistic system of support, particularly in helping people who have saved hard all their lives to make sure that they protect the assets that they wish to leave to their children. However, although we have passed the Bill and it is passing through another place, there is still much work for the Government and the industry to do if it is truly to fulfil that potential.
Care Bill [HL]
Lord Lipsey Excerpts(10 years, 6 months ago)
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Lord Lipsey
“( ) Regulations must set out how local authorities should facilitate access to financial advice regulated by the Financial Conduct Authority for those adults likely to benefit from it.”
Lord Lipsey (Lab)
My Lords, I remind the House of my interest as the unremunerated president of the Society of Later Life Advisers. Why has this matter come up again at Third Reading? It is because there were discussions in progress between the Minister, the two co-signees of this amendment and me, which had not yet concluded and the Minister generously agreed that we could bring it up at Third Reading. I think that the time has been well used. Certainly on the principles of the matter there is now complete accord between the Minister and ourselves. We are all agreed that taking financial advice must not be compulsory but equally we are agreed that it is not enough for the local authority just to hand over a list of names of advisers and say, “Take it from there”. In the fashionable words of today, we are agreed that they have to be nudged into doing what is invariably in their own interests as well as that of the council.
We are agreed that there is an important role for independent, regulated financial advisers in this field. We are agreed—despite the fact that I have tabled an amendment—that there is no need to put this in the Bill: it makes very good sense to spell it out in regulations. However, we are also agreed, and the Minister will confirm this, that it would be valuable, not only for this House but for outside interests, if he were to spell out in a little more detail the Government’s intentions in this regard. We have reached a position of great harmony. I thank him for all the time he and his officials have devoted to it and the sooner the House hears from the Minister, after one or two comments, the quicker this issue will be seen to have been satisfactorily resolved. I beg to move.
Lord Sharkey (LD)
My Lords, I will speak very briefly in support of the amendment. The noble Lord, Lord Lipsey, spoke with his usual clarity in moving the amendment and I shall not repeat his arguments, which seem to me to be compelling. However, I will point out that the amendment now before us is in effect the last remaining part of a discussion that started at Second Reading, continued in Committee and on Report and in private meetings with the Minister and his officials. At the start there were, broadly speaking, two concerns about information and advice. The first was about the Dilnot recommendation that there should be an extensive public awareness campaign about the facts and the implications of the cap. Our concern was essentially about the leadership, the scale and the monitoring of this campaign. I am very grateful to the Minister and his officials for all the discussions that they have had with us over this issue.
Earl Howe
My Lords, Amendment 3 brings us once again to the important matter of financial advice. As we have covered this subject at some length previously, and in the interests of time, I will endeavour to keep my response reasonably short. At the same time, I do not intend to make brevity a substitute for substance.
My discussions with the noble Lord, Lord Lipsey, my noble friend Lord Sharkey and the noble Baroness, Lady Greengross, and my officials’ discussions with the financial services industry have persuaded me that we are all seeking the same end point for financial information and advice. I believe that any apparent distance between the positions of the Government and noble Lords on this issue reflects only the way that I have expressed our intentions thus far. We want to ensure that when people take decisions about how to fund their care it is done in a considered and informed way. We agree that the local authority has a pivotal role to play in ensuring that this happens. I want to set out what I see that role as being in the hope that noble Lords will agree that we are indeed in concordance.
We believe that the local authority should take a proactive role. What does that mean in practice? Under the new system we expect many more people, a large number of them self-funders, to approach the local authority to start their meter running. This provides an invaluable opportunity for local authorities to reach out to these people and tell them about the support that is out there to help them better plan, prepare and provide for the costs of their care. It is particularly important for self-funders that this includes the relevance and the availability of regulated independent financial advice. To pick up the word in the noble Lords’ amendment, this should be a facilitative role for the local authority, providing a nudge in an appropriate direction.
In trying to define what we mean by facilitation, I wholeheartedly agree that handing out a leaflet or placing a page on a website is not sufficient. Instead, local authorities should talk to people and use the opportunity of contact with self-funders and others to give them individually tailored advice that suits their personal circumstances. They are likely to know something about a person’s financial situation and so will be able to tell them about the range of information and advice that might be most relevant to them in considering their care options, whether that is light-touch budget planning or advice from a regulated organisation. It would not be sufficient for local authorities just to tell a person about the types of information and advice available. They will also have to explain how it could be accessed and provide information to enable them to do so.
There is more work to be done before we can finalise what the guidance will say. To get it right, we will need to work collaboratively with stakeholders, including the financial services industry. We have begun to do that already and have had initial discussions and workshops involving representatives from the finance industry. They have confirmed what we all know of some of the necessary complexity in the system, so how and at what stage a person or their family is facilitated to take up regulated financial advice will depend on how and where they have made contact to obtain information and advice. We will gather examples of best practice to inform statutory guidance to help local authorities identify the types of information and advice that different people may need, inform them of those options at the right time and help them to access them.
