Elderly Social Care (Insurance) Bill [HL]
Monday 24th May 2021
(3 years, 6 months ago)
Lords ChamberRead Full debate Elderly Social Care (Insurance) Bill [HL] 2021-22 Read Hansard Text
Elderly Social Care (Insurance) Bill [HL]
Friday 16th July 2021
(3 years, 4 months ago)
Lords ChamberRead Full debate Elderly Social Care (Insurance) Bill [HL] 2021-22 Read Hansard Text Read Debate Ministerial Extracts
Lord Lilley (Con)
My Lords, after 37 years in Parliament, I am grateful to have secured a place in the ballot entitling me to bring in a Private Member’s Bill. This Bill is about social care for the elderly, a subject that has preoccupied me for more than 25 years, since I was Secretary of State for Social Security.
I know from recent debates and committee reports of your Lordships’ House that noble Lords are seized of the crisis in social care provision in this country, which has been growing over decades. Local authority budgets have been squeezed to the bone, demand is rising, as we are living longer, and costs are rising, not least because the national minimum wage raises the pitiful earnings that many dedicated staff in the social care sector have had up to now. Many care homes were teetering on the brink even before the pandemic and are now in an even more precarious situation. Every winter, beds in the NHS are blocked as places cannot be found for patients in the social care sector.
Successive Governments have backed off from tackling the issue. That is because there is a live rail running alongside the basic issue, which has given an electric shock to those who have touched it. That live rail is the understandable and natural concern of home owners and their heirs that the potentially catastrophic cost of social care will consume the value of the home that they hoped to bequeath or inherit.
In 2010, Labour’s plan for a tax to finance social care was labelled a death tax. In 2017, Theresa May lost her majority when Labour retaliated by labelling her plan a dementia tax. In between, the Dilnot plan, legislated for by Cameron, was abandoned as too costly. All the solutions so far suggested have proved either unsaleable or unaffordable. At the last election, Labour promised to set a cap of £100,000 on the maximum cost that anyone would incur while in residential social care. Today, we read in the Daily Telegraph that the Government could, as early as next week, adopt that policy, hoping, no doubt, for bipartisan support. However, it is not Labour’s support that they need but that of home owners and the general public. The problem is that a £100,000 cap would be fine for the owner and the heirs of a £10 million mansion in Mayfair, even if they spent decades needing substantial care for dementia, but the owner of a modest, partly mortgaged home in Middlesbrough will see its value disappear entirely in two or three years. That is not a good proposal to go down well with red wall voters.
On the other hand, raising the value of assets shielded from means testing will still mean many home owners having to sell their homes to pay for longer periods in care. Both those options break the Prime Minister’s promise, repeated in his first speech as Prime Minister,
“to protect you or your parents or grandparents from the fear of having to sell your home to pay for the costs of care”.
Both are expensive. The only other option on the table would be to extend free social care to all, but that is the most expensive of all. Even if any of these options were affordable before the pandemic, they are certainly not now, when our debt is topping £2 trillion and we have an unprecedented deficit adding to it. Pre-empting billions of pounds desperately needed to bail out the existing care system in order to subsidise bequests from home owners to their middle-aged children would be a strange priority.
But there is a solution: insurance. Insurance against the risk of having to sell your home to pay for social care in old age was one of the first solutions to be considered by the Dilnot review, and again by the Economic Affairs Committee of this House. However, they and others rapidly abandoned the idea when the private insurance industry made it clear that it could not and would not provide policies to protect people from having to sell their homes. The inherent risk of needing social care is eminently insurable, and at reasonable cost, just as we ensure our homes against fire or burglary. However, there are two reasons why insurance companies will not touch it. Actuaries cannot measure the uncertainties about future government policy or about possible medical advances prolonging frail longevity. That makes this niche market wholly unattractive to private insurance companies. If they could overcome those problems, people cannot be persuaded to contribute to such policies during their working lives on top of paying for their pensions and paying off their mortgages.
There is an alternative to the private sector providing insurance, which has not even been considered, and that is for a state body to offer such insurance. Instead of people making contributions during their working lives, why not enable them to pay for such insurance after they retire by taking a charge on their homes? The state insurer would then be reimbursed when they die or sell their homes.
This Bill will set up a body owned and guaranteed by the state to offer such insurance policies. Everybody would be informed of the option by the DWP as they approach state pension age and for two years thereafter. To avoid adverse selection, people would have to take out the policy within a couple of years of the state pension age. The public insurer would publish a schedule of premiums, which would be larger for those with higher-value properties and smaller for those with smaller homes needing protection.
How much might those premiums be? The Dilnot commission on fairer funding calculated in 2011 that the average costs for such a premium would be comparatively modest—around £16,000 in today’s money. The arithmetic is simple: only one in four people ever needs to go into a residential or nursing home; the average length of stay is 30 months—two and a half years; and the cost of social care is around £25,000, plus £10,000 for the cost of accommodation and food and basic living costs—the so-called hotel costs, which are normally paid out of state pension benefits and other income not covered by insurance. One in four times two and a half times £25,000 comes out at a premium of around £16,000.
I spelled this out in a pamphlet called Solving the Social Care Dilemma? A Responsible Solution and suggested that the actual premium payable by any individual should be set at a percentage of the value of the person’s home—never their mortgage—at the time they take out the policy. People would be given the opportunity to take out a policy within a couple of years of reaching state pension age and would not have to pay any cash, since the premium would just be a charge on their home, and the premiums would be set at actuaries to meet the average costs.
Why has this proposal not been considered before? I suspect it is because those on the right find the very idea of setting up a state body to provide pensions—taking on a responsibility normally the duty of the private sector—anathema. Certainly, when I offered the proposal to a right-wing think tank, it turned it down with horror, expressing amazement that I, the author of the Government’s privatisation policy, should be the advocate of this. But of course, having thought long and hard about privatisation, I realised that some things are suitable for the private sector and some are not. We should be open-minded about this.
What will the likely take-up be? I do not know. The important thing, however, is that everyone has the option to protect themselves and their homes against the need to sell them and use up the entire proceeds to pay for care in old age. Some may decide that they are quite content to take the risk that they will be in the happy three-quarters of the population who never go into residential care or need social care. But if they take that risk, they will not be able to complain if it turns out that they need to sell their house to pay for some or all of their social care in old age.
I have brought this Bill forward to promote and provoke debate. I am sure that, like all Private Members’ Bills, it has flaws. I hope that Members may find and expose any flaws that it has; if they are remediable, I will address them. If they find fatal flaws, so much the better—we can put the idea to one side. On the other hand, if it garners some support, I hope that the Government will consider it before opting for proposals that, if we are to believe the Daily Telegraph, could land them in exactly the same sort of problems as other Governments who have touched this live rail in the past. I beg to move.
Lord Davies of Brixton (Lab) [V]
My Lords, we must thank the noble Lord for providing the opportunity to debate this crucial issue—one very much of the moment, as evidenced by the front pages of today’s Times and Telegraph. Unfortunately, I do not support the Bill because it misses the point. Put simply, I cannot support a system that depends on housing tenure and the geographical lottery of the housing market. The noble Lord said that everyone would have the option of adopting this plan, but those who do not own their house would not have that option. This Bill is a diversion. Instead, we need a comprehensive national care service, paid for by a fair taxation system. However, the proposal usefully illustrates one fundamental point: the solution cannot be left to the private sector.
