Council Funding and Social Care

Lord Swire Excerpts

Wednesday 22nd February 2017 Westminster Hall

[Alan Johnson]

My hon. Friend is absolutely right about that, and I will talk about the widening inequalities in a second. She was also right to refer to dementia sufferers. Too often in this debate—I am perhaps guilty of this, as well—we deal with dry statistics, percentages and precepts, when at the end of it there are people who are very vulnerable and need care, above all dementia sufferers. We have to tackle that and ensure that the inequality gap does not get wider. I will come on to that in a second.

[Sir Hugo Swire (East Devon) (Con)]

I am following very closely what the right hon. Gentleman is saying and am finding myself in agreement with much of it. In the time left, will he also address the issue of the hidden cost of care? These are the carers who are looking after elderly relations and who have sometimes lost childhoods looking after disabled mothers. A huge army of hidden carers are providing free social care. When we look at the model, we should not forget those people.

[Alan Johnson]

The right hon. Gentleman is absolutely correct about that. I said at the beginning of my remarks that this is a wide debate, but I have chosen to focus on one strand: funding through council tax. I have met not only elderly people caring for similarly elderly people, and not only women trying to care for elderly parents at the same time sometimes as bringing up a child, but, most poignantly, children who care for their parents. They remained hidden to the extent that even schools did not know they had such responsibilities, and there was no obligation on schools to find out, so the right hon. Gentleman is absolutely right that the problem is far reaching. For Government it is a difficult problem to resolve, although I do not doubt their determination to try to resolve it. I am just pointing out that if we were to accept that the way to do it is by local precept on local councils—devolving the issue down to local level—the Government would have to accept that the route they have designed is woefully inadequate.

In addition to the fact that the national living wage costs councils £612 million against the £382 million that the precept at 2% raised last year, a combination of the Care Act 2014, case law in respect of deprivation of liberty safeguards and the proposed Department for Work and Pensions cap on housing benefit—if the Government are unwise enough to go ahead with that, they will create all kinds of problems that will come to councils through adult social care—has created and will create additional unfunded social care costs.

However, as my hon. Friend the Member for Great Grimsby (Melanie Onn) alluded to, the biggest problem with relying on the precept and the retention of business rates—the Government’s other new idea—is that it is grossly unfair and will widen existing inequalities, leaving those with the greatest need less able to raise the extra money that they need. Far from doing something to close the equality gap that the Prime Minister rightly made her mission in her first utterance in that role, it will exacerbate the problem and lead to Government-inflicted inequalities. The King’s Fund points out that the 10 most affluent areas will raise almost two and a half times more from this precept than the 10 most deprived will. If it was more money instead of less, it would be welcome. The fact is that all local authorities, wherever they are in the country, will be worse off overall from cuts to local authority funding, but through the precept and rates retention some will be worse off than others.

Allow me, if I may, Mr Bailey, ahead of your visit to Hull, to be parochial and talk about the city that I represent. Hull has 27% of its population living with a long-term health condition. It is a brilliant city, but not a wealthy one. Not many people have the £25,000 that, according to the Government, allows them—this is another controversial issue—to self-fund. Only 7% of the population is able to self-fund in Hull against the national average of 45%. There is, therefore, a huge and growing demand for adult social care services.

Hull City Council will struggle to produce any meaningful resources from the social care precept because 80% of our housing stock is in the two lowest bands. The net result—this is a neat little comparison—is that in Kingston upon Hull the increase in the precept to 3% will bring in £8.01 per person, but in Kingston upon Thames, which I have nothing against—it is a wonderful place—will raise £15.27 per person. There are even starker anomalies, incidentally, but that is a neat comparison. Kingston upon Hull, which has higher levels of deprivation, a greater need for social care and a lower council tax base, finds itself getting almost half as much as Kingston upon Thames. Because of the Government's failure to properly account for deprivation over the next three years, Kingston upon Thames will have £2.3 million more to spend on adult social care while Hull will have £2.2 million less.

Hull has, like all local authorities, been battling to protect its services through a vicious series of funding cuts, losing £115 million of core funding with a further £33 million of cuts to face by 2020. It has lost £18 million from its social care budget since 2010, with the need to cut a similar amount over the next three years. Overall, a combination of the financial pressures on Hull City Council, the clinical commissioning group and secondary health care—those are all combined in the interface of how we deal with these problems—means that we have a spiral of decline, as the CCG is unable to support community services and is pulling back funding at the interface of health and social care. That then impacts on the ability of the local authority to respond swiftly and robustly to a sudden and unexpected need for high-cost social care, such as somebody experiencing a stroke and awaiting discharge from hospital.

