Council Funding and Social Care

Huw Merriman Excerpts

Wednesday 22nd February 2017 Westminster Hall

[Huw Merriman (Bexhill and Battle) (Con)]

I thank the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) for giving us the opportunity to discuss, on a cross-party basis, the need for reform and the challenges faced by our local authorities. I hope I can be forgiven for being a little more parochial in the time available to me than my right hon. Friend the Member for East Devon (Sir Hugo Swire) was. I want to talk about our challenges in East Sussex, but I will then touch on what the Government are doing and, ultimately, on the need for reform. That need is not only about looking at government but about encouraging reform and ideas at a local level, because the challenges are local. That is where I will focus the main part of my contribution.

To set the scene, we in East Sussex feel ourselves to be in a challenging situation, because those who make the decisions in London look south, see Surrey on the map—Surrey has already been mentioned—and perhaps think that things cannot be too bad in that direction, so money should go west or north. Further south than Surrey, however, is East Sussex. We are a relatively poor county with poor infrastructure, so our ability to create business opportunities is limited. Understandably, because we are on the south coast, we have also become a haven for retirement.

The Surrey scenario is real for us. It is extraordinary how, when I knock on doors in my constituency and speak to retired people, they tell me their stories about moving further south from Croydon, Caterham or wherever. That is fantastic, and those people add to our diversity, but the proportion of over-65s in my constituency is 28% of the total population, compared with a national average of 17%.

People will work and live in Surrey, perhaps in bigger properties, and then sell and downsize, but they will not pay the same amount of council tax in East Sussex. As they get older and into their advanced years, they will obviously need the services of East Sussex. Under the current model, the working age population of East Sussex largely has to fund those services. I agree with my right hon. Friend the Member for East Devon that there is a need to look at the model that requires us to fund social care locally but the NHS nationally, which does not make any sense at all.

Unfortunately, we also have a relatively poor working age population. I recall that, a year or so ago, I was given figures and told, “Congratulations—your constituency is in the top 10 for wage increases when it comes to the living wage.” That really means that 33% of my constituents are on the living wage and work in poorer areas, which is a challenge. I also make that point about the push for new money, which really means a push towards taxing those who are currently working. How will we get people who are currently working to save for their own good care if we tax them to the nines and they cannot afford to save?

[Alan Johnson]

The hon. Gentleman makes an important point. We need to fund social care from a separate source, not just normal taxation. Two ideas came up. The idea of taking money out of people’s inheritances was labelled the death tax. I made the point that I should be paying national insurance. I am 66 years of age and I am still working. Why did I stop paying national insurance at 65? As Dilnot said, that and other ideas need to be explored. We agree that this is not just an argument about sticking taxes up. We must look for a new funding stream, which has been so elusive.

[Huw Merriman]

I absolutely agree. As my right hon. Friend the Member for East Devon mentioned, we should look not just at reform of social care in isolation but at all the other related parts. We should ask ourselves whether we are overspending in certain parts, whether we can recycle in other areas, and whether people need to make fairer contributions, particularly as they get older. We could also throw into that pot contributions by retired people who have no issue at all with their income and have paid for their assets, yet are still entitled to free bus passes and other universal benefits. This is not Government policy, but I can say it because I am a Back Bencher: perhaps the time has come to look again at whether we can afford that when we cannot afford to look after people in social care.

[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.

[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.

[Huw Merriman]

I very much take the hon. Lady’s points. I certainly do not advocate a mansion tax, and I do not believe that my right hon. Friend the Member for East Devon was calling for one either. There is an argument that, if social care continues to be funded locally, there needs to be an additional stamp duty so that, if an asset in Surrey is sold and downsizing occurs, the money actually follows someone into the county. That should not be required, because it does not really make sense for social care to be funded locally, but if it remains locally funded, I agree that we have to start thinking radically about how we spread the money around.

