Care Bill [HL]

Lord Lipsey Excerpts

Tuesday 29th October 2013 Lords Chamber

Moved by

[Lord Lipsey]

3: Clause 4, page 5, line 5, at end insert—
“( ) Regulations must set out how local authorities should facilitate access to financial advice regulated by the Financial Conduct Authority for those adults likely to benefit from it.”

[Lord Lipsey (Lab)]

My Lords, I remind the House of my interest as the unremunerated president of the Society of Later Life Advisers. Why has this matter come up again at Third Reading? It is because there were discussions in progress between the Minister, the two co-signees of this amendment and me, which had not yet concluded and the Minister generously agreed that we could bring it up at Third Reading. I think that the time has been well used. Certainly on the principles of the matter there is now complete accord between the Minister and ourselves. We are all agreed that taking financial advice must not be compulsory but equally we are agreed that it is not enough for the local authority just to hand over a list of names of advisers and say, “Take it from there”. In the fashionable words of today, we are agreed that they have to be nudged into doing what is invariably in their own interests as well as that of the council.

We are agreed that there is an important role for independent, regulated financial advisers in this field. We are agreed—despite the fact that I have tabled an amendment—that there is no need to put this in the Bill: it makes very good sense to spell it out in regulations. However, we are also agreed, and the Minister will confirm this, that it would be valuable, not only for this House but for outside interests, if he were to spell out in a little more detail the Government’s intentions in this regard. We have reached a position of great harmony. I thank him for all the time he and his officials have devoted to it and the sooner the House hears from the Minister, after one or two comments, the quicker this issue will be seen to have been satisfactorily resolved. I beg to move.

[Lord Sharkey (LD)]

My Lords, I will speak very briefly in support of the amendment. The noble Lord, Lord Lipsey, spoke with his usual clarity in moving the amendment and I shall not repeat his arguments, which seem to me to be compelling. However, I will point out that the amendment now before us is in effect the last remaining part of a discussion that started at Second Reading, continued in Committee and on Report and in private meetings with the Minister and his officials. At the start there were, broadly speaking, two concerns about information and advice. The first was about the Dilnot recommendation that there should be an extensive public awareness campaign about the facts and the implications of the cap. Our concern was essentially about the leadership, the scale and the monitoring of this campaign. I am very grateful to the Minister and his officials for all the discussions that they have had with us over this issue.

--- Later in debate ---

[Earl Howe]

My Lords, Amendment 3 brings us once again to the important matter of financial advice. As we have covered this subject at some length previously, and in the interests of time, I will endeavour to keep my response reasonably short. At the same time, I do not intend to make brevity a substitute for substance.

My discussions with the noble Lord, Lord Lipsey, my noble friend Lord Sharkey and the noble Baroness, Lady Greengross, and my officials’ discussions with the financial services industry have persuaded me that we are all seeking the same end point for financial information and advice. I believe that any apparent distance between the positions of the Government and noble Lords on this issue reflects only the way that I have expressed our intentions thus far. We want to ensure that when people take decisions about how to fund their care it is done in a considered and informed way. We agree that the local authority has a pivotal role to play in ensuring that this happens. I want to set out what I see that role as being in the hope that noble Lords will agree that we are indeed in concordance.

We believe that the local authority should take a proactive role. What does that mean in practice? Under the new system we expect many more people, a large number of them self-funders, to approach the local authority to start their meter running. This provides an invaluable opportunity for local authorities to reach out to these people and tell them about the support that is out there to help them better plan, prepare and provide for the costs of their care. It is particularly important for self-funders that this includes the relevance and the availability of regulated independent financial advice. To pick up the word in the noble Lords’ amendment, this should be a facilitative role for the local authority, providing a nudge in an appropriate direction.

In trying to define what we mean by facilitation, I wholeheartedly agree that handing out a leaflet or placing a page on a website is not sufficient. Instead, local authorities should talk to people and use the opportunity of contact with self-funders and others to give them individually tailored advice that suits their personal circumstances. They are likely to know something about a person’s financial situation and so will be able to tell them about the range of information and advice that might be most relevant to them in considering their care options, whether that is light-touch budget planning or advice from a regulated organisation. It would not be sufficient for local authorities just to tell a person about the types of information and advice available. They will also have to explain how it could be accessed and provide information to enable them to do so.