An increase in delayed discharges places an additional burden on the acute trust, which goes deeper into crisis and has to admit people later and discharge them earlier, often discharging them inappropriately and pushing the burden of funding support for vulnerable people back to the CCG and the local authority. The vicious circle then begins all over again, becoming more and more problematic and presenting even greater risks to individuals.

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[Sir Hugo Swire]

On this issue of keeping people in hospital, in some parts of the country the local authority is slow to find them beds because it is then its responsibility financially, but does the right hon. Gentleman not agree that all the evidence shows it is far better to keep people out of hospital, because of muscle wastage and suchlike, and to get them back home as quickly as possible?

[Alan Johnson]

There can be no dispute about that from anywhere. All the evidence says that that is the case. “Bed-blocking” is a terrible term, but it was around when I first came into this place 20 years ago. We thought we had resolved the situation, but it is becoming more and more acute. Keeping people in hospital is a problem because it is not good for the individual, never mind about the effects on healthcare services, the NHS and adult social care. It is not good for the individual to be placed in that situation. I might add that lots of charities and voluntary sector organisations do a great job in helping to deal with that problem. They depend for their existence on a bit of match funding from local authorities, sometimes £10,000 a year, which they are no longer able to get since that has had to be cut because of cuts to local authority funding, so that has had an impact even on the voluntary sector.

In November the Public Accounts Committee concluded that the Department for Communities and Local Government does not have sufficient understanding of the extent to which revenue pressures are affecting local authority finances. That has certainly been our experience in Hull, although we have tried to assist the Secretary of State by highlighting the anomalies that the precept creates. The Secretary of State wrote to the leader of Hull City Council, Steve Brady, on 19 July last year, shortly after he had taken over at DCLG. It was a lovely letter thanking Steve Brady for a letter to his predecessor about devolution in Yorkshire. The leader of Hull City Council’s letter also mentioned the problems being caused by the tax precept for adult social care. The Secretary of State said he understood and wrote:

“ I would be pleased to meet you in due course to discuss this further. My office will be in touch to arrange...a suitable time”

in the coming weeks. Hull City Council waited 13 weeks and then got a response that was not even from the principal private secretary in the Department. A correspondence clerk wrote to say that the Secretary of State no longer had any time in his diary: he was unable to commit to any meeting whatever and unable to commit to the meeting that he himself had suggested, unsolicited, in a letter to the leader of Hull City Council. That is at worst arrogant; at best, discourteous. Perhaps the Minister can suggest to his boss that he clear an hour—even half an hour—in his diary for the commitment that he himself suggested. His failure to do so has led to the suspicion that he is not really interested in gaining the sufficiency of understanding that the PAC alluded to in its report.

The problems in Hull and other cities represented by Members here today remain as acute as they were in July, and the local government funding settlement published late on Monday evening will do nothing to resolve them. The better care fund gives some weighting to local need, but nowhere near enough, with rising demand and reduced funding producing a £30 million funding gap for Hull by 2020, and a further £40 million to come if 100% business rates retention kicks in without some form of adjustment to account for deprivation. Again, places such as Hull with tightly drawn city boundaries—none of the suburbs are part of the Hull City Council area—will do worse from business rates retention than more prosperous areas.

Having failed in our quest to inform the Secretary of State of the effects of his policy on cities such as Hull, the three local MPs wrote to the Chancellor ahead of the autumn statement, seeking his assistance to ensure sufficient funding for adult social care. The reply came from the Minister who is here today, and it was full of reassuring statistics about the money we would be receiving. The only problem is that his figures were wrong by a factor of 45%. The 3% precept will raise around £2.1 million in Hull, not the £3.5 million the Minister claimed. Yes, we will receive £1.46 million from the new adult social care grant, but we will receive a corresponding cut in the new homes bonus of £0.8l million, so that £1.46 million is reduced to £0.65 million. In addition, although it is true that Hull will get £1.88 million from the better care fund, like all local authorities we were hoping to see that money front-loaded, not back-loaded. The £6.5 million we are due to receive in 2018-19 is badly needed now.

The cuts being made to local authority funding are what I would call reckless. Even in this new world of alternative facts, the Government cannot spin draconian cuts into extra funding. Instead of engaging in this kind of smoke-and-mirrors attempt to suggest that all is well, the Minister needs to understand, and then acknowledge, the real funding position for councils such as Hull and other local authorities whose Members are waiting to speak in this debate.

