Care Bill [HL]

Lord Lipsey Excerpts

Tuesday 16th July 2013 Lords Chamber

Moved by

[Lord Lipsey]

91: Clause 17, page 15, line 23, at end insert—
“( ) The regulations must provide that where the financial resources of a carer who has needs for support or of the adult needing care (whether in terms of income, capital or a combination of both) as calculated in accordance with the regulations exceed the financial limit, payments by the local authority shall be tapered in such a way that each complete increase of £500 in resources held by the carer or adult over and above the financial limit shall result in a reduction of annual payments of £1.”

[Lord Lipsey]

My Lords, this has been a great test of my filing system, which fortunately has stood up to it on this occasion. Each of these three amendments in my name is entire of itself and could be passed on its own, but they are designed as a package. Taking them individually to start with, they would do three things: first, to make the tariff for the means test proposed by the Government less draconian; secondly, to increase the allowance given to people helped through the means test to pay for their personal expenses; and thirdly, by abolishing overtime of current nursing care allowance to pay for both the above and leave some money over for better care services.

Let me explain this thinking. I am a supporter of Dilnot—at the margin, I disagree with my noble friend Lord Campbell-Savours on this. I do not regard Dilnot as perfect, but I regard the distribution of ill effect, which I quite agree with him exists, as a small price to pay for the advantages of Dilnot, namely the danger that people quite at random are chosen to be wiped out financially. So I support Dilnot’s scheme. However, I am, as my noble friend is, aware of its defects. The plain fact—Dilnot is perfectly clear about this—is that it helps only one lot of people and not another lot of people. The Minister quoted figures about who benefits from the system as a whole before the dinner break, but the reality is that, under Dilnot, the poorest gain nothing from a cap; they are paid for by means-tested benefits anyway. Nearly all the benefits go to better-off people. That is a serious defect and it is very expensive—not as expensive with the cap at £72,000 as it would have been under Dilnot’s original proposals, but very expensive. This means that it will compete in practice with another set of problems, namely the sheer lack of resources going into long-term care, a short-fall that is getting worse as the number of older people rises and which will go on getting worse as the demographics described in the House’s report on the ageing population continue. So we have a serious problem.

The package is not designed to take apart the fundamental architecture of Dilnot. It does not take from anyone a single penny that they would gain under Dilnot. It is designed to spread the benefits more widely, all without increasing public spending by a single penny. Is that magic? Your Lordships will be the judge of that.

That is the easy bit, I am afraid, and I apologise to the House for any lapses in techno-speak in the words that follow. The first amendment refers to the tariff. I will explain briefly what the tariff is, because it is not altogether familiar. Suppose that you are above the minimum threshold for the tariff, which is around £14,000 at the moment, and you have some assets. For every £250 in assets, you lose £1 a week in benefit, about £50 a year—the equivalent of an assumed 20% return on your capital. That continues under the present system until you reach the £23,250 cap for the means test, but will continue under the Government’s proposals in 2016 until £118,000 is reached, the top level of the cap. You are fined £1 a week for every £250 that you have in assets. If you start applying that to the government system you discover something that has been virtually unremarked upon in the Dilnot proposals. Although the Government are, in theory, raising the upper limit to £118,000, the fact is that someone with £118,000 in assets will gain virtually nothing under the changed means test. That is for two reasons.

First, once you start to claim local authority help with your care, you stop receiving attendance allowance four weeks later. Indeed, according to Philip Spiers of the old persons’ charity, FirstStop, many people with £100,000 or more in assets, if they were properly advised, would be worse off, not better off, if they claimed local authority support, because they would lose £79.15 a week in the higher rate of attendance allowance, or around £87 when inflated to 2016-17 prices. In other words, the apparent cap for means testing under the Dilnot proposals is actually much lower because you do not need much in assets.

The second thing is that the tariff is ripping into your entitlement. Suppose that you are in a home where the fees are £400 a week—if you live up north, and that is what the local authority allows. Say, for example, you have £100,000 in assets above the lower threshold. It is not nothing, but it is not a large amount. On £100,000, the tariff will amount to virtually all the benefits you get under the means test. There you are, getting quite excited because the Government have improved the means test to help you, but you suddenly find that they have not. You will notice that this feature of the Dilnot proposals was not emphasised by either Andrew Dilnot or government proposals. That is a cruel system to confiscate the wealth of people who have only a little bit of it. If the Bill goes through with this feature intact, I predict that we are laying the basis for disappointment and even anger among a generation of older people and their families—people of modest means—who deserve something better.

My amendment makes the tariff less harsh. Instead of losing £1 for every £250 in assets, you lose £1 for every £500. According to estimates by Ruth Hancock of the University of East Anglia and her colleagues at the PSSRU, the substitution of a £500 tariff for the current £250 would cost around £150 million in public expenditure. That is element one of the package.