In addition to the call for evidence and responses to the consultation on funding reform, background work has already been undertaken over the summer that supports the development of statutory guidance. Work commissioned through the Think Local Act Personal partnership has resulted in two publications on information and advice, principles for the provision of information and advice and an interactive map evidencing the difficult pinch points in people’s typical journey through the care system.
We have commissioned detailed work with six local authorities chosen from 40 examples of current practice collected earlier this year to draw together evidence on benefits and effectiveness in developing information and advice services. A number of those examples, including West Sussex, involve directing people to regulated independent financial advice. Helpfully, the ABI has invited my officials to participate in a workshop on access to financial advice being held on 14 November, which we expect further to support the development of guidance.
I am confident that no further amendments are needed to effect what I believe is a shared ambition. The Bill sets out the framework, the skeleton if you like, but it is the statutory guidance and implementation support that will put meat on those bones. What I have set out today is what we will put into practice through guidance. This guidance will be developed in co-operation with all interests, including the Association of British Insurers and the Society of Later Life Advisers, SOLLA, which will build on the good practice that already exists in many areas. We really want this to be the product of co-development which achieves the aims that I firmly believe that the noble Lord and I share.
The noble Lord, Lord Hunt of Kings Heath, expressed concern about what I said on Report about the possibility that local authorities could be held liable in the event that a regulated financial adviser gives poor advice. He pointed out, quite rightly, that such an adviser would be covered under FCA codes, and so on. The issue here is about the local authority making a recommendation to an individual adviser. We do not consider that there is any problem with local authorities providing a list of advisers from whom a person could choose.
On the impact of local authority responsibilities, we have established a partnership with the Local Government Association and the Association of Directors of Adult Social Services and have set up a joint programme and implementation board. We have a lot of ground to cover, and I think that no one would deny that we have our work cut out over the next few months, but I can tell the noble Lord that, together, we are absolutely committed to providing the support that is needed by local government to enable it to fulfil its functions. I hope that we have achieved a meeting of minds on this matter and that what I have said today will give the noble Lord, Lord Lipsey, sufficient reassurance to withdraw his amendment.
Lord Lipsey
My Lords, I could not have put it half as well myself. I beg leave to withdraw the amendment.
Lord Lipsey
“( ) The regulations may not specify any threshold of other assets above which a person is not eligible to receive a deferred payment loan.”
Lord Lipsey
My Lords, I am afraid that I cannot be so succinct this time. I might be acquitted of exaggeration if I say that the House's discovery on Report of the Government's proposed £23,250 limit on the non-housing assets people could have to qualify for the deferred payment scheme has caused something of a furore. I am not sure that Norman Lamb, the care Minister—a Minister for whom I genuinely have huge respect—will think that it was his finest hour when he described people with £23,250 in non-housing assets as quite wealthy. They may not be poor, but they are not likely candidates for the Chipping Campden set either.
My amendment would prevent the Government imposing such a limit. I have moved it in this form because we want to have a free-ranging debate this afternoon. I do not say that the matter will necessarily be resolved in this House this afternoon, and I make it clear that I am not an absolutist in this matter. The £23,250 figure is out for consultation—and following the furore a lot of people out there now know that it is out for consultation, which they did not know when it appeared in paragraph 150 of the consultation document. If at the end of that consultation, as I hope and expect, the Government decide to set a much higher figure, I shall reckon that a result.
Let us remember who this scheme is intended to help. It is not aimed at poor people who own their own homes, because they would not be sensible to avail themselves of its provisions. If they kept their homes under the scheme, they would have virtually no money in the bank and could not afford the little things that make life in a care home tolerable: presents for the grandchildren, a newspaper, sweets. At current interest rates, someone with £23,250 would have no more than £700 a year in income from that capital sum. They might have other bits of income but they are not going to be living a life of luxury in a care home off an income of £700 a year.
In arguing for the cap, the Government have tried to argue that it will not exclude most people. They claimed—or at least newspapers have reported that they claimed—that 35,000 of the 55,000 homeowners who enter care each year have assets of less than £23,250. These figures are contestable, as all asset figures are. A very good analysis in the Sunday Telegraph showed that the average 75 year-old had around £100,000 in other assets—a much higher figure than the Government were putting forward. However, that is not the main point I wish to make about the claim that most people have less than £23,250. My point, which I have been raising throughout, is not that the limit would exclude most people but that it would exclude most of the people who would sensibly take advantage of the Government’s proposal. That is why I have said, and maintain, that a £23,250 cap would kill the scheme stone dead and that if that figure remains unchanged, there will be practically no takers for it.