I will use my remaining time to put this debate in context. We must keep on reminding people that in his first speech as Prime Minister in July 2019—two years ago—Mr Johnson stood outside No. 10 and said
“we will fix the crisis in social care once and for all with a clear plan we have prepared.”
We are still waiting. This clear plan that has been prepared was not in the Tory election manifesto. Now we are told in the Times:
“Boris Johnson is backing proposals for a new tax to pay for reforms to Britain’s social care system under plans that could be agreed within weeks.”
Note the words “could be agreed”; in other words, they have not yet worked it out. The report goes on to tell us:
“Intensive work is under way … to finalise a deal”,
with Downing Street wanting to make an announcement to coincide with the second anniversary of Johnson’s “clear plan” promise. With key elements of policy clearly yet to be finalised, I confidently predict that, even if an announcement is made, it will be light on details and no more dependable than all the other vague promises made by this lightweight Prime Minister.
Lord Mackay of Clashfern (Con)
My Lords, I have no personal financial interest in this Bill because I do not own any home in England, but I have a very strong interest in the proposal that my noble friend Lord Lilley has made.
I realise that, for many people, the need to leave their home and go into care is a very emotional difficulty. If they come to realise—and they quickly will—that the costs are likely to eliminate the value of their home, that will be an even more severe emotional blow. I do not suggest that these are all the people of the country, but they are people who are entitled to be considered, and that is what the Bill does. It considers these emotional stresses put upon people who very often have very modest homes, but homes which they have come to enjoy for quite a while and to love as an appropriate possession. The difficulty of dealing with that is obvious, but I think that my noble friend Lord Lilley, with his skill and experience, has proposed a workable solution. Of course, it does not solve the whole problem facing the Government in connection with the care of the elderly. In view of my age, I regard myself as somewhat under the shadow of that difficulty. But it is sufficient for me to say that I have the strongest sympathy with the people who find that a difficulty.
In my opinion, my noble friend Lord Lilley has worked out a practical solution, and I believe that it is one which is as good as can be proposed. I do not suggest for a minute that there may not be other proposals that could improve on it but, so far as I am concerned, I have studied carefully the detail of it and have noted, for example, that my noble friend Lord Lilley has proposed to make a provision for changes in the future by government regulation, but he has required that these regulations should be approved by both Houses of Parliament before they come into force. I think it is right to have regard to the future, because things may change in ways that I cannot anticipate at the moment. Many things have happened in the last year or two which I did not anticipate for a minute. I must say that I think this is a good proposal, and I shall certainly support it.
Lord Best (CB) [V]
My Lords, I congratulate the noble Lord, Lord Lilley, on bringing forward this Bill and on seeking to address the long-running concern of home owners that care costs could necessitate the sale of their home and deprive their heirs and successors of their inheritance. I declare my interest as a vice-president and past president of the Local Government Association.
I have three points to share with your Lordships. First, drawing on the extensive work of the APPG on Housing and Care for Older People, I would emphasise that the best way to address rising care costs is to prevent or postpone the need for personal care and, in particular, the need to move into residential care. The APPG has spelt out the significance of ensuring that older people have a manageable, accessible home through adaptions to their existing accommodation or through rightsizing to somewhere more suitable. So, my first point is that the most positive way of tackling care costs comes from investing in better housing for later life.
Secondly, if a care insurance scheme is to be considered, this Bill’s version seems to have some flaws. The voluntary nature of this scheme may mean a low take-up for multiple reasons, and it may be unworkable because of adverse selection—take-up mostly by those who feel fairly sure that they are going to need personal care, perhaps because they have underlying health problems, are overweight, are smokers, have early signs of dementia and so on. However, insurance could be a practical solution to meeting not the costs of care but the “hotel” costs, which, at around £25,000 per annum, are roughly half the total charges for living in a residential care home. But these costs are outside the scope of the scheme proposed by the noble Lord, Lord Lilley.
Thirdly, in supporting the excellent report from your Lordships’ Economic Affairs Committee, chaired by the noble Lord, Lord Forsyth, I would both affirm the urgency of an immediate injection of additional funding for local authority adult care services and underline the core recommendation for free personal care in the future in place of the current unfair, complex, underresourced arrangements. To illustrate just how long these same conclusions have had widespread support, I must quote from a Joseph Rowntree Foundation inquiry—incidentally with Sir Andrew Dilnot among its members—which reported exactly 25 years ago. This inquiry concluded that artificial
“distinctions between ‘health care’ and ‘social care’ … should be rejected. Both should be free at the point of delivery”.
The inquiry spelt out how national insurance contributions could help fund this. So, a quarter of a century later, my third point is that the Bill proposed by the noble Lord, Lord Lilley, must not distract, postpone or undermine progress towards our Economic Affairs Committee’s radical but affordable conclusions.
Baroness Chakrabarti (Lab) [V]
My Lords, I too am grateful to the noble Lord, Lord Lilley, for creating this opportunity for such an important debate this morning, but I am afraid that I cannot recommend a rather convoluted homemade attempt at a sticking plaster for the gaping wound that is our national care crisis.
The regressive conceptual contortions that some will go to to avoid the logic of paying for essential public goods by taxing the wealthiest corporations and individuals in our society are almost as ingenious as attempts to privatise such public goods—whether our health data or the desire to care for our vulnerable people—or indeed the highly successful attempts of the wealthiest 1% to avoid paying their fair share of tax.
Our National Health Service is probably the greatest communitarian experiment in world history, and it is so easy to be truly patriotic about it. Given the working people from all over the world who have contributed to it, it encapsulates a positive patriotism that is not remotely xenophobic, yet years of underfunding and its current limits have been cruelly exposed in recent times. Last year, many of our elderly were tipped out of hospitals, untested, into private care homes with inadequate PPE provision, social distancing and testing arrangements, constituting one of the biggest scandals of the Government’s pandemic management—about which the future inquiry will no doubt have much to say.
But this fault-line between health and social care is a more permanent design flaw in a model that cares for the terminal cancer patient at public expense but puts caps, charges and all sorts of constraints on our provision for the patient of identical age and means who is suffering instead from dementia. Such anomalies are only increased with the ageing profile of our population. It is simply unacceptable to leave our older people, or indeed many much younger vulnerable people, isolated, destitute or at the mercy of profiteers who pay too many carers minimum wage on zero-hours contracts.
I look forward to seeing the details of the Government’s plans suggested in the press today, but nothing short of a publicly funded national care service providing rewarding work and dignified care will fit the Bill.
Baroness Altmann (Con) [V]
My Lords, I am grateful to my noble friend Lord Lilley for introducing this Bill, and he is absolutely right that social care is in crisis and that successive Governments have ducked the difficult decisions. But the heart of this crisis, as others have said, is not the worries about selling homes. The origins of this issue are, first, the artificial distinction between what counts as NHS care and what is called social care, and, secondly, the demographics of our ageing population, which we have not prepared for. This is not really like home or motor insurance, so I find it difficult to relate to the figures that my noble friend used to illustrate his scheme.
The proportion of people needing care for their everyday living is potentially one in two of every couple, and that makes the cost of insurance so prohibitive. Private insurance cannot be an option when you have a 50% or even a 30% probability of needing to call on the insurance, and possibly needing to spend tens of thousands of pounds for insurance against something that you may or may not experience.
