Elderly Social Care (Insurance) Bill [HL]

Lord Sikka Excerpts

2nd reading
Friday 16th July 2021 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I, too, would like to thank the noble Lord, Lord Lilley, for this debate, but I cannot support his Bill. The Bill does not really address the crisis in social care, which has been deepened by the Government. There has been a 38% real-terms cut in local authority funding since 2010; we have an expensive and unfair system of means testing and caps; and there is obsession with privatisation. The involvement of private equity and hedge funds has been disastrous. Some 11% of the income of private equity disappears into servicing contrived loans, leaving far less for front-line services. Also, the Care Quality Commission has been an ineffective regulator.

This Bill would create a divisive system to help a few rich people. Currently, around 50% of social care expenditure is on working-age adults, not the elderly. The Bill offers nothing to them. Its concentration on home owners also deepens social divisions. For example, only 20% of black African households own their home, so they would be abandoned by this Bill. Due to low incomes and high house prices, home ownership is declining, at 63% now compared to 71% in 2003. Many retirees are still paying their mortgages and do not have £16,000 just hanging around. The median household gross savings in the UK is around £11,000, and 25% of households have less than £1,800. Poor pensioners are already using equity release schemes to make ends meet, never mind finding an extra £16,000.

The only way forward is for us to have a free social care system funded by general taxation. This can be done without increasing the basic or the 40% marginal rate of income tax or national insurance contributions for the masses. For example, £14 billion a year can be raised by taxing capital gains in the same way as earned income, £10 billion can be raised by restricting tax relief on pension contributions to 20% for everybody, and a modest level of financial transaction tax and wealth tax can raise billions. Since 2010, HMRC has failed to collect around £350 billion of taxes due to avoidance, evasion and errors. A clamp-down on tax abuse, and investment in HMRC, can pay big dividends. There are resources, and they are available, to fund completely free, universal social care for everyone. The only barrier is the Government’s ideology.