As I have already said, it makes no sense for the poor to do it. If they went down this line, they would be left with so little cash that they would not be able to afford the luxuries of life. But let us be equally clear that it would not make any sense for anybody at the top end of the scale to do it—the Chipping Campdens with millions in the bank who Norman Lamb rightly said would be excluded. If they go into a care home they do not have to sell their home anyway—they can pay the fees out of their investment income or by selling a few shares. They could follow the famous advice that Nicholas Ridley, as Environment Secretary, gave to people who were having difficulty paying the poll tax, to sell a few pictures. A cap excluding them will do no harm since they were not going to take advantage of the scheme anyway.
I can quite see why the Government might wish to avoid promoting a scheme that could easily be portrayed—wrongly, as it happens—as giving a handout to the rich. However, the scheme as devised by Dilnot, as accepted by the Government and as amended, sadly, by the consultative document, is not aimed at the poor or at the rich. It is aimed to help people on middle incomes who have worked all their lives and saved a modest sum. That is why the Daily Mail and the Telegraph—which have appointed themselves, fairly enough, as the spokesmen for such people—have mounted their admirable campaigns against the Government’s proposed cap.
Therefore, the question is, “What cap will ensure that these people benefit?”. The answer is not—I repeat, not—£23,250. When we look for another figure, there is a logic that points us in the right direction. Why £23,250? It is an odd little figure and not something which you would dream up overnight. It happens to be the present upper limit for getting help under the means test. If you have more than £23,250 in assets, you get no help under the means test; if you have less, you get some help.
However—this is quite curious, but I can only explain the facts—the £23,250 cap is going to increase dramatically. Under the Dilnot recommendations, as embraced by the Government, the upper limit will increase to £118,000 in 2016, when the new cap on care costs comes into force. Many more people will get help with their care costs, and there will not be the current precipice whereby people who have a small amount of money—although Norman Lamb describes them as being quite rich—will be disqualified. Instead there will be a much longer plateau stage, when people lose a little bit of money if they have more money in the bank.
If the limit is to be £118,000, it seems that the logical thing would be to say, “Let’s forget £23,250. If the new means-test limit will be £118,000, let that £118,000 also be the limit for the deferred payment scheme”. At a stroke, that would deal with the problem of middle-income people who have worked hard all their lives, while excluding the rich people who do not need help. Job done. That may not happen in this House this afternoon, but I am sure that it will be done when the Bill reaches another place.
This is all quite new stuff, which was only discovered in the past couple of weeks, and I want to make two points in conclusion. Some people worry that if we do as I suggest the scheme would impose a high cost on the state. They need not worry. Loans will be repaid in full with interest when the old person dies, and the average time in a care home is about two and a half years. So the Government’s cash flow will hardly be adversely affected for long, and the scheme certainly will not be loss-making.
The second reason why the scheme will not cost much is that not very many people would be well advised to take advantage of it. For most people it would mean either leaving their former home empty—with the roof rotting and the price that it will eventually fetch for their family, out of which the debt will have to be repaid, declining—or letting it out, which would not be easy for somebody in a care home to manage. For some people—those, for example, who have always had the dream of their children living in their house—it will be a huge comfort to see that dream realised when they go into a care home. I speak with some feeling, because my own mother, who is in a care home, has been able to give her home to her other son and that gives her, as well as him, huge pleasure.
This scheme would prevent forced sales at bargain prices when the market is particularly depressed. It would also give the old person, who might initially have said, “Well, maybe I might return home one day”, time to come to terms with the fact that that may not be so. That can take a bit of time—and some people, miraculously, can return home. The scheme would protect some people, but there will not be very many of them. I would expect the take-up to be in the low thousands, if that, and any cost to be exiguous.
Finally, some noble Lords have come up to me in the Lobby and said, “But surely it’s right that old people should use some of the assets they have accumulated in their lives to pay for their care”. This thought is reflected in the reported remarks of the noble Lord, Lord O’Donnell, about the benefits that we give to old people. I empathise strongly with that school of thought. Indeed, it is what has, entirely unexpectedly, led me to spend the past 15 years trying to stop the feeble-minded proposal of the majority on the Royal Commission on Long Term Care for the Elderly that the state should pay for free care for everybody, and then—with my noble friend Lord Warner—tackling the Government and succeeding in stopping the insane proposal of the Brown Government that care at home should be free for all when care in homes should be paid for. I remember the stout support that I had from the Minister for that successful campaign.
I want people to contribute to the cost of their care, but I believe profoundly that a deferred payment scheme will make that easier, for it will remove an injustice from the present system and therefore pave the way to a new public-private partnership in paying for care—a stable basis on which people can plan for their old age, freed at last from fear.
Lord Lipsey
My Lords, I thank the Minister for his reply. It is tempting to go further into the minutiae of these issues, but I think I have been in politics long enough to recognise when a Minister is elegantly preparing for a government retreat. Believing that we have just heard an exemplar of such a speech, I beg leave to withdraw the amendment.
Care Bill [HL]
Lord Lipsey Excerpts(10 years, 7 months ago)
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Lord Lipsey
Lord Lipsey (Lab)
My Lords, I hope that this can be a short, sharp debate because it is about a very clear matter of principle.
