Care and Support (Deferred Payment) Regulations 2014
Lord Lipsey
That a Humble Address be presented to Her Majesty praying that the Care and Support (Deferred Payment) Regulations 2014 laid before the House on 31 October be annulled on the grounds that the Regulations are to come into force in April 2015 instead of simultaneously with the other post-Dilnot reforms in April 2016. (SI 2014/2671)
Relevant document: 14th Report from the Secondary Legislation Scrutiny Committee
Lord Lipsey (Lab)
At last, the big event of the day —the one you have all been waiting for. First, I declare an interest as an unremunerated president of SOLLA, the Society of Later Life Advisers, which is the body that accredits financial advisers who work with the elderly.
As there could be some misunderstanding, perhaps I may explain that there will be two separate debates and I will be making two separate speeches. This will not take any more of the House’s time, but I think it will make it a much less confusing debate than it otherwise would have been. I will speak, other noble Lords will speak, my noble friend Lord Hunt will speak, the Minister will speak, and then we will decide the first Motion; and then we will do the second one.
I turn to the first Motion, which is the fatal resolution. In a world of logical governance it would be taken for granted that the whole post-Dilnot package should be implemented in one—the new deferred payment scheme covered by these regulations together with other elements including the cap on how much people have to spend on care. The Government, however, have proposed that the deferred payment scheme should take effect in April 2015 and the cap and the rest of the measures in April 2016. By this new system, they have set a course for potential chaos. There will be chaos in local councils. The LGA says, quietly, that,
“the timetable is challenging for councils”.
A recent report by the National Audit Office says:
“It may not be feasible for local authorities to implement all the proposed changes to the indicated timetable”.
There will also be chaos for financial advisers whom, through SOLLA, I represent. There will be one development this coming April; the next the following year. How can they give coherent advice to older people on how to proceed in the gap year? As SOLLA has written to the Minister:
“This does seem to add a level of unnecessary complexity to an already difficult system”.
If advisers are struggling to understand the relationship between the two sets of proposals, how are older people themselves or their families supposed to understand? How are they to make the choices before them? It is batty—I can use no less a word. That is the unanimous view of all the experts with whom I have discussed the matter. My noble friend Lord Warner, who is a member of the Dilnot commission, has given me authority to say that, in the commission’s view, there should be one proposed date, not two.
Why? The answer is 7,600. This is the Government’s estimate of the number of extra people who would benefit in 2015-16 from the scheme taking effect in April 2015, rather than waiting another year for the rest of the package. The detailed calculations are set out in the impact assessment, pages 107 to 147. As there are 40 pages, your Lordships will be glad to learn that I do not intend to read them all out now. Broadly, this is the logic. There are 55,000 new self-funders going into care each year. Of these 25,000 are eligible for the new scheme. We will debate how 55,000 go down to 25,000 in my second Motion. If 40% of these take advantage of the scheme, that will be roughly 11,500 claimants in all. Take off the 3,900 who would get it under the existing, defective deferred payments scheme and the Government end up with an additional 7,600—the answer to the question, in their view—as a result of introducing the scheme in 2015 and not in 2016. That is a significant number.
I know it is difficult to take all these numbers in swiftly but I want to question whether this 7,600 estimate is anywhere near correct. The first law of statisticians—and I speak as chair of the All-Party Parliamentary Group on Statistics—is that if a number looks wrong, it probably is wrong. Having been involved in this subject for 17 years, I think it is, since the noble Lord, Lord Joffe, and I were on the royal commission, I have to say this number feels completely wrong to me. No one can take advantage of the scheme unless they know about it. Do you find people rushing up to you in the street saying: “Oh, it’s great. In April I’ll be able to take out a deferred payments scheme”? No, nobody will start to know about it unless the Government have planned some information measures.
Secondly, to take out a deferred loan to pay for your care in this scheme is exceptionally unattractive to most people. It means that their wealth is tied up in a home—probably an empty home, with no income earned on it. Meanwhile, they are paying interest on the loan that the council is making to them. Interest is rolling up at compound rates. So the circumstances in which it is possible to conceive of an older person wanting to do this are quite rare. I sympathise with the Government in making these estimates. It is not surprising that they completely changed the estimates from the first impact assessment to the second one only months later, because it is very difficult to get an exact number. However, I think that the 7,600 is an exaggeration in itself.
