Social Care Funding

John Pugh Excerpts

Thursday 10th November 2011 Westminster Hall

[Tony Baldry]

I agree entirely with my hon. Friend, but I think that we have all slightly lost track of the number of Green Papers, discussion documents and other things that we have had in relation to social care. What will be really important next spring is that we get a White Paper that has a summary that everyone can understand and that makes it very clear what will be the basic system for funding residential social care for the future. I think that that would be greeted in the House by a quick rendering of the “Hallelujah Chorus”.

Following my hon. Friend’s point, if the White Paper can set out the direction of travel for the rest, that would be good news. What we have seen all too often in the past is a discussion paper that concludes that the issue is so huge and so difficult that we have almost lost the will to live. Spring 2012 has to produce a White Paper with a clear commitment to the funding of long-term residential care, and then direction of travel for the rest is important.

Finally, I agree with the need to enhance the status of care workers. In my experience, the model adopted by many residential care homes has often been to recruit people from the Philippines or eastern Europe. The deal was that they came over, got trained, were often paid the minimum wage and, having been trained, worked in the national health service. Because the Government, perfectly understandably and quite rightly, are capping immigration from outside the European Union, it is no longer possible for nursing homes and residential care homes to recruit from the Philippines or outside the European Union, so we have to enhance the status of care workers, both in the NHS and in residential care homes.

On my patch, I have suggested to the chief executive of the Oxford University Hospitals NHS Trust—I am glad that he has responded positively—and others that we should consider setting up in Oxfordshire one of the new Government’s work academies, specifically for care workers. We need to ensure that far more people see care and working in the care sector as a valued profession that makes a real contribution to society. It needs a career path, with a national vocational qualification, training and proper involvement from further education colleges. The issue is of as much interest to the national health service as it is to residential care homes, because if those care homes have sufficient care workers it will be easier for discharges into them to take place. Moreover, we often need to ensure that the NHS has sufficiently well-motivated and well-qualified nursing care assistants. I hope that we will begin to see centres of excellence around the country that will train people as care workers, to ensure that we do not find ourselves in difficulties because nursing homes and residential care homes have to close because they cannot recruit qualified staff.

[John Pugh (Southport) (LD)]

Would not the consequence of that be that care homes would have to pay better wages than they do at present? The hon. Gentleman has mentioned people from the Philippines. I had some in my constituency who were allowed to stay provided that they were paid for their qualifications, but the care homes refused to do so in some cases.

[Tony Baldry]

The management of any sensible care home will want to ensure that it invests in its staff. It has a duty and responsibility to do so. It has to play its part in ensuring that it, like any employer, helps with the required skills, qualifications and training of those people. This is an important issue and one that we have to get right if we are to have proper levels of care in the community, of residential nursing home care, and of care in the NHS.

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[Margot James]

I thank the hon. Gentleman for his intervention. It is true that a £100,000 threshold would provide protection, and I hope very much that we can afford that element of Dilnot’s proposals. That threshold would provide a huge amount of help and protection for just the sort of cases that he and the hon. Member for Lewisham East mentioned.

Turning to the cap that Dilnot recommends, I believe that it should be rethought. He said that it should be between £25,000 and £50,000, beyond which no one should have to pay. Although my suggestion would introduce some complexity—I accept that that is a disadvantage—we must consider a scale on the cap that is linked to people’s assets. A one-size-fits-all approach, whether it is £50,000 or £25,000, does not reflect the huge variation in house prices throughout the country. The average house price in Dudley borough in my constituency is £145,000, but the average house price in Greater London is £420,000, so for families in my constituency, and perhaps in that of the hon. Member for Luton North, the cap on care represents a third of their assets, whereas for families in London in a house with an average value it represents little more than 10% of that value. That is unfair, and I hope that the Minister and his team will look at ways in which the problem can be overcome.

