Care Bill [HL]

Lord Lipsey Excerpts

Monday 14th October 2013 Lords Chamber

[Lord Lipsey (Lab)]

My Lords, I shall speak briefly to Amendment 55 on top-ups and comment, also briefly, on the proposal for a ministerial advisory committee.

I can be brief about top-ups but not because the issue is not important. Indeed, its substance is vital if the Government’s scheme for a cap is to work. We made good progress on the basis of the Minister’s remarks in Committee, and further progress was made in the Government’s consultation document, published on 17 July. I hope that he will indicate that things are still on the right track towards reaching final solutions in the near future.

I recapitulate the argument from Committee. You cannot at the moment top up your own care home fees. If you go into a care home, a third party—your son, daughter or friend—can top them up but you cannot put in your own money. That is important now, and the statutory bar is often got around or simply ignored. However, it will be a lot more important once the Dilnot scheme incorporated in the Bill takes effect.

Consider an old person who is living in a home in which the fees are £800 a week. Suppose that the limit to what the local authority will pay in fees is £500 a week. What happens when the person has spent up to the cap, at the local authority rate of course? It may be that a third party can give them the extra money to pay up, but suppose they are isolated and on their own. I am afraid that the answer is simple and stark. The individual would have to choose between only two alternatives. One is to accept the £500 a week from the local authority and move into a cheaper, perhaps worse, home, with all the disruption to that person’s life that that would involve. The other would be waive the local authority contribution and continue to pay the £800 themselves. That would mean that the cap had not done them a blind bit of good. The way round this is to permit individual top-ups, so £500 would come from the local authority, £300 from the individual. The noble Earl endorsed this in Committer when he said that,

“people should be able to use their savings to purchase more expensive care if they want to”.

He went on to say that revised arrangements to this effect would,

“be set out in regulations made under Clause 30(2) of the Bill”. —[Official Report, 16/7/13; col. 736.]

This is spelt out in paragraphs 263 to 266 of the consultative document, which also has pointers to some of the potential risks. I hope that this was with a view to solving those risks and not to coming along at a later stage and saying that they are insuperable. I ask the Minister to make a brief progress report to reassure the House that this bar on individual top-ups is going to be rescinded. Without it, the Dilnot scheme simply will not work.

I will now say a word on the ministerial advisory committee amendment in the name of my noble friend Lord Hunt of Kings Heath, who kindly adopted a proposal that I made in Committee. As the House knows, I have previous in this field, having been working on long-term care since I was on the royal commission in 1999. I also have a bit of previous on public policy in general because I started working for Tony Crosland when he was shadow Environment Minister in 1972. Of all the myriad subjects on which I have had to do reasonably serious work in this time, this is by far the most complicated. It involves a mix of financial and administrative problems with the most sensitive human considerations, particularly since it concerns people at a stage of their life when they are going into the second age of vulnerability due to age. Public and private are inextricably mixed in a way that complicates things. The whole cap is part of a private/public co-operation; therefore, it is crucial to align what both parts are doing.

The scale and range of the stakeholders involved is enormous. The Care and Support Alliance had more than 100 individual voluntary organisations which came together to promote a solution in this Bill. There are also a lot of nooks and crannies that are not obvious. I am going to come to one in a speech later this afternoon, a feature of this Bill which only became known to me on Friday which greatly changes the deferred payment scheme under the Bill. There are nooks and crannies that can be simply ignored. We had another one earlier in the Bill. It suddenly turned out that if somebody had an income close to the top for which they could claim means-tested support, they had better not claim it, because otherwise they would lose more than they gained through attendance allowance. So it is a hugely complicated field.

I am not a critic of the department on this, nor of its Ministers. They have wrestled bravely with this, helped of course by the superb Dilnot report—I am standing behind my noble friend Lord Warner, who was involved in that process—which helped hugely to clarify the intellectual framework. But there are complications as yet unfathomed. As the scheme goes forward I promise that there will be lots of unexpected and unintended effects. In particular, how people register they are getting care needs, how they are then assessed, and how it builds up towards a care cap will work out quite strangely. The Government will need the best possible advice on how to do it.