Clause 67(4) provides that councils can recover money paid out on claims for any benefit in Part 1 of the Bill which are made in error—and here are the operative words—“whether fraudulently or otherwise”. My amendment would substitute a longer form of words whereby councils can recover where a claim,
“fraudulently or negligently misrepresents or fails to disclose any material fact that they might have reasonably been aware would have a bearing on expenditure incurred by the local authority”.
That is designed to narrow the scope of the “otherwise” that allows councils to recover in all circumstances. In other words, as the Bill stands, someone who applies for a benefit who inadvertently errs in their application can be pursued to repay the full resulting cost to the council, including the cost of the council’s action, I think. My amendment preserves the recovery if the claim was fraudulent but otherwise allows it only if the old person was negligent. In a sentence, it protects the claimant who makes a slip.
I will give an example of what could happen under the Bill as it is worded. An old person applies for a deferred payment loan on their house so as not to have to sell it. Unfortunately, they make a slip in declaring their assets: they forget some bank account or other. If they had declared it, their assets would have exceeded the £23,250 limit, which the House discovered to its surprise now applies to anybody who wishes to apply for a loan; they cannot apply for a loan if they have more than £23,250. The local authority later finds out and demands its loan back; it perhaps forces the house to be sold to pay it back. I do not suggest that this is going to happen regularly or often but we should not allow the possibility that it should happen at all.
I raised this matter in Committee and subsequently discussed it, with the Minister’s encouragement, with his officials. My aim was to find a compromise that protected the old person who had made a mistake in applying for the benefit while enabling the local authority to go after somebody who was deliberately trying to get something they were not entitled to or who had behaved extremely stupidly and should have known better than to claim.
I thought we were making headway in those discussions but last week the Minister sent me a note refusing to change the Bill. I must say that this is wholly out of character for the noble Earl, Lord Howe, who is usually the most humane of men, and I beg him to think again. If he does not like my wording, that is fine; I am quite happy to consider any other wording that he and his officials may put forward that avoids the pitfalls I suggested. What I will not accept is anything short of an amendment to the Bill.
I know, because he said so in his note to me, that the Minister may claim that he can provide guidance which stops this sort of illegitimate recovery of a debt incurred through error. To that I say two things: first, a bird in the hand is worth two in the bush and I would rather change the Bill now than to rely on promised guidance, which we have not seen and could not later amend; secondly, it is not only the people the council would prosecute or seek to get their money back from that we need to worry about. A lot of old people are quite nervous about handling financial affairs—quite rightly, given the complexity of these affairs. They might be thinking of applying for a benefit but if they learn that, under a Bill passed by this Parliament, if they make a slip they can have their assets seized to repay it, many of them will simply decide not to apply at all.
I think I have a pretty thick skin but I was a bit surprised when I read in the newspapers this morning a Conservative spokesman quoted as saying that this was a politically motivated amendment. Just to set the record straight: it was not my idea to amend the Bill in this way. This amendment was put forward by Age UK, which sent a note to all noble Lords explaining why it believes it to be necessary. We all know Age UK: it is a splendid group working for old people. The noble Baroness, Lady Greengross, used to run its predecessor. A less political organisation than Age UK is hard to imagine, so I hope that the Minister will apologise for the inadvertent—I am sure—slur that has been cast on Age UK.
I should add that Age UK believes that the Bill may be in breach of Article 6 of the European Convention on Human Rights. In a House which earlier on displayed such expertise on the subject of the European Convention on Human Rights, I am certainly not going to express my own opinion on whether that view is right or wrong. Nothing could be more stupid than for us to pass this Bill in its present form and later on to find it challenged in the courts, and perhaps overturned.
My argument does not rely on the convention on human rights. It relies on what seems to me to be a simple fact, obvious to anybody who reads this clause in the Bill. This is not the kind of legislative provision that you would expect in a democracy. It is a provision which enables authorities here, in Britain, to punish the innocent and, in the process, to terrify people who might otherwise apply for benefits to which they are entitled. I beg to move.
Lord Lipsey
My Lords, I thank the Minister for that reply and I predict that in the handbook which all civil servants use to train themselves in their art, his reply will figure as an example of how best to argue an indefensible case, because that is what I think he has just done. “Resent” would be too strong a word, but the argument that by raising this matter I am creating a problem and raising the fears of old people is not plausible. This is what Governments do the whole time: they try to do something wicked, but when that is pointed out to them, they say, “Oh no, it is you who are causing the trouble because you are pointing out that it is wicked”. The fears are raised not by my speeches or interventions; they are raised by the words in the Bill to which the Minister has put his name.
The Minister also said that this power is all right because it is 60 years old. To that I have two things to say. If a power like this has been lurking around in legislation for 60 years, it is about time we took a little look at it, and I hope the noble Earl will start some such operation. Wherever that power exists now, this is a different case because here we are dealing with elderly people. As my noble friend Lady Bakewell so graphically pointed out, with the best will in the world, older people can make mistakes. Whether it applies to other social security legislation, I cannot say. It may do so, but I do not think it is appropriate to this legislation.