My noble friend is right that we need social care insurance and that it needs to be run by the state. However, we already have social care insurance, only we do not call it that. We are artificially assessing illnesses such as cancer as being worthy of NHS free care, while others, such as dementia, get no payment and are excluded. But the National Health Service is about care. That is why what we really need is to incorporate social care into the NHS, providing free care for all citizens who are not well enough to live without assistance, funded by a national social care insurance premium, which would take the NHS and social care together outside the so-called tax system, but with its own national contribution from everybody’s income, so that everybody contributes.
I believe that if Beveridge were designing our welfare state now, he would include what we currently call elderly care needs in both the state pension system, where no provision is made for the cost of needing support in later life, and in the NHS. Life expectancy has increased; that is great news. Medical advances help keep people alive longer; that is great news. But at the moment, our system does not adequately support the rising numbers of elderly people who need care and are being refused.
Baroness Greengross (CB)
I welcome the opportunity provided by this Bill to discuss funding adult social care, but I cannot support the Bill, which offers only a partial, voluntary solution to this challenge and offers nothing to renters. Instead we must develop a sustainable system for funding social care, one that commands enduring support from the whole of society and which gives young people confidence that it will be there to support them in future.
The Intergenerational Fairness Forum, which I chair, held a year-long inquiry to consider a sustainable means of funding social care which meets the test of intergenerational fairness: one in which all current generations share the cost burden, with the heaviest burden falling on those best placed to contribute, so that the costs are not imposed unduly on future generations.
We recommended that a state-hypothecated, mandatory system of social care insurance should be established, overseen by a social care contributions agency. Under our system, the Government would be the insurer of last resort, protecting people against the risk of catastrophic care costs. This will be affordable because risks will be pooled at a population level. We proposed that mandatory social care insurance contributions should be set at the rate of 1%, to be deducted alongside income tax and NICs from the incomes of all working adults from the age of 40 until they stop working. This could rise to 2% for those aged 50 and over if additional resources were required to meet rising care costs. As contributions would be set at a percentage of income, it would be a progressive system.
Sadly, it will take years to accumulate enough resources through social care insurance contributions to pay for current care costs, so, at least for a transitional period, additional revenue-raising policies will be necessary to support public expenditure on adult social care. Our forum recommended a number of additional revenue-saving and revenue-raising measures, with the revenues raised to be ring-fenced for social care.
Even with a sustainable system for funding social care, the state will still be able to provide only a decent, basic level of care—akin to the role of the state pension in our pension system. A more sustainable system of funding social care will be a mixed system with an insurance element and a savings-based element and, for as long as individuals have to make a financial contribution towards the cost of their social care, it makes sense for the Government to incentivise personal saving for those costs.
The time to act is now because the problem is urgent, and a solution is long overdue.
Lord Hendy (Lab)
My Lords, with the greatest respect to the noble Lord, Lord Lilley, this Bill fails to address the crisis properly. Cuts of nearly 40% in government support have driven local authorities to cut the cost of social care, although demand for it has, in contrast, increased. Demand now runs at 1.9 million requests per year, more than 5,000 per day. Cost-reduction has been achieved by outsourcing social care to private companies. Whereas 90% of social care was provided in-house 25 years ago, only 10% is today.
That is because outsourcing social care is cheaper. How is that achieved? Simple: the earnings of the workers are slashed. Twenty-five per cent of our 1.49 million care workers are on zero-hours contracts. Many are falsely declared to be self-employed, and some forced to work under personal service companies with no employment rights. The career progression and pensions that care workers had when in local authority employ have evaporated. The democratic input they had into the conditions of their working life is no more. Then, their unions bargained collectively to set terms and conditions across the sector. Employers knew that they would not be undercut by competitors. Workers knew they would enjoy NJC conditions.
Their voice is now silenced. Private employers do not bargain collectively. They compete for tenders on the basis of the lowest labour costs they think they can get away with. Terms are set unilaterally on a “take it or leave it” basis. That is why there is a 10% vacancy rate and a third of care workers leave the sector within 12 months of starting. That is not merely damaging for the standard of life and dignity of care workers; it is catastrophic for those receiving care. They never know who is going to attend them from one day to the next. Caring relationships become impossible.
Neither this Bill nor the Government will give us the national care service the country needs, but there is one step we could take which would improve the lot of carers and the cared-for: the restoration of collective bargaining across the sector. Professor Lydia Hayes wrote a book a few years ago called 8 Good Reasons Why Adult Social Care Needs Sectoral Collective Bargaining. I commend it to the House.
Lord Flight (Con)
My Lords, I, too, congratulate the noble Lord, Lord Lilley, on his Bill and on addressing territory that Governments should have addressed long before now. I agreed very much with my noble friend Lady Altmann’s speech.
The noble Lord, Lord Lilley, argued that social care provides two competing challenges to government. The first is the increased pressure on local social care budgets that comes with an ageing population, the increases in the national living wage and the risk of care homes closing. The second is resentment from homeowners and their relatives who risk having to sell their homes to pay for social care. He advises that both problems could cost billions to solve and that, where there is more placating of homeowners, less finance will be available to provide decent care for those in greatest need.
Under the Bill, a state-owned insurance company would be set up and guaranteed by the state. The cost of insurance would be calculated to be actuarially sufficient to pay for all the care. If they wished, people would be able to pay for the insurance via a charge on their homes, which would be realised when they died. That charge would typically be a modest fraction of the value of any home and nobody would be required to take out such insurance. Based on updated figures and the calculations from the Dilnot commission, the noble Lord, Lord Lilley, calculated that a theoretical premium would be approximately £16,000 and the average cost to social care, supported by local authorities, would be £25,000, as he said. I question whether the noble Lord’s insurance premium of £16,000 per annum will be sufficient.
The Bill does not address the point that there is a perceived unfairness, with those who have worked hard and saved having to pay their care costs while those who have spent all their incomes get their social care costs paid for. Those people should arguably get state-provided care, which would be of a more basic nature than the care that individuals purchase. The main objective of the noble Lord, Lord Lilley, is to weaken the political pressure from homeowners for the state to provide them with free social care, but his arrangements entail the state insurance body realising its charge on a property on the death of the insured person or the sale of that property—the charge being the fraction, set aside at the time of the purchase of the policy, of the value of the property at the time of death, net of mortgage.
The terms of the Bill do not therefore fully avoid the much-disliked arrangement of the public sector taking value from a deceased citizen’s property, even though it would be much less under the noble Lord’s system. The insurance arrangement would operate such that the insured persons would be entitled to social care from their local authority, which would be reimbursed for the cost of the care provided. The weakness here is that there is no incentive for the local authority to keep the care costs as low as possible.
The proposals of the noble Lord, Lord Lilley, are complicated and do not—
Baroness Penn (Con)
I must remind the noble Lord of the advisory Back-Bench time limit for this debate.
Lord Flight (Con)
They do not include the cost of care homes. In my view, what is needed is a less complicated and more standardised approach.
Lord Wigley (PC) [V]
I thank the noble Lord, Lord Lilley, for introducing this Bill, which gives the House and the Government a basis on which to respond to the ideas that he has proposed over several years and which draw on his experience as Secretary of State for social services. The thinking that he has put to the House today and has outlined previously in publications and speeches must be taken seriously, as it addresses a subject that successive Governments have failed to resolve.