I am sorry, but this will take a while because I have three amendments wrapped together. The second component of the amendments is the increase in the personal requirements allowance. It deals with a nasty feature of a very nasty means test. I think that Dilnot himself said that it was the nastiest means test in Britain. If you are on the means test for your care home fees, you are left with just £23.90 a week for all your personal needs. Perhaps you want to give your child or grandchild a birthday present, buy cosmetics or some little comforts, a few sweeties, or even pay for taxis to the doctor when you cannot get about. All that comes out of £23.90 a week. That is not a rich reward for the poorest people in our society to be left with at the end, many of whom have worked long and hard. My amendment raises that to £32.75. That figure, I hasten to add, is completely arbitrary. It is because it costs the same—£150 million—as the change in the tariff. It helps the poorest among us. Thus I have one proposal that helps people of modest means, and one proposal that helps the poorest people. All it means is that they get a smallish share of the goodies handed out by Dilnot to the better off.

--- Later in debate ---

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

My Lords, on one level I sympathise with the intention of the noble Lord, Lord Lipsey, to redistribute funding between health and care and support so as to increase the personal expenses allowance and local authority support for those in residential care. However, we need to face the reality of the current economic climate. One important aspect of our reforms is that the greatest support will go to those with the greatest need, and that is surely the policy aim that we need to keep most closely in mind in this context.

Currently, the NHS funds nursing homes to support the provision of registered nursing care. This reduces the burden on the NHS of having to provide NHS nurses in residential care homes. Removing this funding would risk increasing costs elsewhere in the NHS, but it would also breach a serious point of principle. If we were to stop people in residential care homes from being eligible for NHS-funded nursing care, it would undermine one of the founding principles of the NHS, which is that it should be a service free at the point of delivery. I am sure that noble Lords would agree that we would not like to see that.

I understand why the noble Lord seeks to increase the personal expenses allowance. If someone is contributing to the costs of their residential care from their net income, for example from their pension, the personal expenses allowance is the amount people can retain to spend as they wish. This is currently set, as he rightly said, at £23.90. The amendment would increase it to £32.75. When living at home, people pay for their food and heating from their income. It is right that people should continue to contribute towards these costs in residential care. The personal expenses allowance reflects the fact that for most people these costs represent a large proportion of their income, but it allows people to retain some of their income for other uses. The reality is that spending additional resources on the personal expenses allowance would reduce the resources available to provide support to those with the greatest needs.

I heard what the noble Lord, Lord Lipsey, said about the loss of the attendance allowance meaning that people would be worse off. Local authorities should support people to maximise their income. If a given individual would be better off receiving the attendance allowance, the local authority should support them to achieve this. We will bear this in mind as we draw up the regulations.

I turn now to Amendment 91, which relates to financial assessments. One of the problems the Dilnot recommendations attempt to tackle is the cliff edge between being a self-funder and being supported by the local authority. By extending the means test for people in residential care, we aim to avoid a situation where a small change in a person’s capital results in a large change in what they pay for care.

From 2016, the maximum tariff income for someone with £118,000 in assets will be £404 per week. If we reduced the rate at which people contribute toward their care costs from their assets to £1 per week for every £500 of assets, the contribution for someone with £118,000 in assets would become £202 per week. This means that an individual facing a typical care home fee would be over £200 per week better off if they had assets of £117,000 than if they had assets of £119,000. This would reintroduce the cliff edge that surely none of us wants to see.

I believe that our plans represent a fair balance between the individual and the state. People with care needs will receive additional support with care and support costs through the extended means test, safe in the knowledge that health services will remain free at the point of use and that they are protected by the cap from unlimited care costs. I hope the noble Lord will see that there is method in the Government’s proposals. While I totally understand much of his rationale, I think our proposals have a better balance. I hope that he will feel able to withdraw his amendment.

[Lord Lipsey]

My Lords, I am usually extremely complimentary about the noble Earl’s replies to debates, but I do not think that he lived up to his normal standards in that one. He seems to be under a number of illusions. He seems to think that this Bill increases the amount of public spending that goes to the worse off, rather than the better off. It does not. The Bill incorporates what is a most extraordinary priority in terms of distribution, for reasons that I believe to be compelling. Concentrating money on those most in need may indeed be the Government’s general philosophy, I do not know, but this certainly is not implicit in this Bill.

The noble Earl seems to say that if you do as I suggested on the nursing care allowance, you would increase spending by the NHS. The exact reverse is the case. The nursing cost allowance is paid for by the NHS. I am subject to correction, but I believe it to be paid for by the NHS, so you would have an immediate reduction in NHS spending of some £500 million-plus a year.