I am afraid we will to have to ask more of people who have seen the value of their home spiral over the last 25 years. I trust that with better use of resources, and thanks to Dilnot and the Government’s commitment to seek a cross-party solution to the vexed problem, we will no longer have to ask people to sell their home to fund their care. However, if we cap the amount that people must spend on care, we may have to ask them to remortgage part of the value of their home to contribute to the overall cost that Dilnot recommends. I cannot see a magic pot of £1.5 billion in the Government’s credit balance, so we must be realistic in what we ask them to do. Asking people to remortgage part of the value of their home to contribute to their care is not as bad as the current system, which requires so many to have to sell their home and to invest so much of the proceeds, if not all, in residential care costs.

In conclusion, the reaction to Dilnot has not been as favourable among health and social care managers as it has been among those of us, including organisations outside Parliament, who campaign on behalf of older people. They fear that they will have to find money from their cash-strapped adult and social care budgets. As the other main activity outside residential care is home care—I have described a situation that is far from satisfactory, as have other hon. Members—they fear that there will be less money to fund home care if they have to implement the Dilnot report to fund the higher cost of residential care. I share that concern.

What else can be done? I have said that I do not expect the Government magically to conjure up £1.5 billion in the serious and perhaps worsening economic situation. We must find a better way of managing our resources, and that money must probably come from one of the only protected areas of Government spending—the NHS. Hon. Members have mentioned that the Government have diverted £1 billion from the NHS to social care, and that has been well received, but I do not believe that it goes far enough. NHS spending has risen hugely in the past 10 years, and 27% for the six-year period does not cover the half of it. It does not cover the private finance initiative costs, which have been astronomical.

Too many older people in hospital would be better managed in the community. We have heard about bed-blocking, and that occurs in Dudley borough. People are waiting for residential care places, but the funding is not coming through to meet the need. That funding should be reconfigured more substantially in favour of community care. Many experts who know more about the NHS than I do—the King’s Fund, some hospital consultants and so on—recognise that we have too many hospitals. I am not saying that there is an easy answer, and no one wants hospitals on their patch to be closed, least of all me, but there may be a way of utilising that space and resource more effectively. I urge the Minister to discuss that with the Secretary of State to see what can be done. That would be a more fitting tribute to the Dilnot inquiry than trying to implement every detail in his report.

[John Pugh]

rose—

[George Hollingbery (Meon Valley) (Con)]

rose—

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[John Pugh (Southport) (LD)]

I congratulate the hon. Member for Truro and Falmouth (Sarah Newton) on securing this debate and on introducing it so lucidly. I do not know whether any hon. Members, apart from me, attended an event in the House earlier this week called, “Preparing for Old Age”, and organised by Age Concern and the Prudential. As I went in, I picked up various brochures with rather grim titles such as “What to do when somebody dies”, “Paying for care costs”, “Insuring against ill health” and “Coping with dementia”. I looked in vain for something called, “How to have fun in your 90s”, but there seemed to be nothing about that.

We are fortunate to have a Minister to respond to the debate who has a distinguished record in this area, both when in opposition and as a Minister. My reputation in this area has been somewhat more ignominious. I was in Richmond house for the first time when, as leader of the Liberal Democrat group on Sefton council, I was summoned with other party leaders for a dressing down by the then Minister, Lord Boateng, subsequent to a law case that had gone against Sefton, which was not an uncharacteristic event.

We were taken to court by, I believe, Help the Aged, because we took the view that we could resource care needs only according to the resources that the Government had allowed us. We lost the case, and went to Richmond house to explain our side of the story. We were called into a room and waited patiently until the Minister breezed in, gave us a dressing down, told us how tough the Labour party would be with councils henceforward, and sent us on our way. The interesting point is that the press release hit the streets even before we had left the room, so clearly it had been written considerably prior to the event.

Later, when I became leader of the council, I rationed the number of care homes, which were rather more expensive in the public sector than in the private sector, and found that my Labour opponent—he is now the distinguished deputy leader of Liverpool city council—had gone to the press and engineered a photograph showing a 100-year old resident with a placard saying, “Please do not close my home, Councillor Pugh”. Unfortunately, we did close it, because it had been endowed to the local authority and was unsuited for its purpose. It was costing us twice as much to run, as indeed were some private sector homes then.