All I am suggesting, as my noble friend Lord Hunt will propose in his amendment, is that it would be well for us to set up right at the beginning a ministerial advisory committee that includes everyone—the voluntary groups, the financial services industry and those who regulate it, and government departments—that can keep on top of these things. As major problems are identified, the committee can report to the Minister on them. As I say, it is not a vote of no confidence in the Department of Health. Indeed, I hope that the department will welcome the proposal because it has shown itself to be willing to talk openly throughout this progress of this Bill. The Minister used a good phrase to describe it when discussing the regulations earlier—co-production. We will need co-production as much after the Bill and the regulations have gone through as before. An advisory committee would provide that.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I welcome the noble Earl’s amendments. As we start another day on Report I should declare my interests as chair of a foundation trust, as a consultant trainer with Cumberlege Connections, and as president of GS1. The noble Earl said that the first group of amendments is designed to give more flexibility to local authorities so that they can make a contribution to a person who might normally be affected by the means test. That is entirely reasonable, but I wonder if he could tell us a little more about the consultation timetable from which this has clearly flowed.

I have also noted the amendments that will allow the local authority to charge the cost of care to those people who refuse to undergo a financial assessment. Again, this seems reasonable, but given the difficult circumstances in which that scenario might arise, does the noble Earl not consider that that lends support to those noble Lords who think that there ought to be appeals systems in place? When we come to appeals, I wonder whether the noble Earl might be a little more sympathetic to those amendments.

I want to lend my support to my noble friend Lord Lipsey in relation to top-ups. He argued persuasively in Committee to allow self-funders to top up if they reach the cap but wish to remain resident within a care setting where the costs are higher than the local authority is paying. That is a strong argument, and I, too, welcome the progress that has been made. However, like my noble friend, I hope that the noble Earl will be able to give us a further report on progress on this matter.

I come now to my Amendment 56, which has been very effectively trailed by my noble friend; in fact, it is difficult for me to do as much justice to the amendment as he has done. It requires the establishment of an independent ministerial advisory committee to keep under review the workings of the cap and the means-testing arrangements set out in Clause 17. It is fair to say that all noble Lords who have debated this Bill have welcomed its general intent and the principles that underpin it. The Dilnot commission marked a significant step forward in creating consensus on how people are to be protected from financial catastrophe if they have to fund their own care. We have debated in detail the Government’s response as set out in this Bill: the establishment and operation of the cap, the level of the cap, the continued financial risk to self-funders, the deferred payment scheme, the capacity of local authorities to accept the responsibilities being placed on them, and in particular, I would identify the responsibility for assessing thousands of self-funders who will come into contact with the local authority for the first time. We have discussed the advice to be made available to vulnerable people in a complex area and its interrelationship with the eligibility criteria.

No one, in welcoming the general thrust of the Bill, will believe that this is the last word. I am sure that the operation of the care packages set out in this Bill will need to be kept under frequent review by the Government and particularly by the noble Earl’s department. Oversight of the system would surely benefit from a bipartisan group of people from whom the Government could continue to take advice. My noble friend Lord Lipsey has gone back many years in relation to the debates in this area. Of course, he served on the 1999 Sutherland royal commission. In parallel we have had the Turner commission on pensions and we have seen the benefit of a bipartisan approach in relation to Dilnot.

We would all agree that the funding of long-term care requires stability as far as possible and, even more importantly, a long-term political consensus. As my noble friend Lord Lipsey said, this is a very complex, complicated set of arrangements. We would be best served by the establishment of an independent group that could advise Ministers on how the system was working and enable politicians from all sides to benefit from serious, impartial advice.

I know that the noble Earl has yet to be persuaded of the benefits of an advisory committee, but it would be an effective way to build on the consensus that I think has been created. I hope that even at this late stage, he might be sympathetic.

--- Later in debate ---

Moved by

[Lord Lipsey]

62A: Clause 35, page 29, line 27, at end insert—
“( ) Regulations under this section must provide that—
(a) a local authority shall direct anyone considering a deferred payment arrangement to an appropriately qualified financial adviser or to appropriately qualified financial advisers; and(b) any loan under this scheme shall be sufficient to pay for advice under paragraph (a) above.

[Lord Lipsey]

My Lords, am I speaking at the right time on the right subject?

[A noble Lord]

Yes.

[Lord Lipsey]

That is a great relief to me. I will come to the narrow-ish point in the amendments shortly but I want to put them in context.

One of the reasons why advice is absolutely crucial in the deferred payments scheme is that this is one of the least understood and least explored facets of the Bill. I will come on to one or two aspects of that. In a way, it makes it hard to make the case for the importance of advice, because so many things on which advice will be needed have not yet seen the light of day. In Committee I referred to some of the unresolved issues that have been raised by Partnership, the Equity Release Council and others. They will emerge, and this will make it clearer why advice is needed.