Four factors have made this increasingly pressing over subsequent decades: the higher level of home ownership today compared to in previous generations; the longer life expectation of those who own those homes and extended periods of dependency; the breakdown of the close extended family, which provides care for elderly relatives in the family; and the massive financial challenge facing young people seeking to buy their first home and increasingly resorting to the bank of mum and dad.
This insurance-based Bill offers one way forward. It may not be the only way and it may not address all circumstances, but that does not mean that it cannot have a role to play. It should not be swept aside because it does not deal with every challenge in this field. I support the points made by the noble Lord, Lord Best, and others, particularly on having free social care in the same way as we have free healthcare. There must be an integrated approach, but that does not mean that there is no role for this Bill’s approach.
We shall have an opportunity to consider the detailed issues that have arisen today. I ask the noble Lord, Lord Lilley, only one question relating to the Bill’s applicability. It is an England-only Bill. I have no problem with that; I would however ask whether there may be difficulties if similar legislation is not enacted by the devolved Governments, who have responsibility for social care and housing but not social security. What would be the position of a couple living in England who had taken advantage of the provisions of this legislation but then want to move to Scotland or Wales because their children or grandchildren live there? Would they lose the provisions on which they had depended under this Bill?
Finally, from the viewpoint of local government, whose responsibilities seem to increase by the month and whose resources seem ever more squeezed, can legislative provisions to ensure that central government is obliged to fund these responsibilities ever be totally watertight? Having said that, I support the Second Reading of the Bill.
Baroness Bryan of Partick (Lab) [V]
My Lords, earlier this week, I was disappointed to hear a noble Lord asking a supplementary question refer to pensions as a burden. He further suggested that older people are unfairly benefiting at the expense of younger people. His words reflect a view that, when older people have ceased to be productive, they become a drain on resources.
The phrase “We are all living longer”—generally attached to a warning about how much this will cost the taxpayer—was never that accurate and is already out of date. Life expectancy is declining; so too is healthy life expectancy, which will inevitably result in a greater need for social care. Younger family members, some retired themselves, struggle to support older relatives in poor health and ensure that they are well cared for, whether in their own home or in residential care. This Bill does not address their main concerns about the falling standards of care resulting from cuts in funding.
The whole thinking behind this Bill is a hangover from the discredited creed that home ownership is a moral good. Its starting point is less about social care and more about the ability to pass on wealth. As such, it will fail to reach two groups: first, the increasing percentage of people who do not own their home and, secondly, the people wealthy enough not to worry. The Bill is aimed at those in between. They will be asked to gamble a substantial sum of money on eventually needing residential care—not even care in their own homes. I would argue that this is a gamble most would choose not to take. Polling shows that the majority of people want to see social care fully funded through taxation. I note from today’s Times that some Cabinet Members believe that this would require a wealth tax; that is very perceptive of them.
It seems likely that this Bill will disappear without trace. It is irrelevant to the serious debate on how we as a society provide all types of social care in many different settings at a standard we would hope to receive ourselves.
Lord Cormack (Con)
Well, my Lords, this Bill may be many things but, in response to the noble Baroness who just spoke, irrelevant it is not.
I never thought that the apostle of privatisation would propose a measure of nationalisation to your Lordships’ House; he came clean on that, of course, but my belief is that my noble friend Lord Lilley—I am pleased to call him a noble friend—has done the House a great service. When she spoke, the noble Baroness, Lady Greengross, reminded us how urgent this matter is. Incidentally, how good it is to see her among us in the Chamber. She has been assiduous on the screen but is much better in the flesh. She underlined the urgency.
If you want to underline the urgency still further, it is nothing less than a disgrace that the brilliant report produced by the committee of the noble Lord, Lord Forsyth, and presented to Parliament on 20 April last year, has yet to be debated in your Lordships’ House. I hope the acting Whip will take note of that and say that we want to deliver a collective rocket so that it can be debated in this House. It is right that it should be debated, alongside the ingenious set of proposals from my noble friend Lord Lilley.
The one thing we cannot escape is that this is an urgent crisis. We have to forsake some of our notions and shibboleths, because when my noble friend Lady Altmann said that this matter should be rolled in with the National Health Service, I believe she was absolutely right. Why have we not faced properly the problems of the health service? I rabbited on about this in the other place and have done so in your Lordships’ House. We have to face up to the fact that we cannot afford the National Health Service unless we have a special tax or charges on certain things for able-bodied working people, often earning high salaries, or a combination of the two. If we are to have a world-class health service, across the board—we have been reminded this year of how much we need it, and of the wonderful dedication of those in the NHS; how richly they deserve their GC—and world-class social care, it has to be paid for. I believe it has to be paid for by special tax or charges. I favour a combination of both.
My noble friend has performed a signal service by bringing this Bill before us. I hope it receives a Second Reading, so we can go into more detail in Committee.
Baroness Watkins of Tavistock (CB)
My Lords, I declare my interests as outlined in the register, but particularly as a NED of a housing association that provides care in people’s homes and residential care.
The noble Lord, Lord Lilley, has, I am certain, brought the Bill for our consideration for highly principled reasons; namely to try to reassure older people who are home owners that if they are insured against care home costs through a Government-owned company, they will be protected against having to sell their homes in future. I cannot, however, support the Bill, because I believe that if enacted, it would protect a small minority of people who have been fortunate enough to purchase a relatively valuable home, and it would fail to address the real and urgent problem regarding social care funding. There are people who need assistance in their own homes, as well as those who need residential facilities in later life.
The Government have promised to bring a Bill on social care funding policy to Parliament before the end of this year. But, as others have reported, the papers today tell us it might be here on Tuesday. It is essential that this is achieved and that the suggestions in any Bill are properly debated in both Houses and achieve cross-party support. If this is effectively achieved, there will be a long-term solution for the whole of the United Kingdom, enacted and supported by successive Governments, irrespective of which party is in power.
This was announced in the Conservative party manifesto, which was clear to voters, who demonstrated that they wanted a long-term policy that would be fair to older people today and to their families in the future through their resounding support for the manifesto, resulting in a majority of 80 in the other House. Failure to deliver on that promise would lose significant support for this Government, and therefore I believe that the Bill will be forthcoming.
I hope the Government’s Bill will be based on some of the principles laid out in the Dilnot report, which received overwhelming support from the majority of health and social care organisations. We need, as the Bill from the noble Lord, Lord Lilley, implies, long-term funding strategies that may involve some kind of government-backed insurance solution. Others have spoken about the insecure employment of care workers. It is essential that care work is properly funded and that care workers themselves have good contracts in order to facilitate high-quality care.
In summary, I thank the noble Lord, Lord Lilley, for the work he has done to prepare this Bill and trust that it can be used to assist the Government in their own planning for their intended social care reforms. I ask the Minister to outline a more detailed timetable for when the Government’s reforms are to be brought to Parliament, which would make the Bill before us today unnecessary. We need a strategy that will support not only home owners but renters with savings and those on low incomes, rather than a piecemeal approach, which I fear would be an unintended consequence of this Bill.