Only the other day, Sefton council had a judgment against it when the freezing of care home fees was ruled to be unlawful. It is a balanced council with three parties in the cabinet. The managing director of the solicitors who took the case against Sefton council said,

“There is every reason to believe other councils are doing exactly the same as Sefton.”

Sefton responded by saying that the court was merely critical of some elements of the process. Sefton is a borough with the 13th highest proportion of people aged 65. The bulk of its controllable budget—it has many contracted-out services—is taken up by social services. Sefton unexpectedly had £30 million up-front costs to find by way of savings. It is completely unthinkable that that could be done without eliminating other departments and without affecting social services in some way. Funding social care is a difficult problem. That is what I have learnt.

[Kelvin Hopkins]

We hear constantly about the difficulty of funding. The amounts we are talking about are very small in the overall scheme of things. The £1.7 billion for Dilnot would be less than half a penny on the standard rate of tax—that is the equivalent. Free long-term care for all would be 2p on the standard rate, which is what my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) cut the standard rate by before the election. We are not talking about massive amounts. I have spoken to many groups, and if I ask, “What do you prefer—the fear that you could have your house taken away to pay for granny’s care or paying 2p on the standard rate?” time and again they will all say, “2p on the standard rate”.

[John Pugh]

We all accept that, whatever it may amount to in the round, it is hard for local authorities to meet their care costs within current budget constraints. It is hard for NHS hospitals that suffer because of people who should not be staying there, who they recognise ought to be in care, but it is sometimes cheaper to keep them in the hospital rather than anywhere else, which is not in the hospital’s interest. It is hard for families who have the job of fulfilling caring responsibilities, which can conflict with employment, and it is difficult if they live at some distance from their elderly relatives, as they tend to these days. It is particularly hard for the individuals in need of care and who have increasing costs set against diminishing resources. It will not get any easier for the reasons hon. Members have already rehearsed: an extension of what we might term our declining years; the demographic bulge that we have all spoken about; many carers are taking up their responsibilities at an age at which they are not in, let us say, the first flush of youth; and in terms of social policy we are discovering that neither community nor personalised care are cheap options.

Nevertheless, society has made some significant achievements. Since the great Liberal Government of the early 20th century, the state has underwritten the fundamental problems that used to afflict old age—poverty and infirmity—by providing a safety net. When that reform was introduced, there was the presupposition that families would continue to accept responsibility for elderly members—they usually did—and that people would also look out for themselves to some extent. The old age pension was a mechanism to ensure that they could do that, and people had the opportunity to take still more precautions via provident societies and so on.

However, we have moved on and today we have two central problems. I do not think I have heard other problems apart from these. The fundamental problem that has been cropping up in this debate is that, assuming the system meets basic needs, which I guess it does at the moment, there is the capacity of those needs to become so severe that they can wipe out people’s inheritance, and many people regard that as not in the order of things and not how things should be. There is the other problem, which has not been touched on to the same extent, but I get it in my constituency: a sense of injustice about what might be called the free-rider problem. People have told me that they have saved for their old age, and as a result they feel that they have been penalised, because people who have made no effort to save, or who have blown the money prior to reaching an age when they might need it, get the benefits that the savers are to some extent denied. Those two problems seem to linger around the system.

[George Hollingbery]

Perhaps the problem is even deeper. People in my constituency surgery do not just say that they think others have had a free ride; they say that they are actively advising younger people and their families not to save for old age, because it is no longer worth doing so. Plainly, the system is stacked so far to the advantage of those who do not save that people should not save at all.

[John Pugh]

The hon. Gentleman has usefully illustrated my point. We can argue that the state does not have a duty to preserve a family’s inheritance, notwithstanding the valiant defence of inherited wealth from the hon. Member for Luton North (Kelvin Hopkins). In normal circumstances, that is an unusual stance for him to take.

[Kelvin Hopkins]

I was defending the small amounts of inherited wealth for relatively poor people, not the vast amounts inherited by very wealthy people. I would substantially reduce the threshold for inheritance tax, but my party would not agree.

