Care Bill [HL]

Lord Campbell-Savours Excerpts

Monday 22nd July 2013 Lords Chamber

[Lord Hunt of Kings Heath]

My Lords, the Opposition strongly support the intention behind deferred payments. I hope therefore that the Minister will be able to give a serious response to my noble friend Lord Lipsey, because the issues before us are how the scheme is going to operate, the complexity that is necessarily involved and the ability of local authorities to do the right thing. Around all those matters, there remain some question marks.

While I would not necessarily support my noble friend on the specification of the interest rate, there are questions to be answered about how the Minister thinks the scheme will operate among the many local authorities which will be charged with discharging the scheme. For instance, on the question asked by the noble Baroness, Lady Barker, we could see large differences emerge between different local authorities. That would be unfortunate, and I would be interested to hear from the Minister what work his department has done in trying to model how it thinks local authorities will operate the deferred payment scheme.

The argument for a model deferred payment scheme is pretty persuasive. Even if local authorities are to have discretion—I do not disagree with that—in operating their own scheme, surely the production by the Minister’s department of a model scheme would ensure greater consistency and save local authorities a great deal of work in having to work out the details of their own scheme. Given all their other responsibilities, as much support as possible should be given to local authorities. A model payment scheme would be very useful.

I have two points to make on my noble friend’s Amendment 92ZZY. First, it is very specific on the loans being made available for the purchase of point-of-need insurance policies secured against an adult’s legal or beneficial interest in their home. That raises the whole issue of the insurance market. I again ask the Minister to reassure the House that he is confident that the insurance industry is prepared to come to market with suitable products. I know that he commented on this last week, but there remains some doubt about whether insurance companies really wish to operate in this market. Given that the whole thesis of Dilnot is that capping cost would lead to the development of an insurance market, this is something that we need to debate fully and be reassured on.

On Amendment 92ZZZ and the commencement date, I agree with my noble friends Lord Lipsey and Lord Warner about the complexity of what local authorities are being asked to do. We of course need to consider delay, but I do not understand why a different date has been chosen for the deferred payment scheme in contrast to other parts of the Dilnot implementation. It does not seem to make sense and, I would have thought, would be very confusing for people involved.

That brings me back to the second part of Amendment 92ZZY, which is the issue of regulated independent financial advice being made available to a person considering taking out a deferred payment. Surely the Minister will have been convinced by now that the financial consequences of decisions made by people in relation to the provisions in this Bill will be momentous. I would have hoped that by now he would recognise that the assurance that can be given through independent financial advice would be an important safeguard. Unless we have that, I fear that many people will have to make very difficult decisions, involving potentially large sums of money, without the necessary advice. That would detract from the generally consensual way in which we need to go forward. I hope that the Minister will perhaps have some good news for us on that front.

[Lord Campbell-Savours]

My Lords, I intervene briefly to ask the Minister a rather pedantic question. Subsections in Clause 35 all use the word “may”. There is no actual requirement for the Government to introduce regulations and therefore for local authorities to be placed in a position whereby they can charge. Why has it been left open, rather than using the word “shall”? If we could take the wording as meaning “shall”, can we assume that each further instance of the word “may”—that is to say:

“The regulations may specify costs … The regulations may require or permit adequate security…The authority may not charge interest under regulations…The regulations may make other provisions”—

is part of a whole package? Or, if “may” does mean “may”, might only individual parts of this clause be introduced, as opposed to the whole clause? For example, subsection (2) states that:

“The regulations may specify costs which are, or which are not, to be regarded as administrative costs for the purposes of subsection (1)(b)”.

If that particular part of the clause were not implemented, it would leave local authorities open to decide for themselves what the administrative costs could be. Whatever internal reasons they may have—and my noble friend Lord Lipsey referred earlier to the reluctance of local authorities—should local authorities have that ability to be flexible? I am seeking to establish whether, if this is all going to happen and we should read “shall” for “may”, all the subsections of Clause 35 will be implemented and that isolated subsections will not be introduced in the regulations. That might create difficulties that we are not foreseeing during the passage of the Bill.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

I am grateful to the noble Lord, Lord Lipsey, for his amendments. He has a unique perspective, having first put forward the idea of deferred payments—as he reminded us—when a member of the 1999 royal commission. The Government share his disappointment that deferred payments are patchy and inconsistent across the country. Many people going into care face difficult decisions as a result, and authorities lose money when they offer a deferred payment because they cannot charge interest.

We also share the noble Lord’s commitment to ensuring that deferred payments work better in the future. We agree with the Dilnot commission that deferred payments should become a full and universal offer across the country for people who have to sell their homes to pay for residential care. We intend the scheme to be cost neutral to local authorities, as the commission also recommended.

We are proud to introduce this universal scheme from April 2015. It will provide much needed peace of mind to the 40,000 people who sell their homes each year to pay for care. As well as offering time to make decisions and choices over what happens to their home —a point well made by the noble Lord, Lord Lipsey—it will open up new options, such as renting it out.