This is not a battle among local authorities; it is a battle by local authorities to achieve a proper understanding by the Government of the crisis they face. The Government must take levels of deprivation and the ability to raise finance from local tax receipts fully into account when considering the future fair funding model for local government. They must set out their plans for the promised land of rates retention in 2020, which may help in the south where, as we have been hearing, rateable values are high, but is a huge issue for local authorities in the north. It would also be handy if the Government sorted out their promised review of rateable values before passing that substantial buck to local authorities, as they plan to do in three years’ time. More urgently, they need to front-load the better care fund, so that services do not collapse before a fairer funding model is in place.

Local authority funding of adult social care on the current basis is unsustainable, but, in the absence of fresh thinking, it is all we have, and the people who rely on adult social care cannot wait any longer for the urgent help they need. The debate can get lost in dry statistics, but in reality it is about the elderly woman who is stuck in a hospital bed because there is no satisfactory provision in her community. It is about the disabled man unable to receive the help he needs to have a bath, the care home that closes and the dementia care that vanishes. It is about many of the things that make our society civilised—things that are diminishing daily, on this Government’s watch.

[Sir Hugo Swire (East Devon) (Con)]

I am grateful to the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) for instigating this debate. It will be one of many, and I am pleased that there is some kind of consensus emerging.

At the outset, we should do two things. First, we should be careful in using the word “crisis”—it is an overused word in government—but in this case we do have something approaching a crisis. Secondly, although we should try to take the politics out of this, and I will argue why, I am not a deficit denier and we need to acknowledge the severe financial restrictions under which we are still operating. When we won the election and formed the coalition Government in 2010, the coffers were empty. To imagine that we can print and spend more money is irresponsible and would get us back exactly to where we started seven years ago.

The issue is nothing new. The Blair and Brown Governments failed to address it; successive Conservative Governments have failed to address it. This crisis has long been coming and it is now here. In a sense, I am sorry to see the Minister in his place. A Communities and Local Government Minister should not be involved in this at all, and this should not be a local government matter.

When we talk about additional funding, we are discussing three strains. The first is the precept, which is a problem for us in Devon just as it is in the constituency of the right hon. Gentleman, because we have a relatively low income and high needs. The second strain is business rate retention. Will my hon. Friend the Minister refresh our minds on where we are on business rates retention? The Secretary of State has said that 100% rates retention will mean £12.5 billion a year more to local authorities. Have the Government decided that that is the policy, or is it going to be 100% retention of any new business rates to encourage local authorities to grow business? There is a fundamental difference.

The third strain is the forthcoming Budget. I see that the financial figures are better than were expected, which gives the Chancellor some wriggle room. I would submit that social care is the one area where he could usefully spend money to avert the crisis we are discussing.

Any of those measures are by definition temporary, because they provide only a sticking plaster. A Minister from the Department for Communities and Local Government should not be here answering the debate. The model is completely ridiculous and outdated—I would go so far as to say that the model of healthcare through the NHS and social care is now outdated and needs a radical rethink.

There should be a seamless passage of care from cradle to grave. It seems utterly ridiculous to have a system whereby the NHS is funded by national taxation and social care is funded by local authorities. That model is completely crazy. It has emerged and grown up. We are in the position where, up and down the country, there are examples of hospitals retaining people beyond the date that they should be there, because as soon as they walk out the door they become a cost to the local authority. Where is the incentive for the local authority to provide an early care package for those people? The victims of that situation are at the mercy of the Government and need urgent help.

I am not going to rehearse the statistics from my part of the world, other than to say that we have a higher than average elderly population of over 85s, which is growing faster than the national average. I am trying to sell Ministers the idea of using Devon as a template for getting this right. Places such as Sidmouth in my constituency are demographically 20 years ahead of the rest of the country, so if we get it right in Sidmouth, we are going to get it right everywhere else.

I am enjoying the freedom of returning to the Back Benches—I can speak without fear or favour and make wild spending commitments without having to stand at the Dispatch Box to justify or defend them. I have the freedom to look at these things based on the knowledge I have accumulated as the local MP since 2001 in an area where social care funding is a major problem. The right hon. Gentleman alluded to the cross-party group under the leadership of the right hon. Member for North Norfolk (Norman Lamb)—I suppose it is his leadership, although the group has pretty flat management—to whom we should pay tribute because he has been at the forefront of discussions about social care. I am part of that group, which has been to see the Prime Minister.

I know all the arguments about what has gone on before 2010. Much of that is regrettable, but we should now look this in a radical way. This is about not just social care, but the whole NHS. Bevan himself, when he got the first invoices for the NHS—I think it was to do with penicillin or antibiotics—said, “This is not what I had in mind at all,” yet we have allowed the whole thing to grow enormously. We have to be realistic about what kind of care the state should provide from cradle to grave and how it should be paid for. We must be braver than we have been in the past. Politicians of all hues and shades need to face up to the fact that this is about not just social care but care, health, accident and emergency and GPs—we need to look at the whole thing.