[John Pugh]

We might dispute the borderline between the wealthy people who do not deserve it and the not so wealthy who do, but we have a system in this country, unlike in Germany, where the family has no legal obligation, and we ought to be alert to that. We have already heard in the debate about how some families, in seeking to preserve their inheritance, actually support their elderly relatives, which sometimes is a laudable and desirable outcome. On the free-rider problem, we can argue that, in allowing a reasonable level of retained capital prior to benefits, there is a reward for people if they show a degree of providence. Those who have more than that and therefore do not benefit to the same extent might regard themselves as not simply provident but fortunate.

I am not certain that Dilnot fully addresses the problem. It is too dramatic to say that people have the choice of dying or destitution, or dying before destitution or whatever. Realistically, the option that most people fear is the reduction of their resources to the level that they become solely dependent on the generosity of the state. It seems to me that that is what Dilnot seeks to avoid or prevent. It attempts to deal with the problem that Members have spoken about, which is the total wipeout of a life’s accumulated family resources. The issue is whether Dilnot’s proposals to cap people’s costs have produced a scheme that is both affordable and socially just. It can be argued whether, if someone is vastly wealthy, the cap ought to apply to the same extent.

Whether Dilnot is affordable is not a question that is easy to answer. Does it depend on front-end costs being picked up by adequate and affordable insurance schemes? It depends on the insurers being willing to offer such products. I have spoken to insurers who would prefer to offer annuities or suchlike arrangements, and who question whether they will be in the market to provide the products that Dilnot requires. The other issue is what counts as front-end costs, because we exempt things such as hotel costs. It may be some appreciable time before people get to Dilnot’s benchmark of £35,000, or, if they take out insurance, premiums may be higher than we currently imagine. Asking whether Dilnot is affordable is like asking how long a piece of string is. As the hon. Member for Stourbridge (Margot James) illuminated in her speech, it depends on where we set the lines.

Certainly, what is more affordable to Government is likely to be less attractive to individuals and their families, or might be more problematic for insurers. However, the one thing that we all accept, if we ever redesign Dilnot, is that there is a genuine need for cross-party consensus to work out what blend of insurance risk Government and individuals can support.

That is another point we must consider, and perhaps we have not quite got there yet. I understand the cynicism about what the Treasury may or may not be prepared to do, but before it works out what it can afford, we need a degree of consensus concerning what the state’s role should be on this issue. We need to know not only about the state’s detailed implementation of the policy, but what the purpose of the state is in this business. We must look at how we intervene, and at how we wish to intervene.

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[Liz Kendall]

I could not agree more. The deal must not be done behind closed doors. There has to be a discussion between political parties, but most importantly, there has to be a discussion with the public—not just the current users of the system and their carers, but people who are not in the care system and younger people, who are working now and who will have to understand the issue. We have to have a full and proper debate.

[John Pugh]

During the previous general election, we all had a number of hustings meetings. Whenever the topic cropped up, a theme that came across forcibly from all members of the public was that they wanted the parties to discuss the issue together and that they were rather saddened by what happened immediately before the election.

[Liz Kendall]

I was not a Member of Parliament then, but from my own experience in hustings, I think that people feel let down when such an important issue becomes a political football. The hon. Member for North Norfolk (Norman Lamb), who was the health spokesperson for the Liberal Democrat party at the time, did not engage in that kind of behaviour. I do not want to go over old ground.

We need to discuss the matter, but it will be difficult. We all know what politics is like, and how parties use things to get at the other side. The issue will not be easy—it is about public spending and implications for individuals. What will they and taxpayers have to pay? We would be kidding ourselves if we thought that the issue would be an easy one.

I agree with all hon. Members who have said that the issue is one of the biggest challenges that we face, even if that is a cliché. We all think about it for our constituents and in our own families. I think about it, as many other hon. Members do, for myself, as I hope to live to a ripe old age. It will be a difficult challenge, but I hope that today’s debate shows that we are at least prepared to engage with the difficult issues to take the debate forward.