I recognise that the Government have acknowledged that there is a challenge in the system. That is the first step. The right hon. Member for Kingston upon Hull West and Hessle mentioned the concept “all is well”. We will hear from the Minister, but I constantly hear the Government acknowledge that there is a challenge and a requirement for reform. We need additional funds between now and reform so we can get through this stage, but reform is ultimately the answer. I believe the Government recognise the challenge, so I have great confidence that we will overcome it.

I also recognise that £3.5 billion of extra funding will be put in through the social care precept and the improved better care fund by 2019-20. I hear the point that some of that is backdated and will not come on stream until later, but the Government have listened to that point to a certain degree and allowed councils to increase the social care precept levy to 3%. My county is doing that. The levy will be 3% this year and 3% the following year, but of course it will then go down to zero, which is why reform will be needed at that point. The transfer of the new homes bonus from the district level to the county level has also buffered my county council against some of the increase in costs.

I welcome what the Government are doing and the tone that they have adopted, but ultimately we need reform. I absolutely believe that we need to look at the entire system, including financial services. For example, we talked about property. I believe that there is a problem with equity release, which people cannot get from their high street banks because they just do not offer that service. Anyone who wishes to tap into their property’s value to pay for their care in older age has to go via an insurance company, which is incredibly difficult. I have discussed that with the banks. They have a concern about their bills for recent mis-selling fiascos—they shy away from explaining what equity release means for people in their older age because they were sued so successfully for previous mis-selling scandals. We need financial services reform, too.

We must also look to the future. Why do we not have care individual savings accounts for people—perhaps for people of my age—who should be saving, in the same way that we have help to buy ISAs? We need to look more along those lines. We must be absolutely honest and open that an asset will be sold in totality to pay for care. I regard my house as the asset that I will use for that. I doubt very much that my children will ever see a penny from it. We need to have that conversation with the public, who I believe are ahead of us in this game. Ultimately, people who care for their relatives should be able to inherit, but people who do not should not expect to inherit, because the state will have to pay for that care and the cost will have to be recovered. We need to start talking in that language.

We must also look at reform of the care home sector. Of the 35 care homes in my constituency that were reviewed by the CQC, 29 were less than good. That is an absolute disgrace. The issue with care homes largely is that they are in old buildings with fire hazards, there are not enough staff to look after people and strangers still share rooms. There must be incentives in the system so that new care homes are built, which is why I recently called for care homes to be delivered by local government. Some people took that as a call for renationalisation of the sector, but I did not mean that; rather, when putting planning applications through, local government should require developers to build care homes in the same way that they require schools and GP surgeries to be built. If we put such incentives in the system, we will have the funding in place and the old buildings will be sold. Planning consent requirements should be lowered for the care home sector, which would lead to new buildings.

Local ideas are often the best ideas. The council house sale reform in the ’80s, which Opposition Members may not have agreed with, was a local idea. We have merged the two budgets in the East Sussex Better Together funding programme. We are taking a lot of money out of the primary care system—40% of the budget will come out of hospitals and go into social care. East Sussex is one of the three pioneers that recognise that this is one problem, so there needs to be one fund and one programme. That can be done locally and is being led locally by East Sussex. Rather than talking purely about the challenges, I will finish by talking optimistically. Answers and solutions are being found and delivered locally, and I very much hope they succeed.

[Mr Adrian Bailey (in the Chair)]

We now come to the Front-Bench wind-up speeches. Will the Front Benchers between them leave a couple of minutes at the end for Alan Johnson to reply to the debate? I call Neil Gray.

--- Later in debate ---

[Jim McMahon]

My hon. Friend is right. The reports, reviews and commissions that have looked into this issue have laid out clearly the scale of the problem. It has been made clear that the problem is bad today but will get worse year on year unless action is taken. Cross-party attempts have been made to resolve the issue, only to be undermined by the Conservative party, which wants to use it to wave the flag and scream at the Labour party with accusations of a death tax and a granny tax. We have heard about all that during the debate. The situation today is that the Conservatives are in Government, and it is the Government’s responsibility to come forward with a solution.

