Health and Social Care Levy Bill

Lord Forsyth of Drumlean Excerpts

2nd reading & Order of Commitment discharged & 3rd reading
Monday 11th October 2021 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

My Lords, it is a pleasure to follow the noble Baroness, who speaks with such authority on this subject. I very much welcome the Prime Minister’s determination to fix social care. However, this Bill does not do that. It is a bit like going into a restaurant and being presented with a bill for the meal before you have even seen the menu. I have to say to my noble friend the Minister, whom I admire enormously, that to speak for less than five minutes on a Bill of this importance to the economy and to millions of families—a Bill which has been rushed through for reasons that I still do not quite understand—says something about the relationship between government, the Executive and Parliament itself.

The Bill certainly will not fix social care but it will massively increase the regressive nature of the taxation system, because, as has been made clear, it will place the burden on those who have least, not those who have most. Way back in 2006, when we were in opposition, George Osborne and David Cameron asked me to spend a year of my life with some very able people of all political persuasions to produce a tax reform document. One of the recommendations was to look at merging national insurance with income tax. This is an absolute missed opportunity for those of us who believe we need a simpler, fairer, flatter tax system in our country.

I have a number of questions on the tax aspect. What measures will be in place to prevent people getting round these national insurance increases? I can see even now—well, I cannot actually see it, but I can imagine it—people in the City thinking, “Those bonuses we were going to pay in April, perhaps we had better pay them in March.” How will we avoid the loss of expected revenue? Will measures be brought forward to avoid forestalling?

I will concentrate on social care. The Economic Affairs Committee, which I chair, produced a report more than two years ago called Social Care Funding: Time to End a National Scandal. We set out a series of arguments. Since then, we have had a number of debates in this House on this subject. There has been unanimity across the House on the need to deal with this urgently. Since then, and in the run-up to the publication of that report, demand for social care has grown and grown—and not just among the elderly. One of the really frustrating things about this debate is that everyone seems to focus on the elderly. We are told that it is not fair that young people have to pay for the needs of the elderly, yet half the budget goes on people of working age; the demand from that group is growing as well.

Our report set out a number of questions for the Government. I am very pleased that my noble friend Lord Bethell will speak later in this debate. At each and every debate, he has said that the Government will produce a White Paper but that they want to follow the recommendations of the Economic Affairs Committee and find a solution on an all-party basis, so that it is permanent and so we can move forward. This is certainly not an all-party solution. In case people think I have gone native, I also think it is a bit rich for the Opposition to keep criticising what the Government are doing, without putting forward their own proposals on social care.

In this context of increasing demand, our committee reckoned that it was necessary to spend £8 billion on social care just to get back to the standards of care that existed in 2010. This Bill aims to raise £12 billion, but that will not touch the sides of the problems which face the social care industry and the people who depend on it.

My right honourable friend the Chancellor said that it was a moral duty to ensure that the costs of this were met by an increase in taxation and not by borrowing. Personally, I think we need to think about how as a nation we can generate the wealth to meet our obligations to the elderly. If we are going to talk about moral duties, it is certainly a moral duty to ensure that there is a safety net below which those vulnerable people will not fall. And they are falling.

This Bill, and the Government’s proposals set out in that document, do nothing to address immediate needs. As the noble Lord, Lord Eatwell, said, it is not clear how much of the £12 billion will actually go to social care. Last time we had an emergency payment for the National Health Service, it was £20 billion, and it disappeared into the health service. How much of it went to social care? Almost nothing. The entire cost of social care then was £20 billion. Some people refer to social care as the Cinderella service, but in this case, Cinderella never gets near to going to the ball. That is true of these proposals.

We are told that this will happen in 2023 and we are told that the Dilnot report is the answer. When our committee looked at Dilnot, we were concerned. If you have a cap on spending, the level at which the cap is set is very important, and £86,000 is quite high. Most people will, sadly, spend only three years in nursing care, so you would have to go pretty hard to spend £86,000. Does it apply then only to those who might spend a long period in nursing care? That is okay, but how will the £86,000 cap be calculated? Will we have an army of bureaucrats going through every invoice and every type of care provided in the course of a lifetime? No. I suspect—and the Government’s own publication hints at this—that it will be calculated on the basis of what the local authorities would have paid. But we know, and our report pointed out, that the local authorities’ rates are being subsidised by self-funders, who are sometimes charged as much as 40% more than the going rate for the local authorities. That is not to blame the local authorities; they do not have the money, so they try to squeeze.

What is the solution put forward for this? It is that everyone, even if they are a self-funder, can have their place found by the local authorities. That will not provide the revenue for the people who run the nursing homes. As a result, the nursing homes are going to disappear. Indeed, it is already happening that they favour self-funders because of the differential.

