Baroness Tyler of EnfieldMain Page: Baroness Tyler of Enfield (Liberal Democrat - Life peer)
Department Debates - View all Baroness Tyler of Enfield's debates with the HM Treasury
My Lords, for decades, social care has proved to be an intractable problem. After numerous reviews and failed reforms, the level of unmet need rises, the pressure on unpaid carers grows, the supply of care providers diminishes and the strain on the undervalued care workforce ever increases. So, it is welcome that at last we have a proposal before us and, as the noble Lord, Lord Macpherson, has said, a recognition that taxes will have to rise to pay for it.
The problem is that these are the wrong proposals. What the Minister has brought to us today, is essentially a tax increase on younger and low-paid workers so the wealthy can retain more of the value of their properties to pass on to their children. As we have heard, it is a tax on employment that will hit businesses. It will not, as yet, solve the underlying pressures in social care.
What a flimsy Bill it is. It is treated—remarkably—as emergency legislation, despite the fact that the Government have had 11 years to bring forward proposals to Parliament. There have been no cross-party talks about this and no consultation, and no Select Committee was allowed to scrutinise the Bill before it was brought before Parliament. Clause 4, as my noble friend Lord Eatwell said, is remarkable in the power it gives to the Treasury to make any change it seems to want to in relation to the proposals before us. If this Bill were to receive proper parliamentary scrutiny, it would be torn to bits. No wonder the Minister spoke for less than five minutes.
My noble friend Lord Eatwell has already referred to the remarkable commentary from HMRC on this tax rise. I will repeat one comment that he made. HMRC said:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
As my noble friend said, how can the Minister justify that? What does he say to the CBI, which commented that a national insurance increase
“will directly hurt a business’s ability to hire staff, at a time when businesses have faced a torrid 18 months and are now fighting crippling labour shortages”?
Indeed, having listened to the Prime Minister and Ministers last week, I might ask whether the Government have any interest at all in the future health of our business sector. It seems not.
Unfair as it is, will this levy be sufficient? In his opening remarks the Minister remarkably claimed, without any evidence whatever, that this will put social care on a long-term sustainable footing. But we have already heard that the levy is projected to raise £36 billion over the next three years, that all the money raised in 2022 will go to the NHS and that for the remaining two years £5.4 billion will be invested in social care. This money is not designed to alleviate existing funding pressures on the system, yet these are immense. The committee chaired by the noble Lord, Lord Forsyth, published an excellent report which estimated that an £8 billion yearly increase would be needed to restore care provision to 2010 levels—he has already referred to that. But the £5.4 billion, one assumes, is to be allocated primarily to implementing the cap.
The Health Foundation, following up on the Select Committee report, set out at the beginning of this month what it may cost the Government to fund the NHS and social care system in England, along with workforce requirements, over the next 10 years. It looked at two projections, stabilisation and recovery, and stated that both of them would need much higher growth than in recent years. It said that
“an additional £8.9bn and £14.4bn is needed in 2030/31 over 2019/20 for the stabilisation and recovery scenarios respectively.”
Does the Minister really think that the levy is the answer to that, when most commentators reckon that, in the end, the NHS is going to need almost all of the levy and is likely to get it?
The claim that no one will be forced to sell their own home is surely questionable. My estimate is that on average a person will have to spend at least £160,000 before they get to the £86,000 cap. This takes account of a modest calculation of living costs at about £12,000 per annum, and the fact that the £86,000 cap, as the noble Lord, Lord Forsyth, who is surely right, said, will be calculated on local authority rates—despite the fact that the self-funders subsidise those local authority rates. Even when a person reaches the cap, they will still have to find living costs on an annual basis, and it is quite likely that the local authority will still pay only at the local authority rate, so many people will have to pay top-ups as well. Melissa Lawford in the Sunday Telegraph put the estimate much higher. She thought a self-funder would receive government support only after five years, having spent £296,000. The puzzle to me is that no effort at all has been made to encourage and incentivise the insurance market to provide a more effective way of support for self-funders.
The ABI, in a commentary it set out over the weekend, said that the cap should be viewed as a solution to avoid catastrophic care costs and not as a way to enable a private market to develop. A cap, in itself, would not prompt a market to develop. Why on earth are the Government not seeking to incentivise a private market to develop to help self-funders, allowing the Government to concentrate on the proper provision of social care for those who cannot afford to pay above any insurance prospect?
Why have the Government spent so long dithering about implementing Dilnot when they should have been thinking about a much more concerted approach to dealing with these issues, to encourage as many people as possible to support themselves while shoring up the pitiful state of our social care system at the moment? There is no plan. We are promised a White Paper in December. Does any noble Lord think that this is going to be well thought through in a way that will deliver a good social care system for us going forward?
What about carers? The right reverend Prelate asked what this would mean for carers. I would just say to him, as Carers UK has said, that carers have been propping up a chronically underfunded healthcare system at huge cost to their own personal health, finances and ability to stay in work. It is very telling that nothing, in all the claims the Government have made, has been said about how carers will be helped.
Paul Johnson of the IFS recently described our social care system as the unfinished business of the National Assistance Act 1948. It enshrined, he said, a Poor Law philosophy of both needs-tested and then means-tested moving into the social care system, to be run in parallel with the free at point of use NHS.