Lord Sikka (Lab)
My Lords, I, too, would like to thank the noble Lord, Lord Lilley, for this debate, but I cannot support his Bill. The Bill does not really address the crisis in social care, which has been deepened by the Government. There has been a 38% real-terms cut in local authority funding since 2010; we have an expensive and unfair system of means testing and caps; and there is obsession with privatisation. The involvement of private equity and hedge funds has been disastrous. Some 11% of the income of private equity disappears into servicing contrived loans, leaving far less for front-line services. Also, the Care Quality Commission has been an ineffective regulator.
This Bill would create a divisive system to help a few rich people. Currently, around 50% of social care expenditure is on working-age adults, not the elderly. The Bill offers nothing to them. Its concentration on home owners also deepens social divisions. For example, only 20% of black African households own their home, so they would be abandoned by this Bill. Due to low incomes and high house prices, home ownership is declining, at 63% now compared to 71% in 2003. Many retirees are still paying their mortgages and do not have £16,000 just hanging around. The median household gross savings in the UK is around £11,000, and 25% of households have less than £1,800. Poor pensioners are already using equity release schemes to make ends meet, never mind finding an extra £16,000.
The only way forward is for us to have a free social care system funded by general taxation. This can be done without increasing the basic or the 40% marginal rate of income tax or national insurance contributions for the masses. For example, £14 billion a year can be raised by taxing capital gains in the same way as earned income, £10 billion can be raised by restricting tax relief on pension contributions to 20% for everybody, and a modest level of financial transaction tax and wealth tax can raise billions. Since 2010, HMRC has failed to collect around £350 billion of taxes due to avoidance, evasion and errors. A clamp-down on tax abuse, and investment in HMRC, can pay big dividends. There are resources, and they are available, to fund completely free, universal social care for everyone. The only barrier is the Government’s ideology.
Baroness Verma (Con) [V]
My Lords, I thank my noble friend for bringing this Bill to your Lordships’ House. It is an important Bill. I want to refer to my interest in the register as an adult social care provider for 21 years. Knowing the sector rather better than some of your Lordships, I would like to dismiss a few myths but also include some of the things that we should have addressed, not just today but many decades ago.
A crisis in social care is not a crisis of the last five or 10 years; it has been an ongoing crisis for a very long time. It is also important to note—and I address this directly to the noble Lord, Lord Hendy—that some of our providers are small businesses. Mine is a small business, and 75% of the people who work in my organisation have been with me for at least 15 years or more. So it is about the way we treat our care staff.
The fact we have been unable to professionalise and make people see it as a profession, by paying with a decent funding stream, is part of the problem. As I have raised on several occasions in your Lordships’ House, if we are to make sure the NHS is not overwhelmed, a serious look at social care, which actually prevents many people going to the NHS, will be a necessary and honest discussion. We know we need to protect the NHS, but we need to protect the social care sector as well. We are all living longer, but whether we are living healthier and longer is a different argument. As we all know, burdens on the NHS increase as we live longer.
We have never had an honest debate about the NHS and social care, side by side, and we need to have one. They are two sides of the same coin. While we can discuss lots of alternatives, it is important that this debate, yet again, enables us to look at alternative solutions. Ultimately, it is the duty of us all to ensure that, at whatever age we need support, it is available and we are not discriminated against simply because our illness or need is not recognised for NHS cover. I hope that, when the Government bring forward their Bill, we have a strong and robust discussion on social care needs.
Baroness Wheatcroft (CB)
My Lords, the noble Lord, Lord Lilley, approaches this issue with decades of experience and genuine concern. I congratulate him on at least attempting to provide a partial answer to the problem of funding social care. His insurance scheme has superficial attractions but, as others have spelt out, a more far-reaching solution is required. As the noble Lord, Lord Davies of Brixton, said earlier, in his first speech at Downing Street the Prime Minister promised us he had an “oven-ready” solution. He may at last have decided that a new tax is the answer, but that will not deal with the fundamental flaws in the system.
I wholeheartedly support the speeches, including those of my noble friend Lord Best and the noble Baroness, Lady Altmann, that advocated doing away with the distinction between health and social care. A report of the Joseph Rowntree Foundation 25 years ago was right then and is even more so today. Most people are in care homes because they are not in good health. The pandemic has highlighted the poor health of large sections of our society. We know that the poorer parts of society have lower life expectancy and can expect to live out their final years in less good health than those at the other end of the wealth spectrum. Such inequalities would only be exacerbated by the Bill. Only 63% of our population are home owners and that proportion is shrinking.
A healthier population would have less need of care homes. There would be fewer elderly people having to spend their last years in what, for many, is a totally sterile environment—although, as we have seen, not always as sterile as some might have wished. It would be much better if people could live independent lives for longer. Today, there is talk of doctors prescribing fresh fruit and vegetables. It is sad that there is a need for them to do that, but clearly people need an improved diet. Equally, good health in older age requires exercise of the body and the mind and, in some cases, GPs are already prescribing the arts to keep people in good health. Some care homes provide a comfortable, stimulating environment. I am sure those with which the noble Baroness, Lady Verma, is associated do just that but, as the noble Lord, Lord Sikka, pointed out, too many care homes are now run by private equity, where the debt burden is such that there is little funding to provide a decent quality of care for those who live there. We need a fundamental rethink of the system.
Lord Foulkes of Cumnock (Lab Co-op) [V]
My Lords, I also commend the noble Lord, Lord Lilley, on his extensive work in this area, particularly in preparation for the Bill. However, like others, I cannot support it, however well-meaning it may be, as it is not the right way to deal with a major crisis in social care. It is in danger of letting the Government off from their job to tackle the issue, which they have promised to do in successive election manifestos. This growing crisis has been dodged by successive Governments and needs to be dealt with in a more fundamental way.
As others have said, the National Health Service was created to provide free healthcare when needed, funded through taxation by all of us. Those of us who need medical treatment, however much it costs—and it can run to many hundreds of thousands—are able to get it free when we need it. But those of us who do not need it are both grateful for our good health and happy to cover the costs for those who need it. The same principle should apply to the provision of social care.
Thankfully, many of us will live to a ripe old age without the need for care services, either at home or in an institution. Others who require care should be able to access it for free, without the additional worry of how they will find the money to pay for it. That is why we need a national care service, on the same principle as the NHS, where those of us who are lucky to live without the requirements of care can help support those who do. I am pleased this has already been supported by my noble friends Lord Davies, Lord Sikka and Lord Hendy, and thankfully by the noble Baronesses, Lady Altmann and Lady Wheatcroft.
We can never predict which of us will be struck by dementia, physical incapacity or other conditions requiring care, just as we cannot foresee which of us will get cancer, cardiac arrest or Covid. As many have already said, care is best provided by our excellent local authorities, but they need proper funding. They can then work in collaboration with the good private care homes—they are not all good, but some are—and the voluntary sector. The reduction of local authority funding under the present Government has exacerbated the problem, as we wait and wait for the Government to fulfil their promise. It is now even more vital that we maintain our pressure on the Government to meet that promise, and I fear this Bill will be a distraction.