The Deputy Speaker (Viscount Ullswater) (Con)
I should advise the House that if this Motion is agreed to the second Motion in the name of the noble Lord, Lord Lipsey, cannot be called by reason of pre-emption.
Lord Hunt of Kings Heath (Lab)
My Lords, my noble friend has done a singular service in bringing these two Motions before your Lordships’ House. I take this opportunity to welcome back my noble friend Lady Wilkins, who is in her place. It is great to see her back in your Lordships’ House.
My noble friend made some very telling points about the scheme and the puzzle about the differentiation in numbers relating to the date of its introduction. I was particularly struck by his comments and concerns about the impact on local authorities, on financial advisers, and, of course, on old people themselves. I hope the Minister is in a position to answer my noble friend. He referred to the National Audit Office’s study of the state of readiness of local authorities. I had the opportunity of meeting with the Local Government Association yesterday. It is fair to say that it seems prepared for the introduction. However, its own report has pointed out some of the issues it faces: concern about an increase in total costs; measures around IT, workforce, information and advice, and market shaping; and feedback through direct conversations with its own members that suggests that other pressures on councils, including funding shortfalls and work on the better care fund, compounded with uncertainty on key advice and information, has delayed or otherwise impacted on its preparations in a number of areas.
We debate the introduction of the Care Act’s provisions by local authorities in the context of a huge squeeze on local authority funding. Remember that, since adult social care is probably local authorities’ biggest area of discretionary spend, there have inevitably been huge reductions in their resources. I remind the Minister that, as we have seen from the Autumn Statement, the Chancellor has said that he wants to keep the state permanently at the size it was in the 1930s—around 35% of GDP. If the Government are re-elected at the next general election, that is bound to have a huge impact on local authorities’ capacity to introduce and run the provisions in the Care Act.
I particularly want to talk about one issue relating to implementation. The Minister knows that local authorities will be liable to assess people’s eligibility as self-funders from 2016 onwards. That will then start the clock running to reach the 72,000 cap, at which point those self-funders will be eligible for local authority support. However, picking up my noble friend’s comment, it is clear that local authorities will not be able to assess all current self-funders in April 2016. In fact, I think some self-funders will not be aware of the provisions and therefore will not apply on the first date that they could. Others will apply, but the local authority will not be able to get round to assess them.
The question that I want to put to the Minister is this: will the introduction of the cap on individuals be retrospective? In other words, if I am a resident in a care home, it takes the local authority a year to come round and assess me because of lack of capacity, so will the Government backdate the assessment to the beginning of the introduction of the provisions in April 2016, or will the clock start to run only when the assessment has been made? The question also applies to those self-funders who did not apply on the first potential date when they could have done but were in a care home at that date. That is crucial. There is a risk, if it is not completely retrospective, that local authorities will ration people’s eligibility for this new system by simply delaying the assessments that take place. That is entirely consistent with the point raised by my noble friend. At the heart of his argument are the issues of capacity and the state of readiness of local authorities to undertake the considerable responsibilities that they have been given. It would really be helpful if the Government were able to state with confidence their assessment of the state of readiness of local authorities. What will happen to the thousands of individuals who, in my understanding of what these provisions mean, would be eligible right from the start of the new scheme? Will they have to wait until the clock starts for their assessment to take place?
Baroness Jolly (LD)
My Lords, the Government have made a clear commitment to introduce a universal deferred payment scheme from April 2015. The fulfilment of this pledge directly addresses the long-standing problem in the care system whereby people who have gone into residential care have often had to sell their homes at short notice in order to pay for care. This has often happened at a time when people need space to adjust to a change in lifestyle and circumstances and to make important decisions about their care and finances. This has been a well known source of distress to people—I am sure we would all identify with that—as well as making it harder for them to plan. The introduction of the universal deferred payment scheme directly addresses this issue and that is why we are proud to announce the new scheme from April 2015.