The Minister then rightly said that if a local authority goes to court, the court will not grant the order. But before the local authority goes to court, it will have to deliver a letter to the old lady saying that it is going to do so. What will be the impact of that? Is she going to say, “Oh, that is fine. The court will turn it down. I will see my solicitor or my son and get this defeated”. No, the old lady will be thrown into a panic as a result of what the local authority is doing. I agree totally with the Minister that most of the time, most local authorities act perfectly reasonably. That is not what is at issue here. What is at issue is whether on the face of primary legislation there should be the scope for the odd authority to act unreasonably and thereby cause terrible fear and distress to older people. That is what the noble Earl, I am sure inadvertently, is doing.
Finally, I turn to the most powerful of the Minister’s arguments. He said that this would be very unfair because people would get away with it and they would gain at the expense of others who are also claiming benefits. But I beg the Minister and the House to study my amendment. It does not say, “Well, if you fill in the form inattentively and get it totally wrong, you will get away with it”. That would come under the phrase in my amendment, “they might have reasonably been aware”. In most conceivable circumstances, my amendment would allow recovery in just the same way as the Government’s drafting, but it would do so without that frightful “or otherwise”. It is a sword of Damocles being held over the heads of many innocent older people, and they should be spared from that.
The Minister has made his speech and the House has heard both sides of the case. I think that it is time to test its opinion in the Division Lobbies.
Care Bill [HL]
Lord Lipsey Excerpts(10 years, 7 months ago)
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Lord Lipsey (Lab)
My Lords, I shall speak briefly to Amendment 55 on top-ups and comment, also briefly, on the proposal for a ministerial advisory committee.
I can be brief about top-ups but not because the issue is not important. Indeed, its substance is vital if the Government’s scheme for a cap is to work. We made good progress on the basis of the Minister’s remarks in Committee, and further progress was made in the Government’s consultation document, published on 17 July. I hope that he will indicate that things are still on the right track towards reaching final solutions in the near future.
I recapitulate the argument from Committee. You cannot at the moment top up your own care home fees. If you go into a care home, a third party—your son, daughter or friend—can top them up but you cannot put in your own money. That is important now, and the statutory bar is often got around or simply ignored. However, it will be a lot more important once the Dilnot scheme incorporated in the Bill takes effect.
Consider an old person who is living in a home in which the fees are £800 a week. Suppose that the limit to what the local authority will pay in fees is £500 a week. What happens when the person has spent up to the cap, at the local authority rate of course? It may be that a third party can give them the extra money to pay up, but suppose they are isolated and on their own. I am afraid that the answer is simple and stark. The individual would have to choose between only two alternatives. One is to accept the £500 a week from the local authority and move into a cheaper, perhaps worse, home, with all the disruption to that person’s life that that would involve. The other would be waive the local authority contribution and continue to pay the £800 themselves. That would mean that the cap had not done them a blind bit of good. The way round this is to permit individual top-ups, so £500 would come from the local authority, £300 from the individual. The noble Earl endorsed this in Committer when he said that,
“people should be able to use their savings to purchase more expensive care if they want to”.
He went on to say that revised arrangements to this effect would,
“be set out in regulations made under Clause 30(2) of the Bill”. —[Official Report, 16/7/13; col. 736.]
This is spelt out in paragraphs 263 to 266 of the consultative document, which also has pointers to some of the potential risks. I hope that this was with a view to solving those risks and not to coming along at a later stage and saying that they are insuperable. I ask the Minister to make a brief progress report to reassure the House that this bar on individual top-ups is going to be rescinded. Without it, the Dilnot scheme simply will not work.
I will now say a word on the ministerial advisory committee amendment in the name of my noble friend Lord Hunt of Kings Heath, who kindly adopted a proposal that I made in Committee. As the House knows, I have previous in this field, having been working on long-term care since I was on the royal commission in 1999. I also have a bit of previous on public policy in general because I started working for Tony Crosland when he was shadow Environment Minister in 1972. Of all the myriad subjects on which I have had to do reasonably serious work in this time, this is by far the most complicated. It involves a mix of financial and administrative problems with the most sensitive human considerations, particularly since it concerns people at a stage of their life when they are going into the second age of vulnerability due to age. Public and private are inextricably mixed in a way that complicates things. The whole cap is part of a private/public co-operation; therefore, it is crucial to align what both parts are doing.
The scale and range of the stakeholders involved is enormous. The Care and Support Alliance had more than 100 individual voluntary organisations which came together to promote a solution in this Bill. There are also a lot of nooks and crannies that are not obvious. I am going to come to one in a speech later this afternoon, a feature of this Bill which only became known to me on Friday which greatly changes the deferred payment scheme under the Bill. There are nooks and crannies that can be simply ignored. We had another one earlier in the Bill. It suddenly turned out that if somebody had an income close to the top for which they could claim means-tested support, they had better not claim it, because otherwise they would lose more than they gained through attendance allowance. So it is a hugely complicated field.