--- Later in debate ---

Moved by

[Lord Lipsey]

92ZZA: Clause 17, page 15, line 31, at end insert—
“( ) After section 54(2) of the Health and Social Care Act 2001 (funding by resident etc of more expensive accommodation), insert—
“(2A) The regulations shall only restrict the right of residents to top up their fees to the extent that is reasonable, and in particular they shall not limit top-ups to residents using the 12 week property disregard or the deferred payment scheme.””

[Lord Lipsey]

This is another piece of arcanery, I am afraid, for the House. It is a genuinely probing amendment.

Not everyone may know what top-ups are, any more than everyone knows what nursing care allowances are. They arise for people who are not paying in full for their own care but want a better standard of care than the local authority is prepared to pay for. There are a quite a lot of these people. There are about 350,000 people in care homes and about 50,000-plus of them get care allowance. If a local authority claims a person’s needs can be met in a home costing £400 a week and the old person or their family prefers one costing £500 a week, they get the means-tested support as if they were in a £400-a-week home and the family finds £100 from their own pockets.

However, there is a strange twist. As long as a third party—usually the old person’s family—is prepared to dip into their pockets for the extra £100, there is no legal problem. They can do so under LAC circular (2004) 20, which derives from the National Assistance Act 1948. But if the old person wants better care, they can top up out of their own pocket only in very limited circumstances. They can do so only if they are subject to the 12-week disregard—which is the period you can be in a care home to see whether you get better and come out—or if they have a deferred payment agreement with the council, when the council may make top-up payments on their behalf. In theory, people cannot top up their own home fees but these can be topped up by other people.

As a historian of the Treasury, I can sort of see how this might come about. The Treasury would not want those whose means-tested contribution is offset by the tariff, as has been discussed, running down their assets to pay for better care, thus throwing more of the burden on the state. However, those in the know say that the restriction is widely ignored, often with the connivance of councils that do not want to get into an argument about whether the accommodation they will provide within their own limits is adequate for the old person. As a result, they allow the old person to chip in for their own care—perhaps he or she puts the money into a son’s bank account, the bank account pays the home and we do not know what goes on.

In parentheses, it is perfectly clear that local authorities know very little about what is going on with top-ups. I refer to the report due to be published by the charity Independent Age tomorrow, which analysed this after doing a freedom of information request on all councils. Out of the councils they asked, only 30 or so can be reckoned to have best practice or a good system for keeping account of top-ups. The rest are either bad or worse.

These mysterious top-ups go on, otherwise the old people would have to move out of the home they are in and into a local authority home. As noble Lords know, if you move old people from the home they are in to another home, what frequently happens, I am afraid, is that they die. This strange top-up mess is more difficult in the post-Dilnot world. Because of the extension of the asset limit for means tests, many more people will be receiving means-tested support, and anyone who is receiving means-tested support cannot do a top-up; that is the law. Many more people will therefore find themselves limited in what they can do if they stick by the law—which, as I say, they often do not.

Secondly, because the deferred payments scheme will be made available to everybody, more people will escape through the loophole in the current regulations that allows those on deferred payments to top up—you can do it if you have a deferred loan from the local authority but you cannot if you do not. The injustice between those who can and do defer and those who do not is made worse—the former can top up but the latter cannot. That will be a growing problem and a huge incentive for people to take out deferred payments, because they can legally top themselves up that way.

Thirdly, and potentially more importantly, let us suppose a person is self-funding and in a home where the fee exceeds what the local authority will pay. They reach the cap, having spent their £72,000. What will happen then? The state will meet that part of the cost of the home that they are in which is equivalent to what they would pay if they were in the home selected and provided by the local authority—their limit. If the home costs more than that—£600 a week not £400—where will the rest of the fees come from? Perhaps their family does not have any money for a top-up or is unwilling to provide it. Who is going to top it up? I am afraid that the crude reality is that some people will persuade the council to pay the higher fee while others will be moved—and, as I have already said, people who are moved will as a result, on average, die considerably younger. That is not a side-effect that Dilnot planned for but it is a side-effect of the way it is going to work out. Nothing much has been said by the Government about what happens if you reach the £72,000 cap and are in a home costing more than the local authority is prepared to pay. Until we get reassurances on that, the reality must be that they will be moved out to another, poorer, home and that this is going to be a tragedy.

The irony is that these are not poor people falling back on the state. They may well have assets and might be very willing to put in a bit extra to ensure that their last years are comfortable, but they are prevented by law—if they obey it—from doing so. Either they decide to opt out of Dilnot and fund their care in full, in which case they will not benefit from the cap and Dilnot, for them, amounts to nothing, or they go through the business of moving to the inferior home and we will have inflicted that disaster on them.