I will first put the issue in the following context, to show how unexplored it is. If the noble Earl, Lord Howe, will forgive me, I will correct something that he said in Committee. He said that 40,000 people each year have to sell their house to pay for care. I think that the noble Earl mis-spoke and that he meant to say, “up to 40,000”. That is the explanation that has come to me of what he said. I make no complaint; it is hard when one’s words are examined in such terrible detail.

I have spent a surprising—perhaps wasted—amount of my time trying to trace the figure that 40,000 people each year are forced to sell their home to pay for care. I have been doing it ever since I sat on the royal commission 15 years ago. When we were sitting on the royal commission, we eventually found a very dodgy piece of research, now more than 20 years old, which kind of concluded that the number might be about 40,000. Of course, what happened was not that the piece of research was examined and found to be accurate but that the figure got into the Daily Mail cuttings library, so that every time that paper campaigned against people having to sell their house to pay for care—I praise it for this—the figure was repeated, until it became accepted throughout the world as the number involved.

Having spent all these years studying the subject, I am very tempted to go into greater detail, but I do not think that the House would thank me for it. However, I refer any noble Lord who might be interested to the Full Fact website. It is a fact-checking organisation, of which I am a director, which goes into the matter in minute but very clear detail, and points out that the Government’s claim is based on exploratory research that is almost 20 years out of date.

More importantly, the 40,000 figure is used as if it were the number of people who are forced to sell their house. “Forced” is a funny word in this context. For most people who go into a home, selling their house is the sensible thing to do to fund the cost of care. You do not want to leave the house empty; that benefits nobody. It does not provide housing for anybody; the house starts to crumble and is worth less to you and your family, so you had best sell it and get something that is more suitable. However, the deferred payment scheme is so important because there are people for whom that is not true. For example, some people want their families to live in their house and therefore cannot get cash for it. That is why we have a deferred payment scheme. “Forced” suggests that this is something dreadful in all cases, when in fact it is dreadful in some cases. It is absolutely right, as I said before, that we have such a scheme for some cases but not for all cases.

I now come to another severe complication, and I am afraid that I will have to resort to the vernacular in order to make clear to the House what has happened. The original scheme put forward by Dilnot has had its balls cut off by the Government in the consultation document. That is not too strong a way of putting it, and I will explain why. Yes, every council will offer a scheme, but there is now a huge restriction that will mean that very few people will take advantage of the deferred payment scheme. It would not in any case have been 40,000, but now I think that it will be nearly nil. Why is that? The consultation paper makes it clear, in paragraph 150 on page 44, that you are eligible for a deferred payment loan only if your other assets in total come to less than £23,250. If you have more than that, you have to spend down until you have £23,250 left in the bank or wherever it is, and then you can consider a deferred payment scheme. However, most people who have reasonably valuable houses, who are the people most likely to want to adopt this measure, will have far more than £23,250 worth of other assets. Most of them will not feel the least bit happy if they have to spend down until they have only £23,250 left in the bank before they can get any help from the deferred payment scheme. That hardly pays for a daily delivery of the Racing Post for the rest of their lives, their nightly gin and tonic or more important things such as the literature they want to read or all the things that make their life fuller. For those people, a deferred payment scheme is simply not available.

--- Later in debate ---

[Earl Howe]

I shall come on to the standard scheme proposal in a moment. We need to ensure that this arrangement is rolled out in a way that is financially sustainable for the local authority in each case. We will be supporting the implementation of the capped costs system and an extension of deferred payments with £335 million, which should enable this to happen.

I shall move on to the amendments themselves. I hope that the House will forgive me if I do not rehearse at length the same points that I made about financial advice last week, but I should like to take a moment to reassure the noble Lord, Lord Lipsey, on the specifics of his proposal. It is imperative that everyone has access to sound, reliable information and advice while making decisions about their care to ensure that any option they choose makes good financial sense for them and is sustainable in the long term. It is clear that local authorities have a central role to play in ensuring that their local populations are aware of the range of information and advice, both regulated and non-regulated, that is available to them and that they know how to access it. Last Wednesday, your Lordships accepted my Amendments 16 and 17 which clarify this. The noble Lord’s amendment would underscore the need to make sure that everyone who decides to take out a deferred payment agreement reaches that decision in a considered and informed manner. I agree that that should be the case. All too often, people do not plan ahead for the possibility of needing care and so can find themselves having to make important and lasting financial decisions in a moment of crisis.