I am not a critic of the department on this, nor of its Ministers. They have wrestled bravely with this, helped of course by the superb Dilnot report—I am standing behind my noble friend Lord Warner, who was involved in that process—which helped hugely to clarify the intellectual framework. But there are complications as yet unfathomed. As the scheme goes forward I promise that there will be lots of unexpected and unintended effects. In particular, how people register they are getting care needs, how they are then assessed, and how it builds up towards a care cap will work out quite strangely. The Government will need the best possible advice on how to do it.
All I am suggesting, as my noble friend Lord Hunt will propose in his amendment, is that it would be well for us to set up right at the beginning a ministerial advisory committee that includes everyone—the voluntary groups, the financial services industry and those who regulate it, and government departments—that can keep on top of these things. As major problems are identified, the committee can report to the Minister on them. As I say, it is not a vote of no confidence in the Department of Health. Indeed, I hope that the department will welcome the proposal because it has shown itself to be willing to talk openly throughout this progress of this Bill. The Minister used a good phrase to describe it when discussing the regulations earlier—co-production. We will need co-production as much after the Bill and the regulations have gone through as before. An advisory committee would provide that.
Lord Hunt of Kings Heath (Lab)
My Lords, I welcome the noble Earl’s amendments. As we start another day on Report I should declare my interests as chair of a foundation trust, as a consultant trainer with Cumberlege Connections, and as president of GS1. The noble Earl said that the first group of amendments is designed to give more flexibility to local authorities so that they can make a contribution to a person who might normally be affected by the means test. That is entirely reasonable, but I wonder if he could tell us a little more about the consultation timetable from which this has clearly flowed.
I have also noted the amendments that will allow the local authority to charge the cost of care to those people who refuse to undergo a financial assessment. Again, this seems reasonable, but given the difficult circumstances in which that scenario might arise, does the noble Earl not consider that that lends support to those noble Lords who think that there ought to be appeals systems in place? When we come to appeals, I wonder whether the noble Earl might be a little more sympathetic to those amendments.
I want to lend my support to my noble friend Lord Lipsey in relation to top-ups. He argued persuasively in Committee to allow self-funders to top up if they reach the cap but wish to remain resident within a care setting where the costs are higher than the local authority is paying. That is a strong argument, and I, too, welcome the progress that has been made. However, like my noble friend, I hope that the noble Earl will be able to give us a further report on progress on this matter.
I come now to my Amendment 56, which has been very effectively trailed by my noble friend; in fact, it is difficult for me to do as much justice to the amendment as he has done. It requires the establishment of an independent ministerial advisory committee to keep under review the workings of the cap and the means-testing arrangements set out in Clause 17. It is fair to say that all noble Lords who have debated this Bill have welcomed its general intent and the principles that underpin it. The Dilnot commission marked a significant step forward in creating consensus on how people are to be protected from financial catastrophe if they have to fund their own care. We have debated in detail the Government’s response as set out in this Bill: the establishment and operation of the cap, the level of the cap, the continued financial risk to self-funders, the deferred payment scheme, the capacity of local authorities to accept the responsibilities being placed on them, and in particular, I would identify the responsibility for assessing thousands of self-funders who will come into contact with the local authority for the first time. We have discussed the advice to be made available to vulnerable people in a complex area and its interrelationship with the eligibility criteria.
No one, in welcoming the general thrust of the Bill, will believe that this is the last word. I am sure that the operation of the care packages set out in this Bill will need to be kept under frequent review by the Government and particularly by the noble Earl’s department. Oversight of the system would surely benefit from a bipartisan group of people from whom the Government could continue to take advice. My noble friend Lord Lipsey has gone back many years in relation to the debates in this area. Of course, he served on the 1999 Sutherland royal commission. In parallel we have had the Turner commission on pensions and we have seen the benefit of a bipartisan approach in relation to Dilnot.
We would all agree that the funding of long-term care requires stability as far as possible and, even more importantly, a long-term political consensus. As my noble friend Lord Lipsey said, this is a very complex, complicated set of arrangements. We would be best served by the establishment of an independent group that could advise Ministers on how the system was working and enable politicians from all sides to benefit from serious, impartial advice.
I know that the noble Earl has yet to be persuaded of the benefits of an advisory committee, but it would be an effective way to build on the consensus that I think has been created. I hope that even at this late stage, he might be sympathetic.
Lord Lipsey
“( ) Regulations under this section must provide that—
(a) a local authority shall direct anyone considering a deferred payment arrangement to an appropriately qualified financial adviser or to appropriately qualified financial advisers; and(b) any loan under this scheme shall be sufficient to pay for advice under paragraph (a) above.
