The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Kamall) (Con)
My Lords, I congratulate the noble Lord, Lord Lipsey, on securing this important debate and I thank him for his well-argued case for the importance of the private sector in helping people pay for care. As he rightly acknowledged, it puts a Conservative politician in an interesting place when a Labour Peer is explaining the benefits of the private sector. I acknowledge his long-standing interest in this area; he brings a wealth of experience to the topic, not least as a member of the Royal Commission on Long Term Care for the Elderly, which in 1999 began the important discussion of how people should pay for their care. We should also be clear, however, that successive Governments, even before then, have kicked the can down the road. Reports have been issued and have gathered dust on bookshelves. I worked for an economic think tank which surveyed a range of views across the political and ideological spectrum—good ideas that have just been ignored for many years.
In that spirit, whatever one thinks of the announcement made by the Prime Minister on 7 September, it marks an important step on the journey to reforming adult social care. We are no longer talking theoretically or about blank pieces of paper. We are talking about a proposal that can be critiqued and, we hope, improved. I hope that in time, with noble Lords’ experience across the House, we will be able to come up with a package that addresses many of the criticisms made today.
The Government’s view at the moment is that the £86,000 cap in England will end the worry that individuals may face unlimited care costs. In addition, anyone with assets worth between £20,000 and £100,000 will be eligible for some means-tested support, helping people without substantial assets. The Government’s view is that the reforms will bring people peace of mind from knowing that their assets will not be wiped out if they end up needing care.
Let me turn to a couple of the points made by the noble Lords, Lord Desai and Lord Lipsey. A few years ago, I read a very interesting article in the Financial Times about financial planning. The journalist asked why we plan for people to build ever larger amounts of wealth towards the end of their lives, then leave it to someone without benefiting themselves; surely we should encourage people to build large amounts of wealth that they then spend towards the end of their lives, including on their own care. That raises some substantial questions, which, I agree, the Government will need to address.
The cap marks an important step in enabling people actively to plan for the cost of their care, and agree that this is where the private sector can play a critical role. Of course, the new cap will protect people from facing unlimited costs and give greater clarity and certainty about what costs they may face. However, I take on board the point made by the noble Baroness, Lady Brinton, about making sure that we have proper publicity and public information. People will need to plan. As many noble Lords have said, to date, too few people think about the cost of care until a point of crisis when they or a family member are affected.
We believe that the financial services industry can play a critical role in helping people to meet their needs and in supporting people to pre-fund their care cost if they wish to do so. As many noble Lords acknowledged, the financial services industry already offers a range of products that can be used to help people to meet their care costs; they may not necessarily be marketed as help for care costs, but they help to build up a sum that can be used for such costs. There will continue to be a landscape of products to meet people’s needs and, we hope, to enable them to fund the cost of their care up to the cap. It is not a one-size-fits-all measure, as the noble Baroness, Lady Brinton, outlined.
Some people may prefer, for instance, to invest in a long-term savings product such as a lifetime ISA, or increase their pensions contributions to make use of their pension freedoms. Others may wish to use some of the products that noble Lords have mentioned, such as immediate needs annuities. Some people may wish to draw on their housing wealth, in consultation with their family, to pay for their care and, as such, make use of equity release products offered by either banks or local authorities through a low-interest deferred payment agreement.
No one single product or approach to planning for care will meet everyone’s needs. Therefore, as the noble Lord, Lord Lipsey, rightly pointed out, quality financial advice will be critical so that people can make informed decisions about paying for their care costs up to the cap. There is already a legal obligation on local authorities to help people to understand how they can access independent financial advice, but we recognise that more is needed. We are working with stakeholders to consider what people need and how the Government can support them.
Noble Lords may think it rather far-sighted of me that, 20 years ago, I started looking at financial products and how I could save for my future. Interestingly, when I interviewed financial advisers, one thing I was advised was that they were not necessarily financial advisers, and that they may well have been financial salespeople trying to sell products. As we ensure that better financial advice is available, we are going to have to be clear about making a distinction between independent advice and the incentive-based sale of products. In many cases, this is where mis-selling has occurred—that is, where the incentives have incentivised the so-called financial advisers to sell an inappropriate product, rather than the most appropriate product, to the person requiring help. With increased demand, and given that this sends a signal that people will have to start thinking about their social care, the Government hope that the market will evolve. I cannot say that for certain because no one can predict how markets will evolve; that is the wonderful thing about spontaneous order, with existing products adjusting and new products developing.
