Social Care Funding

Lord Hunt of Kings Heath Excerpts

Monday 11th February 2013 Lords Chamber

[Lord Hunt of Kings Heath]

My Lords, we are grateful to the noble Earl for repeating the Statement.

It is accepted on all sides of the House that our current social care system is living through the worst of all possible worlds: a cruel lottery in which people who go into later life with everything for which they have worked so hard on a roulette table and the most vulnerable are always the biggest losers. So it needs to change. The Secretary of State has today published a modest plan that will make the system fairer than it is today, and he is to be congratulated on that. We welcome elements of what he has announced. A cap of £75,000 is certainly better than no cap at all. Raising the means-test threshold will help more people on lower incomes to get some help with their charges. It is a step forward, but it is a faltering one, and only one of a series of measures that are required if older people and people with long-term conditions are to be given sufficient care and support. We need a holistic, cross-party approach.

Last week, the Francis inquiry exposed some very serious issues within the National Health Service which impact on the quality of care for a growing number of older people in our hospitals, often with several different illnesses. The NHS is overwhelmed with the demands being made on it, the tightening of its finances and the rightful emphasis on safety and quality. The changes being made by the Health and Social Care Act focus on the commissioning responsibility of general practitioners but, overwhelmingly, the real need for GPs is to focus on improvements in primary care, including accessibility and support for older people in their homes. Just when local authorities are needed to do so much more to help prevent admissions to hospital and to have much faster and more sensitive support for people discharged from hospital, they are having to cope with huge reductions in expenditure.

It is hard not to feel a sense of disappointment when listening to the noble Earl—first, because a Statement on a subject of such importance was briefed to the media before Parliament; because the Government have abandoned any efforts to build a cross-party consensus before rushing to announce their proposals; and because they have chosen to rewrite the Dilnot report with figures of their own, breaking the careful logic so apparent in Dilnot’s report.

There are four problems with what has been announced today, which I will address in turn. First, it fails the fairness test. We will have a durable solution to the problem only if we can answer this question: will it help every person and every couple to protect what they have worked for, whatever their wealth and savings? This package falls way short. According to Demos, the £35,000 cap, as recommended by Dilnot, would benefit about 3.2 million pensioners. A per person cap of £75,000 will benefit only 1.4 million. For the average couple, the cap is £150,000. That might be enough to protect detached houses, but it will not protect the average semi-detached home in large parts of England.

The Secretary of State selectively quoted Andrew Dilnot and, specifically, what he said about the £75,000 cap. I remind the House that Dilnot said that the cap was,

“higher than we would have wanted—£11,000 higher than the top end of our range —and I regret that”.

Will the noble Earl confirm that people with modest to average homes and savings are not protected under this plan? The Secretary of State claimed that insurance companies will step in with new products so that more people can protect their assets but, in oral evidence to the Health Committee, the Association of British Insurers said that it did not believe that the capped-cost model would result in a market for pre-funded care assurance. I would be grateful if the noble Earl could say what confidence he can give the House that a market will emerge. What discussions have been held recently with the insurance market?

The second issue that I am concerned about is that this addresses only a small part of the overall social care funding problem. With this decision, the Government have prioritised the funding of a cap on care costs with new money, over and above addressing the crisis in council social care budgets. Will the noble Earl confirm that this was against the advice of Andrew Dilnot to the cross-party talks? What it means in practice is that vulnerable people will continue to face rising charges as councils put up fees to cope with the growing shortfall in their budgets. This is the effect of the Government’s care policy in practice: they are asking people to make up the councils’ shortfall, making it more likely that they will have to pay right up to the new £75,000 cap. To many people, that will not feel like progress.

More than £1.3 billion has been cut from local authority budgets for older people’s social care since the coalition came to power. Care charges are rising well above inflation and councils are warning that by 2024, they will be overwhelmed by the cost of care. Does the noble Earl accept that forecast and, if he does, how will the plans announced today help to address it? It is true that the Government have raised the capital threshold to £123,000, and we welcome that, but can the noble Earl give the House any confidence that the extra support people will receive through a more generous means test will not be more than offset by increasing care charges, caused by collapsing council budgets? Many people may not know that the cap does not reflect what people actually pay for care but a local authority average, and does not include accommodation costs. As the noble Earl will know, accommodation costs can be considerable. Do the Government have any proposals at all to cap those costs, given the risk that they might rise as care home owners take advantage of additional state support?

The third element relates to inheritance tax. In 2007, a flagship pledge was made to increase the inheritance tax threshold to £1 million by the party to which the noble Earl has the honour to belong. Just eight weeks ago, the Chancellor said that he would increase the threshold in two years’ time, so what has happened in the past two months to make the Chancellor change his mind? The irony will not be lost that they are now increasing death taxes to pay for their plan. The noble Earl has said that the rest will be made up from national insurance. Does he think it is fair to ask the working-age population to pay for something else, rather than older people? Also, what safeguards will be available for people who have paid for their own care costs up to the cap and then have responsibility taken over by the local authority? What happens when the fees paid by that person are more than the local authority is willing to pay? Would that mean the person having to move from the home they are in to another and, if so, is the noble Earl aware of the risks involved in moving frail, elderly people from the environment that they have become used to?

What is the impact of this announcement on the considerations of the joint Select Committee that is now considering the draft Bill? I understand that it is shortly to report. Will it be asked to reopen its discussions and, if the noble Earl intends to publish further draft clauses, can he say what parliamentary process will be arranged for their scrutiny? I should also like to ask the noble Earl whether, through the usual channels, we might have an early opportunity to debate this announcement. The noble Lord the Leader of the House was very kind last week, when the Francis inquiry Statement was made. He said that he would see whether a debate on the Francis report could be arranged and, to his great credit, my understanding is that a Question for Short Debate tabled by the noble Lord, Lord Patel, has been prioritised for debate. I think it will be on 11 March. Could the good offices of the noble Earl be put to the same effect, so that we could indeed have a very early debate?

In conclusion, up to a point we of course welcome what has been announced today. It is a start but it will not lead to more integration of care. Indeed, it may well entrench the separation between two systems: of free at the point of use NHS and of charged-for social care. It is interesting that Demos described it this morning as being “unambitious” and “miserly”, and that it,

“will do little to solve one of the most vital social problems facing our generation”.

Would it not have made more sense, rather than developing these piecemeal plans in isolation, to have set them out as part of a single vision for a sustainable health and social care system in the 21st century?