A noble Lord
Lord Lipsey
That is a great relief to me. I will come to the narrow-ish point in the amendments shortly but I want to put them in context.
One of the reasons why advice is absolutely crucial in the deferred payments scheme is that this is one of the least understood and least explored facets of the Bill. I will come on to one or two aspects of that. In a way, it makes it hard to make the case for the importance of advice, because so many things on which advice will be needed have not yet seen the light of day. In Committee I referred to some of the unresolved issues that have been raised by Partnership, the Equity Release Council and others. They will emerge, and this will make it clearer why advice is needed.
I will first put the issue in the following context, to show how unexplored it is. If the noble Earl, Lord Howe, will forgive me, I will correct something that he said in Committee. He said that 40,000 people each year have to sell their house to pay for care. I think that the noble Earl mis-spoke and that he meant to say, “up to 40,000”. That is the explanation that has come to me of what he said. I make no complaint; it is hard when one’s words are examined in such terrible detail.
I have spent a surprising—perhaps wasted—amount of my time trying to trace the figure that 40,000 people each year are forced to sell their home to pay for care. I have been doing it ever since I sat on the royal commission 15 years ago. When we were sitting on the royal commission, we eventually found a very dodgy piece of research, now more than 20 years old, which kind of concluded that the number might be about 40,000. Of course, what happened was not that the piece of research was examined and found to be accurate but that the figure got into the Daily Mail cuttings library, so that every time that paper campaigned against people having to sell their house to pay for care—I praise it for this—the figure was repeated, until it became accepted throughout the world as the number involved.
Having spent all these years studying the subject, I am very tempted to go into greater detail, but I do not think that the House would thank me for it. However, I refer any noble Lord who might be interested to the Full Fact website. It is a fact-checking organisation, of which I am a director, which goes into the matter in minute but very clear detail, and points out that the Government’s claim is based on exploratory research that is almost 20 years out of date.
More importantly, the 40,000 figure is used as if it were the number of people who are forced to sell their house. “Forced” is a funny word in this context. For most people who go into a home, selling their house is the sensible thing to do to fund the cost of care. You do not want to leave the house empty; that benefits nobody. It does not provide housing for anybody; the house starts to crumble and is worth less to you and your family, so you had best sell it and get something that is more suitable. However, the deferred payment scheme is so important because there are people for whom that is not true. For example, some people want their families to live in their house and therefore cannot get cash for it. That is why we have a deferred payment scheme. “Forced” suggests that this is something dreadful in all cases, when in fact it is dreadful in some cases. It is absolutely right, as I said before, that we have such a scheme for some cases but not for all cases.
I now come to another severe complication, and I am afraid that I will have to resort to the vernacular in order to make clear to the House what has happened. The original scheme put forward by Dilnot has had its balls cut off by the Government in the consultation document. That is not too strong a way of putting it, and I will explain why. Yes, every council will offer a scheme, but there is now a huge restriction that will mean that very few people will take advantage of the deferred payment scheme. It would not in any case have been 40,000, but now I think that it will be nearly nil. Why is that? The consultation paper makes it clear, in paragraph 150 on page 44, that you are eligible for a deferred payment loan only if your other assets in total come to less than £23,250. If you have more than that, you have to spend down until you have £23,250 left in the bank or wherever it is, and then you can consider a deferred payment scheme. However, most people who have reasonably valuable houses, who are the people most likely to want to adopt this measure, will have far more than £23,250 worth of other assets. Most of them will not feel the least bit happy if they have to spend down until they have only £23,250 left in the bank before they can get any help from the deferred payment scheme. That hardly pays for a daily delivery of the Racing Post for the rest of their lives, their nightly gin and tonic or more important things such as the literature they want to read or all the things that make their life fuller. For those people, a deferred payment scheme is simply not available.
Earl Howe
I shall come on to the standard scheme proposal in a moment. We need to ensure that this arrangement is rolled out in a way that is financially sustainable for the local authority in each case. We will be supporting the implementation of the capped costs system and an extension of deferred payments with £335 million, which should enable this to happen.
I shall move on to the amendments themselves. I hope that the House will forgive me if I do not rehearse at length the same points that I made about financial advice last week, but I should like to take a moment to reassure the noble Lord, Lord Lipsey, on the specifics of his proposal. It is imperative that everyone has access to sound, reliable information and advice while making decisions about their care to ensure that any option they choose makes good financial sense for them and is sustainable in the long term. It is clear that local authorities have a central role to play in ensuring that their local populations are aware of the range of information and advice, both regulated and non-regulated, that is available to them and that they know how to access it. Last Wednesday, your Lordships accepted my Amendments 16 and 17 which clarify this. The noble Lord’s amendment would underscore the need to make sure that everyone who decides to take out a deferred payment agreement reaches that decision in a considered and informed manner. I agree that that should be the case. All too often, people do not plan ahead for the possibility of needing care and so can find themselves having to make important and lasting financial decisions in a moment of crisis.
