Elderly Social Care (Insurance) Bill [HL]

Baroness Penn Excerpts

2nd reading
Friday 16th July 2021 Lords Chamber

[Lord Flight (Con)]

My Lords, I, too, congratulate the noble Lord, Lord Lilley, on his Bill and on addressing territory that Governments should have addressed long before now. I agreed very much with my noble friend Lady Altmann’s speech.

The noble Lord, Lord Lilley, argued that social care provides two competing challenges to government. The first is the increased pressure on local social care budgets that comes with an ageing population, the increases in the national living wage and the risk of care homes closing. The second is resentment from homeowners and their relatives who risk having to sell their homes to pay for social care. He advises that both problems could cost billions to solve and that, where there is more placating of homeowners, less finance will be available to provide decent care for those in greatest need.

Under the Bill, a state-owned insurance company would be set up and guaranteed by the state. The cost of insurance would be calculated to be actuarially sufficient to pay for all the care. If they wished, people would be able to pay for the insurance via a charge on their homes, which would be realised when they died. That charge would typically be a modest fraction of the value of any home and nobody would be required to take out such insurance. Based on updated figures and the calculations from the Dilnot commission, the noble Lord, Lord Lilley, calculated that a theoretical premium would be approximately £16,000 and the average cost to social care, supported by local authorities, would be £25,000, as he said. I question whether the noble Lord’s insurance premium of £16,000 per annum will be sufficient.

The Bill does not address the point that there is a perceived unfairness, with those who have worked hard and saved having to pay their care costs while those who have spent all their incomes get their social care costs paid for. Those people should arguably get state-provided care, which would be of a more basic nature than the care that individuals purchase. The main objective of the noble Lord, Lord Lilley, is to weaken the political pressure from homeowners for the state to provide them with free social care, but his arrangements entail the state insurance body realising its charge on a property on the death of the insured person or the sale of that property—the charge being the fraction, set aside at the time of the purchase of the policy, of the value of the property at the time of death, net of mortgage.

The terms of the Bill do not therefore fully avoid the much-disliked arrangement of the public sector taking value from a deceased citizen’s property, even though it would be much less under the noble Lord’s system. The insurance arrangement would operate such that the insured persons would be entitled to social care from their local authority, which would be reimbursed for the cost of the care provided. The weakness here is that there is no incentive for the local authority to keep the care costs as low as possible.

The proposals of the noble Lord, Lord Lilley, are complicated and do not—

[Baroness Penn (Con)]

I must remind the noble Lord of the advisory Back-Bench time limit for this debate.

[Lord Flight (Con)]

They do not include the cost of care homes. In my view, what is needed is a less complicated and more standardised approach.