The Parliamentary Under-Secretary of State, Department of Health (Lord O’Shaughnessy) (Con)
I thank the noble Lord, Lord Lipsey, for bringing forward this debate. I know that he has been a tenacious proponent of deferred payments and of reform of the care system. I pay credit to him for that—it is very rare that we have a debate where I can thank everyone individually, so I also thank the noble Baroness, Lady Greengross, and the noble Lord, Lord Hunt. Unfortunately, I did not have the opportunity to know Lord Joffe, but I know how much the House has mourned his passing and have noted the contribution he made. I want to acknowledge that as we talk about this issue.
We have had a bit of a trip down memory lane today, although others might call it Groundhog Day. We seem to be going over this issue repeatedly without properly resolving it. Of course it is not easy; the ageing population is probably the greatest social challenge, at least the greatest domestic social challenge, that we face. It is not one that we have grappled well with in the past, and that is true of Governments of all hues. That is for a number of reasons, including obviously the money and the changing nature of society, particularly working patterns. What has been highlighted by all noble Lords is the interplay between the taxpayer funded, free at the point of use National Health Service and a social care system that works on a different basis. It means that any attempt, whether it is a Labour-proposed national health and care service or through integration at STP level, is made very hard, particularly as things move. So I do not underplay the importance of this issue, and, of course, as we think about the narrower issue of DPAs, it has to be set in a context of what is happening elsewhere.
In the short run, more money is going into local authorities to try to provide the social care that is required. It is particularly focused on delayed transfers of care. That has some interplay with this issue precisely because of the concerns about moving from one part of the health system into another, something mentioned by the noble Baroness, Lady Greengross, and the noble Lord, Lord Hunt. It is about the difference between continuing healthcare and social care and the quite radical consequences of the different funding situations for families that are necessarily trying to navigate through it at a time of stress. It is a challenge, but we are trying to address it through this additional funding.
In the long run, as noble Lords have pointed out, the intention is to bring forward proposals on social care reform for consultation. The objective in the consultation—I am glad the noble Lord mentioned the Care Act—is to achieve the widest possible consensus. It should not be a completely open-ended “what shall we do” process, but it should try to put forward some proposals that, inevitably in the process of consultation, will change but will try to achieve some kind of consensus. The noble Lord, Lord Hunt, specifically asked about Dilnot. There was a lot of agreement around Dilnot, but I still come across people who think that Dilnot was the worst thing that could ever have happened. There is a more nuanced picture. If anything, that just underlines the importance of taking care as we try to build a consensus.
Moving forward to the specific issue of the debate, which is deferred payment agreements, as has been outlined, they are a means by which individuals can access equity in their home to pay for care without having to sell it, meaning that they do not have to sell their home in their lifetimes. As the noble Lord, Lord Lipsey, pointed out, DPAs have been in existence for a number of years and the issue was addressed in the Care Act precisely to attempt to create a more thoroughgoing national system to replace what had obviously been quite a patchy one. Even though some elements of the Care Act have not been taken forward, in particular the social care reform agenda, as has been pointed out, the Government took the decision to move ahead with the implementation of DPAs in order to fulfil the pledge of the previous Prime Minister—to whom both he and my noble friend Lady Sugg owe their position in this House—that people should not have to sell their homes in order to go into care during their lifetime.
In terms of the actual performance of the scheme, we had a year of voluntary data collecting for 2015-16, although it is now compulsory. A helpful note tells me that the next iteration of the data is 2016-17, and NHS Digital should be publishing them towards the end of October. We will then have a really thorough look at what is happening. The previous year showed that about one-third of local authorities responded, so it was only a partial picture. Nevertheless, it was disappointing that fewer DPAs were agreed than had been anticipated. Indeed, the noble Lord, Lord Lipsey, pointed this out as likely to be the case in the debate on the regulations. I will come to what we can do about it, but these are of course a means to an end in themselves. This is why I am not convinced that having a target is appropriate because it is about enabling a choice and adding to the choices that are available for people by providing a means of deferring payment until after death. There are many reasons why people may not choose a DPA, and of course the private market is evolving all the time. But we need to understand why there were fewer DPAs than anticipated and to ensure that those who are eligible for them can access one. If there are local authorities where not one has been signed, that suggests that something is going wrong at the local level in terms of communication between the local authority, individuals and the social care sector. So we need to know why that happens.
Lord Hunt of Kings Heath
In the noble Lord’s very helpful response, he referred to the private market. He mentioned that not everyone thought Dilnot was the right answer, because one of Dilnot’s aims was, by capping costs, for the insurance market to come in when they have been reluctant to. I wondered whether part of the consultation would seek to answer the conundrum of what could make the insurance market come into this area more enthusiastically. Clearly, that would be one way that we could solve some of the problems.
Lord O’Shaughnessy
The noble Lord makes a good point. I do not know if that will be laid out explicitly. We have talked a little about the manifesto and how it was a movable feast over the course of a weekend. We ended up with a floor and a cap. At the point at which you have a cap, in theory, you have an insurable product. It depends whether it is insured by the private market or the state, but that was clearly at the core of the Dilnot design. There was lots of disagreement about how you could take forward that principle, but I think it useful so that, in keeping with the nature of the market, you have a mixed economy of funding.
We have been talking to local authorities to understand why people may not be accessing DPAs. There are a number of barriers, such as lack of awareness, interest charges and administrative fees. We are considering what actions can be taken locally and nationally to raise awareness and understanding of the scheme. One example of that is that is the wide variation in administrative fees charged by local authorities. Clearly, it is important that those fees are not set at a prohibitive rate, nor that local authorities are or seem to be profiting from the fees. They are meant to be covering costs. However, I think interest rates provide quite a positive picture, because the interest rate is around a third of that offered by the standard equity release scheme on the market. With wider awareness, that would prove more attractive than it has done.
Regarding the eligibility criteria, £100,000 is a magic fee in this social care debate—even more so after the election. That was the point that the noble Baroness, Lady Greengross, made about the reform proposal and widening eligibility. There are two points I would like to make on this. First, the Government’s aim in establishing the scheme was particularly to ensure that people did not have to sell their homes, rather than run down other capital. I know that that is more limited than noble Lords might like, but that was nevertheless the aim of the scheme.
The second point is that, in expanding the criteria, a local authority should in theory be able to recoup its costs, but there may be some costs in taking on a wider group of qualifying people. There is always a balance to be struck, particularly in cash flow terms, between helping a group who are by definition better-off people, and fairness to local taxpayers. That is one issue that needs to be considered.
The noble Baroness, Lady Greengross, asked in particular about the deep dive that happened. She will be disappointed to hear that departmental protocol is that these are for internal use only, so I am afraid I am not in a position to share that information with her. It sounds like she has the detail on what happened anyway, so I am not sure that that would necessarily reveal anything that she does not know.
To conclude, it remains a departmental priority to make the scheme accessible to all those who are eligible and would benefit from it. We will continue to monitor the scheme and, once the data are published, may look at some of the ideas suggested by noble Lords on how to give this scheme more momentum. Clearly, the intention of it is not to be de minimis, but to reach the original target and more people beyond that. We are open to ideas on how that can be achieved.
Finally, any DPA scheme must in the long run fit into the wider context of social care funding and provision. That point has been well made in this debate. As the proposals come out for consultation, considering the interplay of DPAs and the overall funding environment will be critical in whether reforms are successful. I conclude by thanking the noble Lord, Lord Lipsey, again for tabling this debate and other noble Lords for their contributions. I look forward to working with them on getting consensus on real reform in the sector.