Deferred payment agreements can be used to reduce some of this urgency and ought to be accessible to ensure that they provide the peace of mind that they are intended to. For this reason I would hesitate to make the process through which a person can access a deferred payment too onerous. We are currently consulting on the information and advice a person should receive before taking out a deferred payment agreement. We will listen carefully to what is said and we will use this to inform the approach that should be taken. I have already given the noble Lord my undertaking to discuss further what remaining differences we have about financial advice, if any, and I hope that those discussions will allow us to explain in more detail our policy intentions and what our own government amendments in this area aim to achieve. I hope that the noble Lord will agree that we are essentially of the same view about this and that he will be content to discuss the matter with me further outside the Chamber. That being so, I hope that he is sufficiently reassured today to withdraw his amendment.

I turn to Amendment 63, tabled by the noble Lord, Lord Hunt, and the noble Baroness, Lady Wheeler. We are in concordance with them that a model deferred payment agreement would help local authorities and that is why we already have one in place for the schemes that are currently operating. What we intend to do now is build on and improve the current model. In doing that, we will work in partnership with local authorities to learn from the well established schemes, some of which have a decade of experience. While the case for a model scheme is clear, I think it would be wrong to mandate national systems and structures for deferred payment agreements. It is important that we strike the right balance between local flexibility and national consistency. Systems and structures must be developed in partnership with local government and allow for and, indeed, encourage local efficiencies to flourish. As noble Lords may know, we have established with the Local Government Association and the Association of Directors of Adult Social Services the joint implementation and programme board to support the implementation of these reforms more generally and, through this, we will support local authorities to deliver the universal scheme from April 2015. This work will include our commitment to providing a model deferred payment scheme, based on the current model, as well as statutory guidance to support local authorities in exercising these functions.

The statutory guidance on deferred payments, in particular, will have a clear legal status. Local authorities must act under this guidance. This means that they must consider and should follow it, unless they have a justifiable reason not to do so. This would seem to be the same status as is envisaged by noble Lords in their amendment. I hope therefore the noble Lord feels able to withdraw his amendment in light of the reassurance I have given on supporting local authorities to deliver the universal deferred payment scheme and the model agreement in particular.

My noble friend Lady Barker asked whether the scheme was a model for how local authorities manage the burden on themselves. This is not designed to be a scheme that makes a profit for local authorities. The interest rate is likely to be set at a rate which recognises local authority borrowing rates, and so ensures that the scheme is cost-neutral.

[Lord Lipsey]

My Lords, I thank the Minister for that reply. On the first two of the three legs of his argument, I am happy to support what he said. Through helpful discussions over the summer, I understood that he had meant to say “up to 40,000.” I make no criticism of him for misleading the House. Any misleading he did is on a tiny scale compared with the misleading that has taken place with the whole country through these repeated cuttings file references. History will now have on record in this debate the truth about these numbers. That is a form of progress, if not legislative progress.

Secondly, I should like to thank the noble Earl for what he said about advice. We are near to having another meeting before Third Reading on advice. We are all after the same things on advice with the same constraints. We have not quite cracked it yet, but I hope when the House comes back on Third Reading to the matter of advice, we shall do so, either in the form of an amendment, or of a shared understanding on where we are going which might take the form of regulation or guidance. On those two things, I agree with the Minister.

However the Minister did not confront my most important point. Let us be absolutely clear. This Bill does not provide a universal deferred payments scheme. It provides a deferred payments scheme only for people who have less than £23,250 in assets. There is no universal deferred payments scheme. Further, this has been done in a back-door manner which disgraces the Government. It was not in Dilnot. We have heard decisive testimony on that from my noble friend Lord Warner. It was not in the Government’s announcement of their response to Dilnot. It was not in the Second Reading speeches. It came out between stages of the Bill in this consultation document. The noble Earl suggested that there would be people with more than £23,250 who could benefit from deferred payments so we did not have to worry. The relevant bit from paragraph 154 of the consultation document says:

“More generally, we also intend that authorities should have the discretion to provide deferred payments to people in residential care who do not necessarily meet all of the mandated criteria.”

Those criteria include the £23,250, so that sounds quite good. The next sentence says:

“For example, if someone has slightly more savings”—

I stress the phrase “slightly more savings”—

“than the £23,250 threshold but would qualify for a deferred payment soon, an authority might prefer to offer the option upfront.”

That is a tiny loophole. This is essentially a £23,250 threshold that the Government have smuggled in, telling nobody until they had to produce this document and hoping no doubt that by 25 October, nobody would have noticed. I shall tell you who will notice. The Daily Mail will notice. The Daily Mail and other newspapers which campaigned so that people would not have their houses seized—I applaud them and have applauded them before for doing so—are now going to learn that the Government have welched on the deal. The tsunami that will hit the Government in consequence will hurt not only this proposal but the Government as a whole.