Residential Care: Cost Cap

Lord Hunt of Kings Heath Excerpts

Thursday 10th December 2015 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a great pleasure to wind up for the Opposition and to thank my noble friend. It has been an excellent debate; a number of very challenging questions have been put to the Minister and we look forward to his response. There can be no doubt that the viability of the residential care home sector, the failure to implement Dilnot and the failure to raise the means test are causing great anxiety to thousands of people and their relatives throughout the country. As the noble Baroness, Lady Walmsley, said, the lack of viability of the residential care sector is but one part of what one has to say looks increasingly like a dysfunctional health and social care system.

When the Minister replies—because he has done it recently—he will no doubt talk about the Autumn Statement, ministerial vision and the potential of the new models of health and social care that the Government are putting an awful lot of eggs into, without, I have to say, any evidence that they will be able to enable a response to the challenges. The gap between ministerial rhetoric and reality is striking. There is no problem with a five-year forward view. This vision is described as empowering patients, their families and carers to take more control over their own care and treatment. It is a future that truly integrates health and social care, at last puts mental health on a par with the rest of the system and, crucially, prioritises prevention. That is a fine vision and, in the absence of any vision for social care, I assume it is the Government’s statement of social care policy as well.

However, it is impossible for me to see how that will happen in the context of a Government determined to bring the share of government spending down from 41% to 37% of GDP. It is always good to wait until a few days after an Autumn Statement to get the real analysis of what is happening in spending. The analysis I have seen from the King’s Fund is that for the next five years the actual growth in the health service will be 0.85% per annum. So we are just continuing the misery of the last five years. We know that the historic growth level in the NHS is 4%, and that is what is needed to meet these challenges. It is striking that, of the much-vaunted extra £8.4 billion, £4.6 billion has come from other parts of Department of Health expenditure, including Health Education England, the nurse bursaries, capital and public health. You also have to add in the £1.1 billion of pension costs due to the changes in the pension rules from next April, for which no additional money has gone into the health service.

The King’s Fund projection shows that in this five-year period social care will be left with an annual cut of 0.3% per annum. Therefore, even though it is back-loaded, it is starting off with a very challenging situation. There is then the cost of the living wage to be added to the negative growth. I cannot possibly see how the health and social care sector can meet the challenges of the demographics that it is facing, with the huge population growth that we have seen in the last 10 years projected to increase by another few million over the next 10 or 15 years, as the noble Lord, Lord Filkin, said.

When it comes to the residential care sector, there is no need for me to repeat the figures that other noble Lords have referred to, but I thought that the ResPublica report got it in a nutshell when it talked about the unsustainable combination of declining real-terms funding, rising demand, increasing financial liabilities, a funding gap of £1 billion by 2021, the potential loss of beds and, of course, the knock-back impact on our National Health Service. I had not seen the advice from Care England. That advice is very sobering indeed when it comes to the whole viability of the residential care home sector.

It seems to me that the result of all this will be that, far from the models being implemented, we will see the perverse incentives mentioned by the noble Baroness, Lady Brinton, getting worse and worse because of the tension between the free-at-the-point-of-use NHS and means-tested social care. That is why integration is so difficult. Until we get to grips with that divide, we will never achieve integration of services. As my noble friend Lord Turnberg said, NHS hospitals are the providers of last resort. If the residential care sector goes down, residents will end up in NHS hospitals. I remember those dreadful long-stay wards that NHS hospitals used to have, and I am afraid that they will be recreated unless we can sort this problem out. Many reports are coming out but one report produced today by the Nuffield Trust shows that 3.6% of patients took over a third of all bed capacity in acute hospitals, and the trust expects the position to worsen in the years ahead. That is the challenge that our system faces.

There are about 10 questions from my noble friends to which the noble Lord, Lord Prior, is being asked to respond. The first, on the positive side, was asked by my noble friends Lady Dean and Lord Lipsey. Can we increase public awareness of the importance and success of many parts of the residential care sector and the good work done by the staff? My noble friend Lady Dean gave a wonderful example of the sector working at its very best.

The second concerns the general view that, essentially, the care cap will never be implemented. Can the Minister say that it actually will be implemented, and when? Thirdly, does he agree with his noble friend Lord Lansley about the sense in going back to Dilnot’s original recommendation about the size of the cap? A number of noble Lords mentioned the £6 billion. Noble Lords look quizzical whenever it is mentioned, but that figure has appeared in government papers and projections. I think we are right to ask what on earth has happened to it.

The noble Lord, Lord Sutherland, asked what analysis the Government have made of the risk of closures. What are their contingency plans? How will we avoid the dreadful situation of very frail older people having to be moved from one home to another, which we know can have appalling effects on life outcomes? When will the means test limit be increased as promised? The Government made a deal. They made a deal with people that the care cap would come in in 2016 and that the means test would be increased. Many people made financial provision on that basis. Surely the Government have a moral responsibility here to deliver what was promised. Does anyone remember the Prime Minister saying no one would have to sell their home? What has happened to that?

There are two final things. First, my noble friend Lord Bhattacharyya asked about incentives to encourage people to build up funds for their care. What has happened to the much-vaunted insurance market? It was supposed to come to the rescue and be complementary, in a sense, to the introduction of the care cap. Finally, and overwhelmingly, my noble friends Lady Pitkeathley and Lord Turnberg and other noble Lords talked about the need for a coherent, long-term strategy. Either we go into absolute crisis in the next year or two, with huge knock-on impacts on the rest of the provision of health and social care, or the Government have to get a grip and actually start going for a long-term strategy. I hope the Minister will announce that tonight.