There is more work to be done before we can finalise what the guidance will say. To get it right, we will need to work collaboratively with stakeholders, including the financial services industry. We have begun to do that already and have had initial discussions and workshops involving representatives from the finance industry. They have confirmed what we all know of some of the necessary complexity in the system, so how and at what stage a person or their family is facilitated to take up regulated financial advice will depend on how and where they have made contact to obtain information and advice. We will gather examples of best practice to inform statutory guidance to help local authorities identify the types of information and advice that different people may need, inform them of those options at the right time and help them to access them.

In addition to the call for evidence and responses to the consultation on funding reform, background work has already been undertaken over the summer that supports the development of statutory guidance. Work commissioned through the Think Local Act Personal partnership has resulted in two publications on information and advice, principles for the provision of information and advice and an interactive map evidencing the difficult pinch points in people’s typical journey through the care system.

We have commissioned detailed work with six local authorities chosen from 40 examples of current practice collected earlier this year to draw together evidence on benefits and effectiveness in developing information and advice services. A number of those examples, including West Sussex, involve directing people to regulated independent financial advice. Helpfully, the ABI has invited my officials to participate in a workshop on access to financial advice being held on 14 November, which we expect further to support the development of guidance.

I am confident that no further amendments are needed to effect what I believe is a shared ambition. The Bill sets out the framework, the skeleton if you like, but it is the statutory guidance and implementation support that will put meat on those bones. What I have set out today is what we will put into practice through guidance. This guidance will be developed in co-operation with all interests, including the Association of British Insurers and the Society of Later Life Advisers, SOLLA, which will build on the good practice that already exists in many areas. We really want this to be the product of co-development which achieves the aims that I firmly believe that the noble Lord and I share.

The noble Lord, Lord Hunt of Kings Heath, expressed concern about what I said on Report about the possibility that local authorities could be held liable in the event that a regulated financial adviser gives poor advice. He pointed out, quite rightly, that such an adviser would be covered under FCA codes, and so on. The issue here is about the local authority making a recommendation to an individual adviser. We do not consider that there is any problem with local authorities providing a list of advisers from whom a person could choose.

On the impact of local authority responsibilities, we have established a partnership with the Local Government Association and the Association of Directors of Adult Social Services and have set up a joint programme and implementation board. We have a lot of ground to cover, and I think that no one would deny that we have our work cut out over the next few months, but I can tell the noble Lord that, together, we are absolutely committed to providing the support that is needed by local government to enable it to fulfil its functions. I hope that we have achieved a meeting of minds on this matter and that what I have said today will give the noble Lord, Lord Lipsey, sufficient reassurance to withdraw his amendment.

[Lord Lipsey]

My Lords, I could not have put it half as well myself. I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

--- Later in debate ---

Moved by

[Lord Lipsey]

5: Clause 35, page 31, line 20, at end insert—
“( ) The regulations may not specify any threshold of other assets above which a person is not eligible to receive a deferred payment loan.”

[Lord Lipsey]

My Lords, I am afraid that I cannot be so succinct this time. I might be acquitted of exaggeration if I say that the House's discovery on Report of the Government's proposed £23,250 limit on the non-housing assets people could have to qualify for the deferred payment scheme has caused something of a furore. I am not sure that Norman Lamb, the care Minister—a Minister for whom I genuinely have huge respect—will think that it was his finest hour when he described people with £23,250 in non-housing assets as quite wealthy. They may not be poor, but they are not likely candidates for the Chipping Campden set either.

My amendment would prevent the Government imposing such a limit. I have moved it in this form because we want to have a free-ranging debate this afternoon. I do not say that the matter will necessarily be resolved in this House this afternoon, and I make it clear that I am not an absolutist in this matter. The £23,250 figure is out for consultation—and following the furore a lot of people out there now know that it is out for consultation, which they did not know when it appeared in paragraph 150 of the consultation document. If at the end of that consultation, as I hope and expect, the Government decide to set a much higher figure, I shall reckon that a result.

Let us remember who this scheme is intended to help. It is not aimed at poor people who own their own homes, because they would not be sensible to avail themselves of its provisions. If they kept their homes under the scheme, they would have virtually no money in the bank and could not afford the little things that make life in a care home tolerable: presents for the grandchildren, a newspaper, sweets. At current interest rates, someone with £23,250 would have no more than £700 a year in income from that capital sum. They might have other bits of income but they are not going to be living a life of luxury in a care home off an income of £700 a year.