When we started our report on social care, I was attracted to the idea of a cap because the insurers would then be able to come in behind it. It will not work, however, because of the size of the cap and because, on the whole, people will not buy insurance for something they think will not happen to them. It is hard enough to get them to invest in pensions, when they know—or hope—that they are going to get old. They do not hope that they will require care in a nursing home or elsewhere.

The most chilling thing of all—because none of this money will be allocated to social care in the short term—is that it will all be left to local government. Over the weekend we heard the hints that the noble Lord, Lord Eatwell, mentioned: that local government will need to pick up the strain here. It does not have the money. If it goes on the council tax, that will be even more regressive and damaging and will introduce a postcode lottery for care. The sad thing is that some of the local authorities with the broadest tax base have the least demand, and those with the narrowest tax base have the most demand. There would therefore be inequality. Building up? This is building down. A postcode lottery would be the consequence.

What will the Government do to fulfil the Prime Minister’s promise to fix social care? I have been watching the Brown-Blair films, and there is a bit where Gordon Brown is alleged to have said to Tony Blair: “You have stolen my”—expletive deleted—“Budget”. I have a feeling that the Chancellor’s Budget has been stolen a bit here, because we have a commitment in this respect, but where are we on local authority funding? If we are really to fix social care, I assume that the Chancellor will make a very generous settlement to local authorities in order for them to provide the means they need to deal with this problem now. I hear someone saying it is unlikely—have faith.

If the Government really want to fix social care and are committed to the Dilnot solution, why on earth are they not doing it now? The legislation that provided for Dilnot was passed in the Care Act 2014—seven years ago. It is there on the statute book; they could do it now. What we are seeing here is a bit of: “I need money for the health service and I need money for social care. Let’s think of a number that’s not quite big enough, and we’ll say that we’ll do it first for the health service and then social care will get it.” If you believe that, you will believe anything, because the truth is that the National Health Service needs that £12 billion and, three years on, the money will not be available—just like the £20 billion put in before, as I mentioned.

I have a question for my noble friend: is domiciled property to be included in the means test for domiciliary care? At the moment it is not. If it is, it will create a huge incentive for people to go into nursing homes and a real unfairness for people who wish to be cared for in their own homes.

I did a few calculations, in case my noble friend thinks I was being unfair about the regression. If you are an average worker on an average wage and are paying the basic rate of income tax at 20%, and you work that little extra to create that extra £1 of value, 20% of that disappears in income tax, 13.25% disappears in national insurance and your employer has to give up 15.05%. In other words, 48.3% of every £1 disappears—and we wonder why our productivity is low when those are the incentives. I do not believe that national insurance was the right tax to use to achieve the purpose that the Government intend.

Of course, it is too late to say that now. We cannot change it in this House; we have to leave it to the House of Commons. A decision has been taken, but it is for the Government to fulfil the Prime Minister’s promise to fix social care and that means looking at the resources provided to local authorities, which have been absolutely heroic. My bins get emptied once a month now. Almost every service has been cut to the bone in order to try to help those people needing care. We look forward to the Budget at the end of the month and the fulfilment of the promises that have been made.

--- Later in debate ---

[Lord Agnew of Oulton (Con)]

My Lords, more detail will be set out in the Budget and spending review in the next two or three weeks to address the noble Lord’s question.

The noble Lord, Lord Hunt, my noble friend Lord Bethell and the right reverend Prelate asked about help for carers specifically.

[Lord Forsyth of Drumlean (Con)]

I apologise. My noble friend was about to answer the question on domiciliary care.

[Lord Agnew of Oulton (Con)]

Yes, sorry. I lost my thread. There will be no changes to existing procedures.

Noble Lords asked about support for unpaid carers. Of course, they play a vital role in the care system. I suspect that there is hardly anyone here in the Chamber who has not been involved in the care of their parents at the end of their lives on an unpaid basis. I certainly had to—but luckily I am one of seven siblings and we all live in the same county. None the less, it is a considerable burden.

The Care Act encourages local authorities to support unpaid carers and to provide preventive care to stop people’s early care needs escalating. A new cap on care costs will offer greater certainty to unpaid carers and support informed decision-making and planning for the overall costs of care.

The Government will take steps to ensure that the 5.4 million unpaid carers have the support, advice and respite they need, fulfilling the goals of the Care Act. We will work with the sector, including unpaid carers, to co-develop more detail in our plans and will publish further detail in the White Paper for reform later this year—and on the matter of the White Paper, I say to noble Lords that it is not long now. It is only a couple of months; it has been promised before the end of the year, and I am perhaps a little more optimistic than some Members of the House.