Deferred payment agreements can be used to reduce some of this urgency and ought to be accessible to ensure that they provide the peace of mind that they are intended to. For this reason I would hesitate to make the process through which a person can access a deferred payment too onerous. We are currently consulting on the information and advice a person should receive before taking out a deferred payment agreement. We will listen carefully to what is said and we will use this to inform the approach that should be taken. I have already given the noble Lord my undertaking to discuss further what remaining differences we have about financial advice, if any, and I hope that those discussions will allow us to explain in more detail our policy intentions and what our own government amendments in this area aim to achieve. I hope that the noble Lord will agree that we are essentially of the same view about this and that he will be content to discuss the matter with me further outside the Chamber. That being so, I hope that he is sufficiently reassured today to withdraw his amendment.
I turn to Amendment 63, tabled by the noble Lord, Lord Hunt, and the noble Baroness, Lady Wheeler. We are in concordance with them that a model deferred payment agreement would help local authorities and that is why we already have one in place for the schemes that are currently operating. What we intend to do now is build on and improve the current model. In doing that, we will work in partnership with local authorities to learn from the well established schemes, some of which have a decade of experience. While the case for a model scheme is clear, I think it would be wrong to mandate national systems and structures for deferred payment agreements. It is important that we strike the right balance between local flexibility and national consistency. Systems and structures must be developed in partnership with local government and allow for and, indeed, encourage local efficiencies to flourish. As noble Lords may know, we have established with the Local Government Association and the Association of Directors of Adult Social Services the joint implementation and programme board to support the implementation of these reforms more generally and, through this, we will support local authorities to deliver the universal scheme from April 2015. This work will include our commitment to providing a model deferred payment scheme, based on the current model, as well as statutory guidance to support local authorities in exercising these functions.
The statutory guidance on deferred payments, in particular, will have a clear legal status. Local authorities must act under this guidance. This means that they must consider and should follow it, unless they have a justifiable reason not to do so. This would seem to be the same status as is envisaged by noble Lords in their amendment. I hope therefore the noble Lord feels able to withdraw his amendment in light of the reassurance I have given on supporting local authorities to deliver the universal deferred payment scheme and the model agreement in particular.
My noble friend Lady Barker asked whether the scheme was a model for how local authorities manage the burden on themselves. This is not designed to be a scheme that makes a profit for local authorities. The interest rate is likely to be set at a rate which recognises local authority borrowing rates, and so ensures that the scheme is cost-neutral.
Lord Lipsey
My Lords, I thank the Minister for that reply. On the first two of the three legs of his argument, I am happy to support what he said. Through helpful discussions over the summer, I understood that he had meant to say “up to 40,000.” I make no criticism of him for misleading the House. Any misleading he did is on a tiny scale compared with the misleading that has taken place with the whole country through these repeated cuttings file references. History will now have on record in this debate the truth about these numbers. That is a form of progress, if not legislative progress.
Secondly, I should like to thank the noble Earl for what he said about advice. We are near to having another meeting before Third Reading on advice. We are all after the same things on advice with the same constraints. We have not quite cracked it yet, but I hope when the House comes back on Third Reading to the matter of advice, we shall do so, either in the form of an amendment, or of a shared understanding on where we are going which might take the form of regulation or guidance. On those two things, I agree with the Minister.
However the Minister did not confront my most important point. Let us be absolutely clear. This Bill does not provide a universal deferred payments scheme. It provides a deferred payments scheme only for people who have less than £23,250 in assets. There is no universal deferred payments scheme. Further, this has been done in a back-door manner which disgraces the Government. It was not in Dilnot. We have heard decisive testimony on that from my noble friend Lord Warner. It was not in the Government’s announcement of their response to Dilnot. It was not in the Second Reading speeches. It came out between stages of the Bill in this consultation document. The noble Earl suggested that there would be people with more than £23,250 who could benefit from deferred payments so we did not have to worry. The relevant bit from paragraph 154 of the consultation document says:
“More generally, we also intend that authorities should have the discretion to provide deferred payments to people in residential care who do not necessarily meet all of the mandated criteria.”
Those criteria include the £23,250, so that sounds quite good. The next sentence says:
“For example, if someone has slightly more savings”—
I stress the phrase “slightly more savings”—
“than the £23,250 threshold but would qualify for a deferred payment soon, an authority might prefer to offer the option upfront.”
That is a tiny loophole. This is essentially a £23,250 threshold that the Government have smuggled in, telling nobody until they had to produce this document and hoping no doubt that by 25 October, nobody would have noticed. I shall tell you who will notice. The Daily Mail will notice. The Daily Mail and other newspapers which campaigned so that people would not have their houses seized—I applaud them and have applauded them before for doing so—are now going to learn that the Government have welched on the deal. The tsunami that will hit the Government in consequence will hurt not only this proposal but the Government as a whole.