This area has not been much explored but there is a simple way of dealing with it, which is incorporated in this amendment. It is simply to end the ban on residents topping up their own fees. I do not think the cost would be very much but if the Minister has some other way of dealing with it, he should tell the Committee now before we endorse a policy which could lead to the mass eviction of old people from the residential homes in which they have long lived, in sharp contravention of all we are aiming to do in this Bill. I beg to move.

[Lord Warner]

My Lords, I intervene on this to talk very briefly about what the Dilnot commission said on this issue. I will quote just two sentences from page 22 of our final report, which are worth putting on the record. We said very clearly:

“The state-funded care element will be based on a local authority care package, but people will be free to top up from their own resources, should they wish. If someone moved to a different local authority, they would take with them a record of their contributions to date”.

That is a very clear statement of what our policy was. When we were taking evidence, there was not a lot given to us about the extent of top-ups.

If I fast forward to my time on the Joint Select Committee with other Members of this House, the issue of top-ups seemed to have changed quite significantly between the time when the commission reported, having considered all this, and the time that the Joint Select Committee was working on it. There were not good data, other than that many of us have been increasingly learning that the top-up levels have been quite considerable in some homes. There is clearly a problem with the cross-subsidising of people who are state funded from self-funders. The issue is now complex and I do not know how good the Government’s data are on the use of top-ups. We were clear that you could count towards the cap only what the state-funded element of that payment was, which would be determined by what the local authority would pay in its area for the care being provided. If we depart from that principle, we will end up in chaos—and probably end up with a much higher public expenditure bill.

There is an issue here that the Government need to think about, but in principle we should do nothing to stop people topping up if they and their family are prepared to provide for a higher level of care. The present rules were drawn up for a different time and on top-ups, the world has moved on. We need to get this straight before we finish this Bill.

--- Later in debate ---

[Earl Howe]

My Lords, having disappointed the noble Lord, Lord Lipsey, on the previous group of amendments, for which I shall try to make amends over the summer holidays, I hope to do a little better with this one but I predict that he will not be completely satisfied with my answer.

People should be supported to receive the care they want and should be able to use their own assets to achieve this when they can afford to do so, but this should never be an excuse for local authorities to underfund the cost of meeting people’s needs. I agree with the noble Lord that people should be able to spend their money on purchasing more expensive care and support for themselves if they wish to do so, provided this is affordable. We are seeking better to understand the impact of such a relaxation and the protections that are appropriate for vulnerable people. It would clearly be undesirable for a person to spend their life savings on residential care and late in life be faced with the prospect of having to move to alternative accommodation purely on affordability grounds. I take that point absolutely. In addition, we want to consider the implications for the ability of local authorities to arrange services for other people. If individuals were to use their resources to purchase more expensive care, this could ultimately reduce local authorities’ income from charges. This in turn would reduce the amount of care the local authorities could arrange for other vulnerable people. There are a number of factors at play here, which we need to think through a bit more.

In principle, people should be able to use their savings to purchase more expensive care if they want to. We are determined to clarify and modernise the care and support arrangements in a way that is fair and reasonable to people who need care, their families and the taxpayer. The revised arrangements for people to use their savings to pay for their own care will be set out in regulations made under Clause 30(2) of the Bill. Through the public consultation on funding reform, we are seeking better to understand how relaxing the existing restrictions on making additional payments, which the noble Lord, Lord Lipsey, outlined, might impact on the wider care and support system. The evidence we hope to gather from the consultation will inform the regulations that will set out the revised arrangements. Those regulations will also be subject to further public consultation. In view of that, which is really a long-winded way of saying that this is work in progress but we are on the noble Lord’s side, I hope he will feel able to withdraw his amendment.

I can clarify one point in relation to when local authorities take over responsibility for funding care. It may be appropriate for the local authority to meet any additional cost, for example, where moving the person receiving care and support would adversely affect their health. However, where paying the higher cost might limit the local authority’s ability to support other individuals with care and support needs, the person may have to move to less expensive accommodation. In making any decisions, the local authority has to consider the exercise of its duty to promote that individual’s well-being.

I hope that those are helpful remarks. I would be happy to discuss this issue with noble Lords between now and Report.

[Lord Lipsey]

My Lords, I thank the Minister for that reply. Having berated him for his previous speech, I can more than fulfil his expectations on this. He has done all that I could have hoped for and more. It will be extremely well received in the world outside that the Government are finally getting to grips with this long-outstanding anomaly. I do not blame this Government. Various Governments have been exactly the same. We are going to get a solution that is essential if the Dilnot scheme is to work as we meant it to work. It is very good news to hear the Minister state so strongly in principle that if people want to use their own money to top up their fees, they should be able to do so, although I understand his reservations about the impact that might have on the local authority market. I look forward to his further work on the subject and to discussing it with him and his officials, as will, no doubt, other noble Lords who have an interest in this. I beg leave to withdraw the amendment.

Amendment 92ZZA withdrawn.