Suggestions can come forward from the Opposition—we have heard some today—and from local government, social care providers and charities. We have heard about that, but ultimately it is the Government’s responsibility. In many ways I pity the Minister. I would not like to be in a situation where my own party’s Prime Minister was completely clueless on the scale of the problem and the Chancellor of the Exchequer seemed completely careless about the scale of the problem. The Minister’s own Secretary of State seems to show little interest in the brief he has been given, investing little time in it and leaving it, with all due respect, to junior Ministers to come and take the brunt of the problem.

The truth is that the Treasury will not release the amount of money that is needed. What happens as a result? Further pressure is pushed on to departmental budgets, but because the DCLG has no more money it pushes it back on to local authorities. The result—besides the fact that we do not even touch the sides in dealing with the scale of the problem—will be that council tax will have increased by 25% by the end of this Parliament. In human terms that will mean that people living in towns such as Oldham, Hull or Rochdale will notice their council tax bills increasing by 25%; but the fact that those towns historically have a low council tax and business rates base will constrain their ability to generate the total amount of money needed to provide care.

[Huw Merriman]

rose—

[Vernon Coaker (Gedling) (Lab)]

rose—

--- Later in debate ---

[Jim McMahon]

That is right. I had the pleasure of facing the Minister across the Committee Room during consideration of the Local Government Finance Bill, where we debated that at length. I asked him clearly whether he believed there was a social care crisis, and his response was crystal clear: he did not believe that there was. That goes completely against the professional advice of people working in the sector, the 1.2 million people who need care but are denied it, and the advice of the Local Government Association, which represents its member authorities across political parties—the point is not a party political one at all. The Minister seems to want to hunker down and pretend there is not a problem on that scale.

[Huw Merriman]

Will the hon. Gentleman give way?

[Jim McMahon]

I need to make progress, with all due respect, so that the Minister can give a meaningful response to the debate.

Even with the 25% council tax increase, which will obviously put pressure on low-income families, particularly in areas with a low tax base, there will still be a £2.6 billion adult social care funding gap. The money will not even pay for a national insurance contributions increase, local authorities’ obligations under the apprenticeship levy requirements, or the national living wage. That is before we get to the point of tackling the poor quality of care provision in the private home care market in particular.

That is the scale of a problem that could have been avoided, and the cruelty of the situation we are in. I do not say that we could create a perfect system. We need to accept that although we will evolve a system far better than today’s, we have lost critical time for the reforms that are needed. In any transitional phase between systems there must be adequate resources in place to deal with the transition and, effectively, double-running of the system. People already in the system must be paid for, and new entrants to it must also be paid for, perhaps in a different way, to ensure that they will be looked after following the transition to the new way of working. That could be a 10, 15 or 20-year programme, and there is no appetite from the Government to look even beyond this Parliament, let alone so far ahead.

The total deficit in public service provision, at local level, is now running at £5.8 billion. That is the amount that councils need to fulfil their statutory obligations and provide basic public services. I do not agree at all that it is not a question of choices—it absolutely is. The corporation tax cuts cost us £5 billion, which could have been used either to offset the £2.6 billion adult social care deficit or even to make sure that councils could provide the 700 services that central Government require of them at local level.

Councils are being put in a difficult position. They will be expected to put up council tax by 25% at a time when the universal services that people can see, and that they believe they pay their council tax solely for, are being withdrawn—altogether, in some cases. The public will rightly ask, “What am I paying my council tax for? The park isn’t being maintained any more. The streets aren’t being cleaned any more.” In fact, most people believe they pay council tax only to get their wheelie bins emptied—and that happens less often than it used to, so where is the money going? The relationship between the taxes people pay and what they get in return is critical for democracy and for holding decision makers to account, and that link is being eroded. The truth is that a social care system reliant on 1991 property values is not a base on which to build a social care and health system for the future. It is not progressive and does not reflect people’s ability to pay, based on the income they earn. Of course, people in poorer areas ultimately pay more.

An offer has been made but not taken up yet, though it should be, to put party politics to one side. It is about choices, and we shall hold the Government to account where they make choices in favour of adult social care. There is a broad consensus across the political parties about the solution—about changing the system and ensuring that those who need adult social care can get it.