Care Bill [HL]

Lord Lipsey Excerpts

Tuesday 21st May 2013 Lords Chamber

[Lord Lipsey]

My Lords, I declare an interest as unpaid president of SOLLA, the Society of Later Life Advisers. I want in my remarks to concentrate on the Dilnot-related parts of the Bill—that is to say, the cap and the related changes to the means test. I should state straightaway that I welcome the cap. Indeed, I hope that the House will not think it unduly immodest of me if I claim to be, if not its father, perhaps its grandfather. In the minority report of the 1999 royal commission, which I signed with the noble Lord, Lord Joffe, there was a proposal that people should have their care costs covered if they were in care for more than five years. I was not even able to command the majority in the minority on that matter, because the noble Lord, Lord Joffe, did not agree with me on that, although we agreed on everything else. So right from the beginning I have been a strong supporter of people being protected against catastrophic costs of care. I emphasise the word “catastrophic”, because I am also extremely glad that the Government opted for the £75K cap, which I referred to in this House in my initial reaction to the Dilnot proposals, and not for the much lower figures put forward by the commission, which frankly I thought to be unaffordable.

I hope that my credentials as a broad supporter of what the Government are doing are established and that it will not seem impossibly contrarian if I point out two disadvantages of the proposed scheme that we need to bear in mind throughout proceedings. The first is that it is still pretty expensive—£1 billion by the end of the next Parliament, rising to £2 billion by 2030, according to calculations by the Health Economics Group at the University of East Anglia and the LSE’s PSSRU. In the times of austerity in which we are living, any increase in public spending needs to be very thoroughly justified, because of its implications for taxation if nothing else. There is a particular danger in spending money on helping people to pay for care. The real acute and immediate crisis that we face is not about people paying for care; it is about the amount of care that we are providing, on which spending has been cut by about £710 million in real terms since this Government came to power. There are loads of figures, but that is the one that hit me. People are doing without services. If you do not have substantial needs, you do not get services any more. When the priorities come to be weighed, that seems to me to be the pre-eminent one.

There is also the issue of where this money goes. The Dilnot proposals—for all their advantages, which I will come back to before noble Lords get convinced that they should not go forward—do little for the poor. They mostly benefit the better-off. That is because poor people get paid for in full under the present means-testing system. It is the better-off who have to pay. Of course they do not like that and it understandably creates a furore. Even the Government’s plan, which I will call “watered-down Dilnot”, benefits most the better-off. According to the same academic sources that I quoted, the plans in 2030 will be worth £52 a week to people over 85 in the top quintile by income—the top 20%—compared with just £20 a week to those in the lowest quintile. That is an inevitable consequence of replacing means-tested benefits with targeted universal benefits, which is why some of us are chary of the current fashion for scrapping means tests.

Dilnot argued that the cap will protect a bigger share of the assets of those with modest wealth than those with lots of wealth. That is true. It is, however, also true that those with modest wealth will have to contribute to the cost of their care a higher percentage of their wealth than will richer people. It was therefore as difficult a choice for me as it was for Joel, my noble friend Lord Joffe. I go back to the only dispute that we ever had.

Against those disadvantages had to be weighed two important advantages. One is that there is real injustice in the present system, because it is a total lottery as to whether you need care or none at all. It seems unfair that one set of people, however well off they may be, have their wealth wiped out because they happen to need a lot of care, while more people—about two-thirds—get away with the full loot to leave to their children because they do not happen to need care. That lottery is unjustifiable.

I have been in politics for some time and, frankly, I thought that it would be a tremendous advantage if, at reasonable cost, we could get this issue of paying for care off the agenda and concentrate on the things that really matter—the money that has to go into care services, the way that those services are organised and the way that individuals get more control over those services. The issue of the old having to sell their homes to pay for care is a distraction from a more important debate, and the proposals, at modest cost, will take it off the agenda. It is right to proceed with them, but I am sorry that the cap changed from £75,000 to £72,000 and that it has been brought in a year earlier as a result of the Budget. That means increased Exchequer costs earlier, which is robbing money that should go on services.

Incidentally—this is a side issue, but important—the administrative burden on local authorities is quite alarming. Getting this done by 2016 is a major deal. Authorities will need to invest huge amounts in systems, staff, advice and all these things—perhaps £500 million just for the administrative costs. The Government must—I repeat, must—pay for that in full, but it will be nip and tuck as to whether it is done in an orderly fashion to the new timetable. If that had not been done, we would have had a little extra money. At quite modest cost, the government scheme could be tweaked to do more for those with relatively modest wealth and we would not have to worry as much that all the benefits were going to the better-off.

This now gets a bit geeky, but I will persist. The Government propose to raise to £123,000 the limit on how much wealth you can have before you stop getting means-tested support. That is good; it represents the value of a cheap house in some parts of the country. However, it is not very good. I do not know how many noble Lords are fully aware of this but, in fact, if you have £123,000 in assets and that modest house, all the money that the Government are trying to give you under the means test will be taken away from you. Why is that? It is because of a little-known thing called the tariff. Under the present system, for every £250 that you have in excess of about £14,000 in assets, you lose £1 a week in benefit. You would require a 20% return on your savings—£50 a year on £250—to benefit. The money is taken out of your pocket by this tariff in the means test as it is put in by the increase in the ceiling.

How could this be changed? It could be done easily. Suppose that the tariff was changed so that, instead of losing £1 for every £250 of your assets, you lost £1 for every £500. Therefore, those with assets of up to £123,000 would get decent benefits from the state towards the costs of care. Nor would the cost to the state be great. According to the academics whom I quoted, the cost would be around £150 million—less than a sixth of the cost of the Government’s proposals. A small slice would go to those with modest income and wealth and, if necessary, it would reduce the very large slice going to those with substantial income and wealth. In other words, if this proposal were to be combined with the cap proposals, we would have a much less regressive package. If it were necessary to fund it by raising the cap from £72,000 to, say, £80,000 or a little more, that would be a price well worth paying for a more socially just solution.

My party has rightly criticised the Government, mildly, because their plan does not do enough for the less well-off. Here is a ready-made solution. The Minister was described at a meeting earlier this afternoon as a saint. I would not dissent from that. I do not mean to be offensive to the noble Earl, but he would not like the tag put on him that he cares only for the better-off. When the Bill goes to Committee, I am confident that the noble Earl, Lord Howe, will stand up and accept amendments to reduce the tariff to £1 for every £500, thereby making this Bill much more progressive and helpful to those hard-working people on modest incomes who want their fortunes to be protected.