The first Motion that we are to debate calls for the regulations bringing the universal deferred payment scheme into force to be annulled on the grounds that the reforms are coming into force a year before other changes to social care funding. There are two compelling reasons why the Motion is misguided and any delay must be resisted. First, many thousands of people stand to benefit from deferred payments in the first year of the scheme alone. These people would otherwise be at risk of having to sell their homes to pay for care. Secondly, local authorities are confident that they will be ready to implement the scheme in full from April next year so there is no sensible reason why these people should not benefit.
The need to reform deferred payments without delay has been accepted for many years. The Commission on Funding of Care and Support, chaired by Sir Andrew Dilnot, supported extending deferred payments in part due to its finding that,
“the availability and use of deferred payment schemes is patchy”.
At the moment, offering deferred payments is voluntary for local authorities, with no common eligibility criteria. As a result, not everyone who wants and needs a deferred payment can get one. The Dilnot commission identified that one of the key reasons for this patchy provision across the country was the fact that local authorities were not able to charge interest on deferred payments and were thus forced to run the scheme at a cost to them. By allowing local authorities to charge a low rate of interest that will help them run the scheme on a cost-neutral basis, we are removing one of the clear disincentives of the old scheme. From April next year, local authorities will be able to charge up to 2.65% interest, which helps to keep the scheme financially sustainable and compares very favourably with equity release products, which can charge in the region of 7% to 8% interest. Through the regulations being debated today, all local authorities will be required to have a deferred payment scheme from April next year. There will be a universal offer across the country, ensuring that those most at risk of losing their home can benefit from the support they need to meet their care costs, wherever they live.
It has been suggested by the noble Lord that the universal deferred payment scheme should be delayed by a year and not come into force until 2016. We are sympathetic to concerns that local authorities could have found the implementation of the scheme challenging, but I can reassure your Lordships’ House that the timetable that we have planned is realistic, necessary and achievable. The Department of Health has worked closely with local government colleagues through the LGA and the Association of Directors of Adult Social Services to ensure that the sector is ready to implement the Care Act from April 2015. To pick up on a point raised by the noble Lord, Lord Hunt, we recognise that there will be a need for additional capacity to assess people and we are prioritising £335 million in 2015-16 to support implementation, including early assessments towards the cap. The latest survey of local authority readiness shows that progress towards implementing Part 1 of the Care Act from April 2015 is on track and that confidence is high and improving in almost all areas, including deferred payments.
It is important to note that the introduction of the universal deferred payment scheme from April 2015 will mean that an extra 7,600 people will be able to benefit from the protection of a deferred payment. This is in addition to the 3,900 people who would have benefited in the current regime anyway. This means that when the new scheme comes into force, we project a total of 11,500 new deferred payment agreements in the first year alone.
The noble Lord, Lord Lipsey, questioned the uptake assumptions in the impact assessment. The figures used in the impact assessment are based on a local authority with a well established scheme. All who qualify for deferred payment would also qualify for the 12-week property disregard so will come to their local authority anyway. Noble Lords will surely agree that, bearing in mind the confidence of local authorities in being able to implement the scheme, it would be hugely unfair to these people to wait any longer than is necessary to introduce this historic reform.
Lord Lipsey
I thank the noble Baroness for her reply, which the world will be able to peruse together with my speech in Hansard and judge whether she has answered all the points that I made. She and her department are obviously getting quite different information from local authorities, which is not surprising because local authorities want to tell the department that they can do it but they tell us that they cannot. There is no seeing which is the truth.
Despite what I said about the 7,600 figure, the noble Baroness did not address the substance of my remarks. Perhaps I could deal with this matter quite easily. I will have a bet with the noble Baroness. For every one by which the figure that finally emerges is above 7,600, I will give her £1 and for every one that it is below 7,600, she will give me £1. If that is agreeable, perhaps the House will excuse me while I book my Mediterranean cruise for next year because the figure will not be 7,600, as in due course we shall find out.
I do not want to press this Motion to a vote today. I am concerned about adding chaos to chaos. It would have been much better if we had debated this some months ago. I do not want to do a screeching U-turn at this stage. I fear that the Government have very far from convinced me and I hope that they have not convinced the House that they are doing the right thing.