This Bill is not the answer to that. It will not transform social care; it will not help care workers get the pay, terms and conditions they deserve; it will not help unpaid family carers. Instead, we have a huge, missed opportunity and a tax on the youngest and lowest-paid workers for the benefit of the better off. This Bill will not do.
My Lords, I am very pleased to follow the noble Baroness; I agree with her on one or two items I will come to in a minute. She had some ideas about how these revenues might be otherwise achieved. I will not offer my own ideas, but there is a question here; I wondered whether the noble Lord, Lord Macpherson of Earl’s Court, might have said this. It seems very misplaced to have a fiscal effect of this scale in September when the Chancellor should be on his feet in late October with what ought to be the fiscal event that gives us the OBR’s judgments, which enables us to see the whole panoply of revenue and expenditure, and I am surprised that it was done this way. It is obviously done for political reasons; it has enabled the Treasury to distance itself somewhat from the decision that led to this. I am grateful to my noble friend on the Front Bench for introducing the Bill in this way. He set out the Treasury’s arguments in favour of the Bill; it was therefore necessarily a short speech.
The noble Lord, Lord Eatwell, is not in his place at the moment but I was surprised that he did not refer to Gordon Brown’s hypothecation of a national insurance increase to the NHS. As a subsequent Secretary of State, I can say that this was important only in so far as it made the accounting for the NHS in the departmental accounts more complicated. It had no impact whatever on the decisions made about revenue and expenditure in the Department of Health, as it then was. This will not have an impact either. The NHS will continue to be funded out of general taxation, and the only impact of this increase is that it further reinforces the misplaced belief on the part of the general public that the NHS is funded out of national insurance contributions and it is therefore a contributory tax. It is not like that, has not been like that and will not be like that. The noble Lord, Lord Eatwell, made a point about whether people think that they have access to the NHS because they pay for it. They have free access to the NHS because they pay for it through general taxation, not because they pay for it through national insurance contributions, and the extent of their national insurance contributions has no impact, and should have no impact, on their access to the NHS.
I have two problems with using national insurance contributions in this way for the National Health Service. The first is that it is a tax on jobs. This is happening in the week after the Prime Minister has told the business community that it is going to have to pay higher wages, so it may well say, “If we have to pay higher wages, you might not impose on us additional costs of employing people”, which is exactly the point that the noble Lord, Lord Macpherson, made. There is a gap at the moment between the cost of employing people in this country and the cost of employing people in, for example, continental Europe. However, we cannot be complacent about that, because there is a different gap and a cheaper cost of employing people in many of our other competitor countries. We have to be very aware of the risks associated with continuously increasing the cost of employment.
All that said, increasing national insurance is an inappropriate way of funding social care. Like my noble friend Lord Forsyth of Drumlean, I welcome the fact that the Government are addressing the funding of social care. They have done so in the past, through one or two mechanisms, but at no stage have we seen the increases in resources for social care keep pace with the rising cost. That is where we need to be. The NHS, as I know perfectly well from past experience, needs, broadly speaking, a 4% per annum increase in real terms to keep pace with demand. Social care is getting nothing like that, but the increase in demand for social care is very like that for the NHS.
More of these resources should go to social care than the Government intend—not all of them, but perhaps one-third over the next three years—and that should start now. If you ask people in the NHS whether funding for social care and funding for the NHS are separate, they of course understand the essential link between them. Funding social care now, so that we can remedy some of the lack of access to local authority-funded social care and enable people who have substantial, not just critical, care needs to get access to social care, will do a great deal to reduce the crisis in demand for the NHS.
This is particularly true of accident and emergency units, which are often presented with older, frailer people with comorbidities—incredibly difficult patients with whom to work. The NHS does not want to discharge such patients to their homes with comorbidities and unresolved issues, so the cost to the NHS is very high. But such patients can be managed through the social care system and in primary care—we just need to make sure that they have fewer crises that have not been anticipated and dealt with.
Speaking as the Secretary of State who asked Andrew Dilnot to form his commission and prepare his report, I note that it is now over 10 years since it was presented. We legislated for it in 2014. It is available and it could be implemented now, but in my view it should not be paid for out of the national insurance increase. I proposed, more or less 10 years ago, that it should be paid for by removing the exemption for people’s principal private residence from the means test for domiciliary care. My noble friend Lord Forsyth of Drumlean asked this question. Now, it would, I think, raise something like £1.3 billion a year. If, in addition, higher-rate taxpayers who are pensioners were not to receive the winter fuel allowance, we would have about the amount of money necessary to pay for the cap on care costs and the changes to the means test.
That is how it should be paid for—within the system, essentially by those who will benefit from it, because they have the underlying resources to do so, not least in the properties that they own. So let us not go down the path of unfortunate intergenerational impacts, particularly for younger people, of putting this on to national insurance contributions.
My final point is that a White Paper on social care and healthcare is coming. We already have the Health and Care Bill. The integrated care in that Bill is not integrated care between health and social care. When we talk about integrating health and social care, what we need is not institutional integration but integration around the care user and patient themselves. That is the only integration that will really work: integration around the person themselves. Whether it is done by personalised care or self-directed care, it needs to be supported by pooled budgets and joint commissioning. Fundamentally, it is about giving patients and care users themselves, and their families, much greater control over the nature of the services provided to them by the NHS and social care. I hope that is what we shall see in the autumn.