Residential Care: Cost Cap

Lord Bhattacharyya Excerpts

Thursday 10th December 2015 Lords Chamber

[Lord Bhattacharyya (Lab)]

My Lords, I also thank my noble friend Lady Wheeler for securing this debate. When two years ago the Government committed themselves to capping the cost of care, the Health Secretary said that the policy would create,

“certainty, fairness and peace of mind”.—[Official Report, Commons, 11/2/13; col. 592.]

Both the summer postponement of the cap and our debate today demonstrate that those pledges are just a distant hope. True, the challenges the Government faced were vast. Social care was an unreformed, unsustainable system. For some, social care meant losing all their savings. For others, it meant inadequate homes, or worse. A growing number were denied support altogether.

The Care Act was a serious attempt to address these issues. It was not perfect but it put a limit on financial risk and set clear guidelines. However, five years after Dilnot, we find that 400,000 fewer people now receive social care and 1 million more elderly people have unmet needs. Care home providers warn of bed reductions and home closures. The only place where the cost of care has been capped seems to be the spending review. After all, we know that the cost of care is growing for those in need. The threshold at which you must pay the full cost of your care has now been frozen for five years. This care creep means that more and more pensioners are losing the right to any help with social care every year. Those who still qualify for some support have seen their bills increase by almost 50% since 2010.

We know that pressure is growing for carers. Since the turn of the century, 1 million more people have become unpaid carers. The number of carers doing 20 hours of unpaid work each week is up by over a third. The LSE estimates that a third of a million carers have left the workforce altogether.

We know that the burden of care is falling on our health service. Cancellations of urgent operations in the NHS have almost doubled in just two years. The reason? Patients cannot leave hospital if there is no care at home. Just last week NICE told hospitals to appoint a discharge co-ordinator to try to get patients out of NHS beds. That is money being spent in the NHS to deal with the care cuts.

We have heard the Government’s response to these growing stresses in the system. They say that councils can increase taxes, which is welcome, of course. However, you cannot fund national social care fairly with a system that allows Wokingham to raise twice as much per head as Birmingham. Next, the better care fund is being increased—but only in two years’ time. We shall wait and see. Finally, the care cap is being delayed, as many people have said, saving £6 billion. The truth is that the savings from delaying the cap will come from the assets of those in care. With no care cap, more family homes will become deferred payments for social care. Self-funders will still get no support for five years, even if eligible for help.

I accept that there are no easy answers. Many of these issues dogged the last Labour Government as well. Nor do I think you can build a strong social care system on the basis of unsustainable borrowing. Ultimately, if we want decent social care, we must pay for it. I will highlight two ways in which we could do so. First, it is bizarre that while we are making huge cuts to social care, we are increasing pensions via the triple lock. The Government’s actuaries say that the triple lock already costs an extra £6 billion a year. That is the same as the care cap. Politically, the triple lock may seem untouchable. But if those excess pension rises were used to fund social care, we would be changing only how we help our older citizens.

For a longer-term solution, we must examine the broader pensions and tax system. One consequence of delaying the care cap is that for the next five years anyone who withdraws their pension faces the risk that their nest-egg will be snatched to pay for social care. This could be the next pensions scandal. However, it also suggests an opportunity. The Government are reviewing the tax arrangements for pensions. If pension funds are to be truly flexible, surely we can encourage savers to use these savings to support their care needs. Why not make using your pension to pay for social care tax-free? To help create a save-for-care culture, we could offer younger people “care ISAs”. We could even cut tax-free allowances for the wealthy to fund incentives for people on lower incomes to save.

Finally, the Government have hinted that they might move to a “tax first, exempt later” pensions policy. This would give an immediate, if temporary, increase in tax revenue. It would make sense to use such a windfall to fund a transition to an integrated health and care service. I would be interested to hear from the Minister if such approaches are being considered in the pensions review. Clearly, finding money in an austere age requires creativity but, as my noble friend Lady Wheeler made so clear, social care desperately needs resources. Last year we agreed on the right ends; this year our ambition must be matched by means.