I am interested that the right hon. Gentleman did not allude to cultural changes. I like to think of myself as his benefactor, as I put money in his pocket by buying his books—and very good they are too. I recommend that those who have not read them do so, and buy them rather than go to the library—cheapskates!—because the publishing industry needs our support. In those books, the right hon. Gentleman eruditely paints a picture of an extraordinary upbringing in Notting Hill in London. He was actually the original member of the Notting Hill set and set the bar for them—what an excellent group of people they all turned out to be, with some exceptions. But I bet—he did not say this, but he will correct me if I am wrong—that in the Notting Hill he grew up in, elderly people were more often than not cared for by their families, and were not left alone in their homes or put into institutions.

The majority of carers in this country are women caring for men. We have already talked about the hidden carers, such as the elderly lady looking after an infirm husband, not getting enough help or respite—respite for carers is another issue. We talked earlier about the child who is having their childhood stolen from them because they are not able to attend after-school events as they have to rush home to care for a disabled or a needful member of their family. All that is true, but we have to recognise the fact that, because couples are now on the whole in work, they are less able to care for vulnerable parents and relations than they were in the past. Perhaps we need to look at that more carefully. Perhaps we need to plan more carefully to make it easier for people to add on what used to be called granny flats, and try to encourage more people, through either fiscal incentives or behavioural change, to care for people at home. We have to decide where the family stops and where the state steps in. It cannot all be left to the state.

All those things need to be looked at. The more outrageous and controversial the suggestions that are made, the better, because that gets people out of their boxes and makes them think about how we are going to deal with this problem. Hon. Members are shaking their heads in disbelief, but this problem is not going to go away; it is going to get worse as the population becomes more elderly. We have finite resources, so we need to see how best to allocate them. At the end of the day, this is a prosperous country, and a prosperous country should be judged by how it looks after its elderly and vulnerable people. At the moment, we are not doing it well enough.

Others wish to speak, so I will say three things in summary. First, I call, as I have done in Parliament previously, for the £1.5 billion of funds for the better care fund to be brought forward, because currently it will not be available until 2019. We need that money now. Secondly, we need transitional funding to facilitate the change in the healthcare model in East Devon. Thirdly, as I have said, we need a cross-party review of the NHS and social care services.

I have a local councillor standing for re-election in my part of the world who believes that money grows on trees. Her stock answer to everything is, “Scrap Trident, tax corporations, tax the rich.” It is not terribly intellectual. We have to be rather smarter than that. If the Chancellor has some wriggle room in his Budget—he is looking at the many priorities and hard-pressed areas that come across his desk, from the NHS to local government finance and the military—he owes it to this country to put social care at the top to provide some relief. That is not the long-term answer, but we have a short-term problem, and I am looking to him to help us solve it.

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[Kate Green (Stretford and Urmston) (Lab)]

I was not in the Chamber for the beginning of the debate, for which I apologise, so I am particularly grateful to the hon. Gentleman for giving way. He alluded to local experiences, and the demographics and wealth in East Sussex. There is also a disparity between north and south in how wealth is held in housing assets. There is an interesting opportunity for the Government to look at how the excessive housing wealth that is held in London and the south-east could be released in a fair way to ensure that constituents in my part of the country are not disadvantaged.

[Sir Hugo Swire]

Mansion tax!

[Kate Green]

And constituents in the south-west. There are areas where housing wealth is low and therefore not a good source to pay for social care, but there are other areas where it is very high. I own a flat in central London, and that ought to be used to pay for my social care.

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[Sir Hugo Swire]

Will the hon. Gentleman give way, so that I can correct him factually?

[Jim McMahon]

In that case, yes.

[Sir Hugo Swire]

The hon. Gentleman said an offer had been made for a cross-party group but not taken up. That is wrong. A cross-party group has been to see the Prime Minister, and we are in talks.

[Jim McMahon]

There is a world of difference between a cross-party delegation having an audience with the Prime Minister, who ignored what was said in that meeting, and a reach-out from the shadow Minister to the Minister in the Local Government Finance Bill Committee to say that we should work together.

There are two issues, one of which is public service delivery, responsibility for which sits with local authorities, social care providers and health providers. Fundamentally, however, it will come down to brass tacks—where is the money? In the Opposition, that question is the responsibility of the shadow Communities and Local Government team; and in the Government it is the responsibility of the DCLG. There has been an offer to work in a cross-party way to find a solution.