Baroness Neville-Rolfe (Con)
My Lords, the Bill deals, although at one remove, with one of the greatest and most welcome developments of the last two centuries. I refer of course to the extraordinary increase in average human lifespan that has occurred over this period. The separation of clean and foul water, advances in medicine and the development of vaccines, the discovery and invention of antibiotics and the recognition of the importance of safety in industrial processes, taken together with a realisation of the effects of smoking and diet on health and other factors, mean we have seen a rise in the average lifespan from well under 60 to around 80. This is a wonderful achievement but, like all advances, has thrown up problems. The greatest of these is the increased and increasing need of many elderly people for care, especially residential care, and its financing. The present arrangements are creaking.
As a society, we have taken a long time to grasp this nettle and, while Governments of every colour have dallied, the situation has deteriorated. Meanwhile, the financial position of local authorities, at least in England, has become much more challenging for various reasons, one of the most important of which was the cutbacks following the financial crisis of 2008. Some allowance has recently been made for local authorities to raise extra funds for social care, but the sector needs a significant injection of cash if standards are to be maintained, staff are to be rewarded properly and operators are to find it worthwhile to remain in the system.
What are the problems other than the need for money? One is uncertainty. None of us knows, early in life, how much care we will need over our lifetime. We might need none or we might need decades of care. Most of us will fall somewhere between these two extremes, but the financial difference between them is enormous, running into hundreds of thousands of pounds. Accordingly, another problem is fear—fear that we might be faced in old age with vast financial claims that will eliminate our lifetime savings.
All this seems to point to the need for an insurance-based solution, since in many areas of life that is how we cope with risk, with the advantages of pooling risk that it provides, but as my noble friend Lord Lilley has so eloquently explained, this is an area where private insurance cannot operate, mainly because of the fear that calculations will be upset by changes in government policy. My noble friend proposes to solve this dilemma in a typically brilliant way by harnessing the value of people’s houses after death in the way he has outlined as a component of what amounts to a voluntary, but state-guaranteed, insurance system which will operate at minor cost to taxpayers. It has been welcomed today as a workable solution by my noble and learned friend Lord Mackay of Clashfern, and the noble Lord, Lord Wigley, in a powerful speech, said it could play a part. This Bill represents a responsible and timely way forward. We need to act now. There is no sign that the Government will be able to do so quickly, so we should enthusiastically support this Bill which would make a contribution, large or small, to one of the greatest problems of our time.
Baroness Brinton (LD) [V]
My Lords, I declare my interest as a vice-president of the Local Government Association and a vice-chair of the All-Party Parliamentary Group on Adult Social Care.
I thank the noble Lord, Lord Lilley, for securing this early slot to present his Bill, although these Benches have serious issues about the principles and details of his proposals for creating an insurance scheme for elder social care. In March, I read the noble Lord’s paper on his scheme, which was published by Civitas. It is right that policymakers on all sides of the political spectrum think through the series of complex problems our social care sector currently faces. I thank him for continuing that debate in your Lordships’ House through the Bill, even if we do not believe that it is the solution.
The noble Lord referred to a live rail running alongside the funding reforms for elder social care. As many other noble Lords have said, these proposals miss the point. We need to devise a comprehensive elder social care system for everyone, whether home owners or not, and regardless of the value of their property if they are. We agree with many speakers today who have talked about having that universal social care system for everyone regardless of assets or income. I also echo the comments made by other noble Lords about the excellent report on this issue by the committee chaired by the noble Lord, Lord Forsyth, and the noble Lord, Lord Cormack, is right to say that this House needs to debate that report as soon as possible. It is a disgrace that we have not had the chance to do so. It is very overdue.
In 2011, Andrew Dilnot’s report on the funding of elder social care was published and, for a while, all three major parties worked together to make it happen. Dilnot proposed a neat solution, using facts about average stay in a care home, percentage of people needing it and average costs. All three parties were on the point of agreeing it, when, I am sorry to say, the Conservatives walked away. Ten years on from the publication of the Dilnot report, it looks, if the leaks to the Times and the Telegraph are right, as if it is back on the agenda. I hope that is correct. It was a fair and equitable proposal that merited serious consideration.
We await the Government’s long-overdue proposals. It is two years since the Prime Minister announced it as an absolute priority and well over 18 months since he stood at the door of No. 10. However, the devil will be in the detail. The current funding system for elder social care is a disgrace, and we must remove the fault line, as the noble Baroness, Lady Chakrabarti, called it, between health and social care at the source. The problem with this Bill is that it tries to create an insurance system which the insurance sector does not want to provide for, so the noble Lord proposes that the Government go into the insurance industry themselves, an industry where they have no experience or track record of success. That way disaster lies.
What we need is a system that sets a cap on costs that individuals have to pay, in the style of Dilnot, but underlying that there must be a mechanism for funding social care properly, on a par with health and, as we said in our manifesto in 2019, to be funded beyond that Dilnot cap through taxation. That means that those who do not own their own homes or have homes of low value will have access to the same social care as those who have houses of high value. It would also stop the current inevitable but wrong practice of private social care patients funding the publicly funded ones because local authorities are not given enough funding by central government to cover that public funding duty.
Our social care sector needs a much more fundamental review, and I hope that the Government will provide that root-and-branch review beyond funding. The noble Baroness, Lady Verma, is right: until there is parity of esteem with the health sector, it will always be treated like the Cinderella service it feels it is. This Government’s callous discharging of patients with Covid into care homes last year in order to protect the NHS epitomises that, and I am glad they stopped that practice. Pay structures, career pathways and the treatment of staff are always compromised by the amount of funding coming into the social care system, which is why we are in this mess.
We also need to fund care support that is not based around care homes, which gives older adults the protection and support they need to keep them independent to avoid the need to go into care homes, which is vital with a rapidly ageing population. This Bill would not cover that critical part of the multidisciplinary services, including, for example, encouraging post-retirement, part-time working, whether paid or in the voluntary sector, to keep minds active, or including a healthcare system that considers prevention as a priority—for example, of fractures, rather than always just having to repair them, which often leaves people much less independent than they were before. It should also include investment in social activities in communities, which many local councils can no longer afford to do with their squeezed funding following government cuts.
We on these Benches do not support the Bill. I hope that proposals from the Government, whenever they finally appear, will present a root-and-branch reform of social care and not just the funding mechanism for home owners. Can the Minister say when they will be published and whether they will be the comprehensive reforms that all Members have highlighted in today’s debate?
Baroness Merron (Lab)
My Lords, I pay tribute to the noble Lord, Lord Lilley, for his efforts through this Private Member’s Bill to find a way forward to improve the provision of social care which is so desperately needed. There has been a theme throughout this debate which has heard many thoughtful contributions by noble Lords. It is a determination to see the right quality of social care at the point in people’s lives when they are at their most vulnerable. This debate has made clear the need to meet both duty of care and duty of dignity.
I start by paying tribute to the extraordinary work and commitment of social care staff over the past year, in both the independent sector and the local authority sector. They have been at the front line of this pandemic, going beyond the call of duty and helping hundreds of thousands of people through an extremely difficult time.
However, as my noble friend Lord Davies of Brixton and the noble Baroness, Lady Wheatcroft, reminded the House, it is some two years since the Prime Minister stood at the steps of No. 10 Downing Street promising to fix this challenge, yet nothing has changed. We can remind ourselves that there were high hopes of a Bill in the Queen’s Speech, but they were roundly dashed. Instead, today, as we read in the media, we have rumours that Downing Street is
“comfortable with some sort of tax”
to pay for social care. I wonder whether the Minister is in a position to flesh out details of this tax plan, which has clearly been some years in the making.