However, as the noble Lord, Lord Lipsey, and other noble Lords acknowledged, this will not happen overnight. We will listen to and work with partners and industry over the coming months to consider the development of financial products to help people to plan for their care costs, in line with the introduction of the cap on care costs in October 2023. The Government have also held initial discussions with the ABI. What is interesting about those conversations is that we were clear that this will not be spontaneous, and that these measures will emerge with time as people start to understand the parameters and the amounts that they need to raise for their future. We hope to continue these conversations with a broader range of sector representatives in the months to come.
I give this pledge to noble Lords across the Committee: I want to learn from the expertise in this Committee. Some very valuable points have been made in this debate. I will hope to take them back when discussing with the Government the future course of the Bill. We will be listening and there is great and deep expertise. As I indicated before today's debate, I would like to have a long conversation with the noble Lord, Lord Lipsey, and others because there are some valuable points being made.
It is important to see the reforms as a package. The noble Lord, Lord Lipsey, said—and this is something we should all be aware of—that this should not be something for the wealthy; it should be for everyone. There is not just the cap, but also a much-extended means test. It is about how we can support people with their care costs right from the beginning and be aware.
The problem with being purely private, as I think the noble Baronesses, Lady Wheeler and Lady Brinton, said, is that there might be some who cannot afford to take out some of these products—those with less or the just about managing. In that case, unless one is a complete anarcho-capitalist, one would see a role for the state to help those who are unable to make those informed decisions.
Regarding equity release schemes, the deferred payment schemes are effectively a local authority-administered equity release scheme and available in certain circumstances. The Build Back Better document says that we want to make these more accessible, better value and not necessarily for profit.
A number of noble Lords asked questions about raising awareness. We have committed to providing information. We want to make sure that those looking to prepare for their own future, or maybe helping their parents prepare for the future, make informed decisions. It is critical that we make sure that they are getting independent advice. I welcome noble Lords’ advice on how we ensure that we make that distinction between advice, objective advice and pure sales. We also want to work on how to improve access to this advice, for example through the citizens advice bureaux.
My noble friend Lord Balfe talked about people paying for their own care. For this Government, it is about balance. We recognise—as I said previously and many other noble Lords have said—that people do not start thinking about this until it is sometimes quite late. We agree that people should pay towards their care, but we want to make sure that they can somehow plan and overcome this issue of unpredictable costs at the same time. How do we get the balance right between personal responsibility and state support for those unable to provide for themselves?
My noble friend also talked about equity release schemes and existing equity release schemes. He made some very interesting points, as did the noble Lord, Lord Desai, on these. We should take them on board.
The noble Baroness, Lady Brinton, talked about the possibility of the insurance market. We agree that the most important point is that the cap in itself will not mean that an insurance market will magically spring up. It will take time for the industry to understand and work through the consequences—particularly the very clever minds in the insurance industry—and then to see what demand there is from the public.
We need to make sure there is a better understanding of who pays for what, as the noble Baroness, Lady Brinton, said. An extensive campaign should be launched. We very much hope once again to draw on the experience of noble Lords across the House in reaching the public. We are finding this with some other health issues. How do we reach those difficult-to-reach markets?
We will publish details of policy parameters later. I will end with a couple of points. My noble friend Lord Balfe talked about Denmark. It is important that we learn from the best and worst international experiences. If my noble friend can send me details of other international schemes, we will look into those.
The noble Lord, Lord Desai, said that women tend to look after men. My wife would probably say that that is not just in old age—I think they start rather young. As my wife says to me, she has two sons but three boys.
I apologise if I have not covered all points made by noble Lords today. If I have not, I hope noble Lords will write to me and follow up. I will try to get the answers if I can. I thank the noble Lord, Lord Lipsey, for securing such an important debate today and thank all noble Lords who have taken part.