Social Care Funding: Intergenerational Impact
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The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con)
My Lords, I say very sincerely that this was a powerful debate, very worthy of this Chamber. I congratulate the noble Baroness, Lady Greengross, for securing it and thank her for her thoughtful comments and the well-argued case she put before the House today. The noble Baroness brings an enormous wealth of experience on this subject. I pay tribute to her contribution to the House of Lords Intergenerational Fairness and Provision Committee, to which a number of noble Lords referred; to her role as a former commissioner of the Equality and Human Rights Commission; to her previous role as director-general for Age Concern England; and to her current role as chief executive of the International Longevity Centre.
I also thank the noble Baroness for the work she has done with the Intergenerational Fairness Forum, in publishing its report on sustainable funding for social care and intergenerational fairness. This report is informed, thought-provoking and extremely influential. There were a series of insightful points in that report with which I completely agree. First, funding social care is a problem not just for those who need it, but for all of us. Secondly, there should be greater integration between health and social care services, as I have said from this Dispatch Box many times over the last 18 months. Thirdly, catastrophic care costs should be capped, with increased risk pooling across society. Fourthly, those who are able to contribute towards their care costs should continue to, even in retirement. The steps that we have taken following the announcement last week, in the Health and Care Bill, show our commitment to exactly those principles. We are in complete agreement about the need for generational fairness. I will say a few words of context about that.
The future of adult social care is at the heart of this debate. Our country’s adult social care system has never been under the pressure it is today, as the noble Baroness rightly pointed out. The coronavirus pandemic posed unprecedented challenges to the sector and only strengthened the case for urgent reform. That is why, earlier this month, the Prime Minister took the bold step of publishing Build Back Better: Our Plan for Health and Social Care. The reforms presented will make a real difference to the front line of adult social care, and they include care users and—as many noble Lords, including the noble Baroness, Lady Tyler, rightly pointed out—the dedicated care workforce, who have been so brilliant during this pandemic.
Underpinning these reforms is a vital injection of funding over the next three years. This will end wholly unpredictable care costs and include at least £500 million to support the adult social care workforce. It also includes funding to enable all local authorities to move towards paying providers a fair rate for care, which should drive up the quality of adult social care services, improve workforce conditions and increase investment.
I remind the noble Baroness, Lady Bennett, who gave a powerful case for a completely alternative approach, that the current system, while not perfect, has a high level of satisfaction among those who use it. We do not think the moment is right to abandon the benefits of the market economy or that that would improve satisfaction rates. Let me set out how the reforms I have described will benefit future generations.
Of the two principal pillars of our reforms, the first is a cap on care costs, funded by the health and social care levy. This means that, for the first time, everyone will be protected from unlimited care costs. People who have done the right thing and saved for their old age have previously been hit hard by the roulette wheel of health and social care needs. That means that one in seven faces care costs of over £100,000. It is right that society provides a backstop against that. Introducing a cap means that they can keep more of their savings in assets, so people can leave some of their savings to their loved ones. I remind noble Lords, including the noble Baroness, Lady Brinton, who made a point on this, that this often includes many who provide unpaid care and fear for the loss of these assets.
Secondly, those who have limited or no savings will be protected by a much more generous means test. They and their loved ones will have the certainty of support when it is needed, and everyone will have more of their assets fully protected. I am very proud to be part of this, especially as the reforms this Government are bringing forward will increase the number of older adults receiving some state support by roughly two-thirds, up from about half at the moment.
The Intergenerational Fairness Forum report recommended a review of DPAs—deferred payment agreements—and the introduction of new equity release schemes. DPAs complement the reforms well, and I agree that equity release is a clear mechanism for protecting people from selling their homes within their lifetime. There are issues within the current system, including narrow eligibility criteria and low take-up, but I assure the noble Baroness, Lady Greengross, and the noble Lord, Lord Griffiths, that as part of the announcement last week we are committed to working with partners to review the existing scheme in order to provide more flexibility for people to defer their care payments. I would very much welcome and hugely appreciate the noble Baroness’s insights into this area to inform that review.
These measures, which are being fully funded by a new, UK-wide health and social care levy, mean that we are not passing on the costs to future generations or increasing the public debt. I remind the noble Lord, Lord Davies, that by using national insurance contributions we are also ensuring that business contributes; it is not left just to the individual. It is progressive, in that those earning more will pay more, and has a clear UK-wide approach, meaning that everybody pays the same, wherever they live in the UK. Crucially, I remind noble Lords that we are tackling intergenerational fairness by extending the levy to all those over state pension age from April 2023, ensuring that individuals of all ages play their part.
I remind the noble Lord, Lord Howarth, that the new levy is not just for social care. It will fund the full range of health priorities and support people of all ages. New spending on the NHS will not just benefit older individuals, with recent evidence suggesting that more than half of NHS spending goes to people in households below retirement age. In adult social care, currently more than half of all public spending goes towards under-65s. Working-age people will also benefit from limits on what they will have to pay if ever they need care later in life. It is entirely consistent with the contributory principle for national insurance, whereby working-age employees pay NICs, which gives them access to contributory benefits when out of work, including the state pension.
I say to the noble Baroness, Lady Watkins, that we know there is no one-size-fits-all approach to the social care system. I acknowledge that in 2019-20 we had more than 250,000 younger adults and more than 375,000 older adults receiving state support. These reforms will provide support to people of all ages. Younger and older adults will benefit from the same cap on care costs. Once they reach it, they will no longer pay for their personal care from their income or any assets. This will provide certainty and reassurance, help people plan for their future and ensure that more people are able to pass on more to their loved ones.
Finally, I assure noble Lords that this Government completely recognise the real need for intergenerational fairness, the subject at the heart of this debate. I will try to persuade the noble Lord, Lord Lipsey, who spoke with such characteristic learning on this subject, that we are making changes to that effect in many areas of policy. First, the Government’s new Environment Bill, which has taken up a lot of noble Lords’ time this week, looks to the future, focusing on creating a new governance framework for the environment, setting a new direction for resources and waste management, improving air quality, securing our water services, enhancing green spaces, updating laws on chemical use, and so on. Secondly, the Government are committed to strengthening their management of the public sector’s assets and liabilities to the benefit of future generations. Thirdly, our Kickstart scheme provides funding to employers to create jobs for 16 to 24 year-olds on universal credit.
I remind the noble Baroness, Lady Tyler, that we are working hard to drive up provision of affordable housing, and the new mortgage guarantee scheme launched in April will help increase the supply of 5% deposit mortgages for creditworthy households. We will support lenders to offer products through a government-backed guarantee on new 95% mortgages until 31 December 2022. These are some of the ways this Government are ensuring that we are building back better for future generations.
I reassure the noble Baronesses, Lady Wheeler and Lady Brinton, that we have made a bold step on the journey to reform, which will make a real difference to a great many people of all ages and backgrounds, including care users and the adult social care workforce, who have worked so brilliantly through the pandemic. I reassure the noble Baroness, Lady Greengross, and the noble Lord, Lord Griffiths, that we will work with partners in the development of these policies.
I thank the noble Baroness, Lady Greengross, who has been such an advocate for this important issue and secured such an interesting debate today. I thank all noble Lords who have taken part.