In his amendments, the noble Lord raises important questions about implementation. These concern the interest rate, the use of a deferred payment to purchase insurance, support for authorities to implement deferred payments and the timetable. Before turning directly to those amendments, it may be helpful if I briefly outline our plans.

Clauses 34 and 35 contain the necessary powers for us to introduce deferred payments. All authorities will offer deferred payments and it is our intention that people at risk of selling their home to pay for residential care will qualify. They will be able to defer reasonable residential care and accommodation fees, in the care home of their choice, for the whole of their lifetime. We are currently consulting on more detailed proposals on who will qualify and what fees they can defer, and are gathering more evidence on the costs and practical issues involved with offering deferred payments.

One practical issue that we are exploring in our consultation is the possibility of situations in which the authority cannot secure its debt through a legal charge on the property. This is why the Bill provides for other forms of security, including third-party guarantees. The noble Lord, Lord Lipsey, expressed doubts about this provision and wondered whether the proposals in the Bill may put people off taking out a deferred payment plan. Our guiding principle here is that we want as many people as possible to benefit from deferred payments, but it is equally important that local authorities are able to secure their debt.

Traditionally, deferred payments have been secured by registering with the Land Registry a legal charge on the person’s land, but this might not always be possible or offer sufficient security to allow the authority to recover its costs. Examples of this might include when a charge cannot be secured by registration with the Land Registry or where there is reasonable doubt about the person’s ability to afford the care home of their choice over the longer term, but we are consulting on whether there are situations in which offering a deferred payment is particularly challenging and, if so, on what a constructive way forward might be. That might include use of a different form of guarantee such as a solicitor’s agreement or the involvement of a third party. It is important that the Bill contains this flexibility so that when we design deferred payments to accommodate all situations that might arise, individuals’ preferences about the type of security that they wish to offer can be built in. I hope that this will persuade the noble Lord to withdraw his amendment, at least for the time being.

These issues will, in turn, inform how we set the interest rate, which has to strike an important balance. The rate must be enough to help authorities cover their lending costs but be affordable to people going into residential care who are at risk of selling their home. I understand the intention of Amendment 92ZZW to fix the interest rate at a predictable level but, as the noble Lord, Lord Lipsey, might have sensed—the noble Lord, Lord Warner, may have alerted him to this—I am concerned that setting the rate in the Bill before we have finalised other aspects of the scheme is premature. We will announce the proposed interest rate following the consultation and decisions on the wider design of the scheme. This will be set out in the regulations that we will consult upon in 2014. It will be a nationally set, maximum interest rate and local authorities will not therefore be able to charge excessive rates.

I have tabled government Amendment 92ZZAA, which would introduce a new clause allowing authorities to make alternative arrangements for people who would not wish to have a deferred payment because of their religious objection to paying interest. I am grateful to the Islamic Bank of Britain for its help on this amendment. We will work with the bank over the summer to produce detailed proposals, and ensure deferred payments are available to such people.

--- Later in debate ---

The noble Lord, Lord Campbell-Savours, asked me about Clause 35 and the reason for the word “may”. We are consulting on the details of how this policy will work, as I have mentioned, and our intention is to make a set of regulations that will reflect the policy decided in response to the consultation. I do not anticipate that we will adopt a selective approach to the various provisions set out in Clause 35. Those provisions have been put there for a purpose because we think that they are important. I hope that, while I cannot anticipate the result of the consultation, I may reassure the noble Lord as far as I can that we do not anticipate omitting any of those provisions from the eventual regulations.

[Lord Campbell-Savours]

But suppose that the local authorities come back and say, “We don’t want regulations to cover the issue of administrative costs”. What happens then? Is it possible that the regulations might be introduced excluding the requirement of administrative costs, if the consultation threw that up as a response? If it were possible, would it not change the nature of the debate that we are having today on this part of the clause?

[Earl Howe]

We fully expect a range of views about how to implement the proposals that we have set out in the consultation document. However, what we do not anticipate is wholesale objections to the very idea of the proposals, because by and large they are widely accepted as being the right ones. We need to ensure that they are capable of being implemented in a practical way.

[Lord Campbell-Savours]

I am sorry to press the Minister, but the point is that some local authorities—let us say Westminster, Maidenhead and Windsor or Wandsworth—may want to raise the charges for administrative costs while other authorities might be more sensible and reasonable about what those costs are. There has to be national uniformity in that area, and we should be given assurances today that there will not be flexibility, which would invite differential administrative costs between local authorities and trouble for many people.

[Earl Howe]

I can reassure the noble Lord that we are aiming to have uniformity. Merely because one local authority may present us with some rather maverick objections, I do not think that I could possibly envisage us capitulating to that kind of pressure. We want to see a system where people, wherever they live in the country, can rely on some clearly set-out rules and can thereby have peace of mind if they take out a deferred payment scheme. I hope and sincerely believe that the noble Lord’s fears will prove groundless, but I am happy to clarify as much of that as I can, given that we have only just gone out to consultation, in the letter.