Care Bill [HL]

Lord Lipsey Excerpts

Monday 29th July 2013 Lords Chamber

[Baroness Pitkeathley]

My Lords, I rise briefly to make two points, the first as a result of my membership of the Joint Committee. Every witness who came before us to give evidence said two things. The first was that this is an excellent Bill for which we have been waiting years. The second was that implementation will be impossible if no more money is put into the system. All our witnesses said that the current proposals for funding are totally inadequate. That is exactly what I feel in my role as a campaigner and spokesperson for carers—and this is my second point. The Bill is all that I could have dreamed of in terms of rights and recognition for carers but will come to nothing if all that results are fewer services that are harder to access, with more pressure being put on carers to do the caring. I am seeing that now in carers’ groups and organisations. They were elated when the Bill was published: now morale is plummeting for fear of what the reality may be.

I join the noble Lord, Lord Warner, in asking the Minister for chapter and verse in his call for a review. We all want the Bill to succeed but we cannot, as responsible legislators, ignore this important issue.

[Lord Lipsey]

My Lords, I should have put my name to this excellent amendment.

It would not be the first time that the OBR has looked at this issue because there is some valuable material in its report on fiscal sustainability in July 2013, to which I will return in a minute. My noble friend concentrated on how serious the problem is now and how serious it will be in 2016. Perhaps I may detain the House for a few minutes to describe the slightly further away prospect because, if we are in problems now, we shall be in crisis unless something major changes within the next eight or 10 years.

The demographic factors have been widely appreciated, most notably in the report from the Select Committee of your Lordships’ House, Ready for Ageing, which indicates that there will be 39% more people aged 85 and over by 2021 compared with 2011, and 101% more—more than double—by 2030. The Select Committee concluded that what will happen is that they will get shoved into hospital, which will be,

“contrary to their wishes, not in their best interests, and more expensive”.

That is not a very good prospect. Moreover, as the OBR has shown, there is the prospect that stays in residential care may get longer and, therefore, cost more. It calculates a variant with a 20% longer stay, which is not implausible. So, just demographically, the situation is very difficult.

However, some less noticed factors all point the same way and add to the pressures. The most prominent factor is workforce issues. Many of your Lordships will have read the excellent report produced last week by the King’s Fund. It projects that by 2025 there will be a shortage in the care sector of 1 million workers—that is 35% of the current workforce. That is assuming that the Government’s immigration policy does not bite even more sharply than we think. You have only to go into a home to see how they are kept going by caring people who have come from overseas and are willing to work for the minimum wage, or near it, to look after our older people for us. Given the Government’s policy, these people will increasingly not be available for this purpose and so wages will inevitably go up. That will be a good thing because these people are terribly underpaid for what they do—it amazes me that the services are as good as they are, not that they occasionally fall short—but the cost to the Government is very sensitive to wages: it is the main expense because around 70% of the costs of an old persons’ home are paid out in wages.

The trite response to that is, “Let productivity increase”. However, in this sector, where one person looks after another, an increase in productivity will invariably lead to a decline in the standards of service. We know this because productivity is going down—it is down 20% over the years 1997-2010—simply because we rightly expect better services for people in the homes. There is no offset available through productivity. Those are the workforce issues.

As to the related fees shortfall, the system works at the moment by local authorities paying rock-bottom prices for the care they buy and self-funders paying rather more. The noble Baroness, Lady Greengross, sees this as an unfair tax but, being an economist, I know about marginal and average costs and I am therefore less shocked than I should be. However, it is a fact that it is taking place. The shortfall in fees over what will be necessary to provide an economic return for these homes would have cost local authorities £540 million in 2008-09, according to the latest published study by Laing and Buisson, to get the fees up to a level where they provide a reasonable return to the homes.

However, it will be much more difficult under the Bill’s scheme, because at the moment self-funders have no idea what the local authorities are paying for the same places that they are enjoying; they are not told. I was glad to hear the Minister confirm that under the Bill, self-funders will be told what the local authority pays. They will have to be told because the amount the local authority pays is what counts towards the cap. Thus a self-funder may be told that while they are paying £700, the local authority is only allowing £400. Your Lordships can imagine what is going to happen. I do not think that many self-funders will say, “Oh, I’ll be delighted to go on paying £700. After all, I may benefit from the cap if I live for a very long time”. They are going to be enraged. It is not a system that can be sustained. I have no doubt that the fees paid by local authorities and the fees paid by self-funders will come closer together, and that will mean increased bills for local authorities.