I should at this point acknowledge that while this Bill refers to the older members of our society, social care extends far beyond them. Half the budget for social care is for working-age adults with disabilities, who comprise a third of the users. Furthermore, there is a misconception, as has been pointed out several times today, that social care is all about care homes, when in fact there are more people getting care and support in their own homes, something we should aim and hope to expand, as advocated by the noble Lord, Lord Best.
Social care is as much a part of our infrastructure as are the transport, telecoms and energy systems we rely on. A neglect of the country’s physical infrastructure results in the lights going off and trains grinding to a halt. Well, the same is true if there is a failure to invest in social care infrastructure. As the noble Baroness, Lady Watkins of Tavistock, identified, if we do not have a properly paid and trained care workforce, we see vacancy and turnover rates soaring, fewer people getting the support they need and families—and, overwhelmingly, women—ending up taking the strain.
Covid-19 has brutally exposed existing failures, as described by my noble friend Lady Chakrabarti. Throughout the pandemic, we have seen that care is still not funded or treated as equally important as the NHS. We know that front-line care workers are chronically undervalued and underpaid, as my noble friend Lord Hendy set out. Families get too little support in return and an already fragile care market has been made even more susceptible to failure, with all the human consequences this brings.
Dealing with such a virulent and dangerous virus was always going to be difficult but, when the pandemic struck, our care system was more vulnerable than it should ever have been. We have a welfare state in the 2020s built on the life expectancy of the 1940s. One in four babies born today is set to live to 100 years old. As the noble Baroness, Lady Altmann, and other noble Lords set out, our health and care system has struggled to keep pace with these changes, with social care developing—as far as it has—in a piecemeal and fragmented way. As my noble friend Lord Foulkes of Cumnock said, we face a major and growing crisis in social care that cannot wait.
Fundamentally, as we have heard throughout this debate, social care services need to be fully joined up with, but not run by, the National Health Service. Noble Lords will be only too familiar with distressing tales of people having to battle their way around various services, repeatedly telling the same story. This is not good for them and is wasteful and inefficient. We need one care system built around the needs of users and families, with proper links to other services, including housing.
The Private Member’s Bill before us seeks to address the very real problem of older people being forced to sell their home to pay for care. However, as the noble Baroness, Lady Greengross, and other noble Lords identified, regrettably the Bill falls short of a comprehensive approach—not least because it does not address the situation of those who do not own their own homes or have the requisite level of resources.
In addition, nearly a fifth of pensioners live in poverty and may not have the assets required to finance insurance. They need care just as much. The latest figures are that 8% of pensioners would not even be able to pay an unexpected bill, as expressed by my noble friend Lady Bryan of Partick. I am sure that the noble Lord, Lord Lilley, will bear this in mind, because it certainly begs the question of whether those in poverty would consider using their assets for insurance that they might not need.
The issue of eligibility thresholds and how they would be determined is also to be resolved. According to Age UK, 2 million people have had requests for support turned down in the last two years, while local authority budget cuts have led to eligibility thresholds being tightened, as my noble friend Lord Sikka highlighted.
Although we are unable to support the Bill, I am grateful to the noble Lord, Lord Lilley, for seeking to address a challenge that hitherto remains unaddressed, while impacting on so many of us. I am grateful to him for providing more than the Government have so far managed to do. In the century of ageing, everyone should be able to look forward to getting older with confidence and without fear. I hope that the debate today will make its contribution.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con)
My Lords, I congratulate my noble friend Lord Lilley on securing time for the Second Reading of this important Bill. I thank him for bringing forward this challenging legislation, which addresses the pressing issue of unpredictable and catastrophic adult social care costs. Nothing could be more salient. As he said, my noble friend Lord Lilley brings 37 years in Parliament and seven years in Cabinet to bear on this, and it shows. His Bill is a most thoughtful and intelligent proposal to address an electric issue that has confounded policymakers for a generation and now engages the best minds in government.
I very much note the mood of the Chamber and in particular the supportive comments by the noble Lord, Lord Wigley. I cannot promise that the Government will support the Bill. However, I assure my noble friend that we have carefully considered its points and that its insight has provoked a timely dialogue.
Clause 1(1) is on the measures for insurance to be delivered through a public not-for-profit company owned and guaranteed by government. As my noble friend Lady Neville-Rolfe rightly points out, social care should lend itself to risk pooling. Many of us are likely to need care at some point in our lives. Three out of four adults over the age of 65 will face care costs at some point. Half will face care costs of less than £22,000, but around one in seven will face costs of more than £100,000.
Despite this, as my noble friend Lord Lilley pointed out, affordable financial products to provide protection against unpredictable and catastrophic care costs are currently unavailable. A small insurance market grew momentarily in the 1990s, but noble Lords should note that insurers cited both supply-side and demand-side difficulties. The fact that there is currently no private market for insurance does not mean that there is no case for insurance. Singapore has a government-run insurance scheme, voluntary for people born before 1979. The Bill shines a valuable light on a classic but none the less long-standing and damaging market failure. It therefore provides a strong case for government intervention.
Clause 1(3) specifies that the purchase of the insurance should be voluntary and that
“home owners who choose not to purchase the insurance continue to be subject to existing regulations regarding the provision of social care.”
The current means-tested system is based on personal responsibility, with financial help focused on those with the least. It is appealing that the Bill builds on this principle, offering people the option to pool the risk of needing care but placing a responsibility on individuals to plan for care.
Clause 5, on timing, sets out that the insurance offer should be targeted specifically at those approaching state pension age. At this age, still relatively few people need care and it is unlikely that people can accurately predict whether they will eventually require care. Among those aged 55 to 64, only 5% receive formal or informal care, compared with 13% of those aged 75 to 84 and 33% of those aged 85 or over. In response to the point from the noble Lord, Lord Best, this mitigates against the risk of only those who know they will need care choosing to buy insurance, driving up prices. This also allows the insurance to pool both longevity risks and the risk of needing care in the first place. This in turn should help keep premium costs down.
The measures in Clause 2(6) and 2(7) set out that the insurance premia should be
“set at a fixed fraction of the value of the property, net of mortgage.”
This means that someone with significant housing wealth would pay more for the insurance than someone with only modest wealth.
The Bill makes an important comment on the current system. Someone with a care journey of, say, two years in residential care, at cost of £700 per week, with an income of £9,200 a year and starting wealth of £50,000, could deplete up to 57% of their wealth, whereas someone with wealth of £250,000 would deplete only 23%. The Bill has the commendable feature of being both progressive and affordable—a challenging combination.
Clause 3(1) describes that the insured person would be entitled to pay for the premium through a charge on their home realised upon the death of the insured person or the sale of the property. The Bill picks up on an important point here. Even if the cost of the insurance policy were just a small fraction of the value of one’s home, not everyone would be able to afford to pay for it from their savings. After all, as my noble friend Lord Lilley described in clear detail, many people have only limited wealth other than what is tied up in their home. Nearly half of adults over the age of 65 have savings of less than £25,000 and 36% have savings of less than £12,500. Of course, people could draw on their pension pots, but this may be subject to income tax. Therefore, allowing people to pay for the insurance by releasing some of the value of their home prevents people having to sell their home to pay for the insurance. The attraction of this was well described by my noble and learned friend Lord Mackay, and I note the similarity with deferred payment agreements. All this illustrates the strength of the Bill and my noble friend’s proposals; his timing is also impeccable.
Some noble Lords made clear their objections and have emphasised the huge sense of challenge around social care. The noble Lord, Lord Davies, noted the vagaries of the property market and the spread of tenure. The noble Baronesses, Lady Merron, Lady Chakrabarti, Lady Bryan, and the noble Lord, Lord Foulkes, made passionate cases for a nationally funded public social care service. My noble friend Lady Altmann called for a national health and social care insurance premium. The noble Baroness, Lady Greengross, raised the huge challenges of intergenerational fairness. My noble friend Lady Wheatcroft, urged the importance of investment in healthy lives, diet and exercise to minimise social care costs. These are all important points.
The Government’s objectives for reform are to enable an affordable, high-quality and sustainable adult social care system that meets all people’s needs. Every person should receive the care they need, provided with the dignity that every person deserves. The noble Lord, Lord Hendy, was very emphatic in describing the importance of a social care workforce as critical to our ambitions for raising the quality and access to social care. He is right in this. I therefore reassure my noble friend Lady Verma and the noble Lord, Lord Hendy, that in his first few days in his new role, the Secretary of State for Health and Social Care wrote a letter addressed to social care staff with a promise to do all he could to support the sector in the future. I say to the noble Baroness, Lady Watkins, that the Prime Minister has been very clear that we need a long-term plan for social care. As she will know from today’s papers, the details are emerging as we speak. With these things in mind, I once again thank my noble friend for his valuable contribution and express my gratitude to him for his Bill.
Lord Lilley (Con)
My Lords, I am grateful to all noble Lords who have contributed to this debate—those who disagree with the Bill, those who agree with it, and those who feel that it merits further debate. Two central criticisms were made. First, a number of noble Lords said that it does not address the main issue. With respect, that is precisely what it does. It says that the main issue is the underfunding of the existing social care system for those who do not have the means to pay for themselves, but we must not pre-empt the money needed to bring about proper funding of that by diverting much of it to subsidising those who wish to leave their homes to their heirs and beneficiaries. I hope people realise that resources are finite. If we spend money on those who can afford to contribute to their own care, we have less to spend on those who cannot.
Secondly, there were those who, as a matter of principle, believe in universal state provision. I respect that point of view, but they should recognise that no Labour Government since 1948 has introduced that, and that if it were possible to have done so before the pandemic, it is much less possible now that we have £2 trillion of debt and a massive deficit. They should also recognise that that is not what Labour offered at the last election; it offered the £100,000 cap on contributions. Setting a cap, which was also endorsed by the Liberal Party, brings me to my final point. They are saying that we should give the greatest benefit to those in Mayfair and the least to those in Middlesbrough. If that is their idea of fairness, priorities and a comprehensive solution, it is not mine. I beg to move.
Elderly Social Care (Insurance) Bill [HL]
Friday 4th March 2022
(2 years, 8 months ago)
Lords ChamberRead Full debate Elderly Social Care (Insurance) Bill [HL] 2021-22 Read Hansard Text Read Debate Ministerial Extracts
Lord Hamilton of Epsom (Con)
My Lords, on behalf of my noble friend Lord Lilley, who is suffering from Covid, I beg to move that this Bill do now pass.
Baroness Penn (Con)
My Lords, noble Lords may wish to have a short debate before we pass the Bill.
The Lord Speaker (Lord McFall of Alcluith)
Actually, I hesitated very slightly there, but nobody seemed to be standing up. If somebody wishes to stand up, the Floor is theirs.
Baroness Merron (Lab)
The Lord Speaker is most kind: I will be quicker in future.
I thank the noble Lord, Lord Lilley, who is not able to be in his place today, for his considerable consideration and work during this Bill’s passage. I am grateful to him for having given your Lordships’ House the opportunity to discuss such important issues, which are particularly timely considering the passage of the Health and Care Bill. As noble Lords will be aware, while discussion on the Bill was welcome, it has unfortunately not found favour across the House. I certainly look forward to the Bill being an encouragement to the Minister to come forward with ways to support the sector properly. I look forward to a real and sustainable plan for fixing the issue that faces us. So, I extend my thanks to all Members of your Lordships’ House for their contributions during the passage of the Bill, and to the noble Lord, Lord Lilley, and I look forward to hearing from the Minister.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Kamall) (Con)
My Lords, I begin by thanking the noble Baroness, and the Lord Speaker for allowing us time for this debate. I congratulate my noble friend Lord Lilley on securing the time for Third Reading of the Bill, which proposes a state-backed insurance company for social care. I am sure noble Lords across the House will wish my noble friend a speedy recovery. I thank him for his thoughtful proposal to address the long-standing issue of unpredictable social care costs. As many noble Lords will recognise, there have been many reports over the last few decades and they have just sat there gathering dust on shelves: to date, we still do not have a proper system. The Government wholeheartedly agree with much of the analysis underpinning the Bill and I shall mention but a few of the ideas that stood out for us.
First, we are well aware of the challenges around the private market delivering insurance for social care costs, so we recognise the benefits of delivering insurance through a public not-for-profit company owned and guaranteed by government. I also particularly admired how the proposal addresses affordability by allowing people to pay for the insurance premium through equity on their home. Lastly—this is probably the Bill’s strongest selling point—it would be cost-neutral to the Exchequer. I recognise the opportunity this presents for the savings to be invested in financial support for those not able to access the insurance offer—for example, people who do not own a home.
I reassure my noble friend that his proposal has been carefully considered in the lead up to the announcement of our reform package from October 2023, but I point out that one of the key benefits of the cap and extended means test is that it is a universal offer—universal for everyone, irrespective of age or home ownership. We believe that a universal cap means people can plan ahead for their care from the outset. Knowing that the cap is there will benefit everyone, not just those who own a home. The home ownership landscape is changing over time, and within that context the Government have developed a package of reforms which is future-proof and gives support and certainty to the current generation, as well as future generations.
In addition to the cap, from October 2023, anyone with assets of less than £20,000 will not have to make any contribution for their care from their savings or the value of their home, ensuring that those with the least are protected. Anyone with assets below £100,000 will be eligible for some means-tested support, helping people without substantial assets and ensuring that many more people benefit from funded support earlier in their care journey. We believe that our reforms significantly improve the current system. In developing the reforms, we had to make tough choices, balancing the generosity of the reforms with how much extra we ask taxpayers to contribute and pay for them. My noble friend may disagree with our current formulation of the cap, but we believe the plan is credible, deliverable and affordable. Therefore, while the Government are not convinced that the Bill is the right course of action, we agree with his intelligent analysis that underpins it and, as the noble Baroness, Lady Merron, said, we will debate this further.
I again thank my noble friend Lord Lilley for putting forward this proposed Bill, and for his engagement in discussing our reforms after this debate.
Lord Hamilton of Epsom (Con)
My Lords, I know that my noble friend Lord Lilley will be very grateful for the compliments from both Front Benches and he will be glad that he stimulated so much thought in the minds of the Government, judging by the remarks of my noble friend the Minister. He will probably be watching this from his sick bed but if not, I am sure he will read it tomorrow in the Official Report.