In arguing for the cap, the Government have tried to argue that it will not exclude most people. They claimed—or at least newspapers have reported that they claimed—that 35,000 of the 55,000 homeowners who enter care each year have assets of less than £23,250. These figures are contestable, as all asset figures are. A very good analysis in the Sunday Telegraph showed that the average 75 year-old had around £100,000 in other assets—a much higher figure than the Government were putting forward. However, that is not the main point I wish to make about the claim that most people have less than £23,250. My point, which I have been raising throughout, is not that the limit would exclude most people but that it would exclude most of the people who would sensibly take advantage of the Government’s proposal. That is why I have said, and maintain, that a £23,250 cap would kill the scheme stone dead and that if that figure remains unchanged, there will be practically no takers for it.

As I have already said, it makes no sense for the poor to do it. If they went down this line, they would be left with so little cash that they would not be able to afford the luxuries of life. But let us be equally clear that it would not make any sense for anybody at the top end of the scale to do it—the Chipping Campdens with millions in the bank who Norman Lamb rightly said would be excluded. If they go into a care home they do not have to sell their home anyway—they can pay the fees out of their investment income or by selling a few shares. They could follow the famous advice that Nicholas Ridley, as Environment Secretary, gave to people who were having difficulty paying the poll tax, to sell a few pictures. A cap excluding them will do no harm since they were not going to take advantage of the scheme anyway.

I can quite see why the Government might wish to avoid promoting a scheme that could easily be portrayed—wrongly, as it happens—as giving a handout to the rich. However, the scheme as devised by Dilnot, as accepted by the Government and as amended, sadly, by the consultative document, is not aimed at the poor or at the rich. It is aimed to help people on middle incomes who have worked all their lives and saved a modest sum. That is why the Daily Mail and the Telegraph—which have appointed themselves, fairly enough, as the spokesmen for such people—have mounted their admirable campaigns against the Government’s proposed cap.

Therefore, the question is, “What cap will ensure that these people benefit?”. The answer is not—I repeat, not—£23,250. When we look for another figure, there is a logic that points us in the right direction. Why £23,250? It is an odd little figure and not something which you would dream up overnight. It happens to be the present upper limit for getting help under the means test. If you have more than £23,250 in assets, you get no help under the means test; if you have less, you get some help.

However—this is quite curious, but I can only explain the facts—the £23,250 cap is going to increase dramatically. Under the Dilnot recommendations, as embraced by the Government, the upper limit will increase to £118,000 in 2016, when the new cap on care costs comes into force. Many more people will get help with their care costs, and there will not be the current precipice whereby people who have a small amount of money—although Norman Lamb describes them as being quite rich—will be disqualified. Instead there will be a much longer plateau stage, when people lose a little bit of money if they have more money in the bank.

If the limit is to be £118,000, it seems that the logical thing would be to say, “Let’s forget £23,250. If the new means-test limit will be £118,000, let that £118,000 also be the limit for the deferred payment scheme”. At a stroke, that would deal with the problem of middle-income people who have worked hard all their lives, while excluding the rich people who do not need help. Job done. That may not happen in this House this afternoon, but I am sure that it will be done when the Bill reaches another place.

This is all quite new stuff, which was only discovered in the past couple of weeks, and I want to make two points in conclusion. Some people worry that if we do as I suggest the scheme would impose a high cost on the state. They need not worry. Loans will be repaid in full with interest when the old person dies, and the average time in a care home is about two and a half years. So the Government’s cash flow will hardly be adversely affected for long, and the scheme certainly will not be loss-making.

The second reason why the scheme will not cost much is that not very many people would be well advised to take advantage of it. For most people it would mean either leaving their former home empty—with the roof rotting and the price that it will eventually fetch for their family, out of which the debt will have to be repaid, declining—or letting it out, which would not be easy for somebody in a care home to manage. For some people—those, for example, who have always had the dream of their children living in their house—it will be a huge comfort to see that dream realised when they go into a care home. I speak with some feeling, because my own mother, who is in a care home, has been able to give her home to her other son and that gives her, as well as him, huge pleasure.

This scheme would prevent forced sales at bargain prices when the market is particularly depressed. It would also give the old person, who might initially have said, “Well, maybe I might return home one day”, time to come to terms with the fact that that may not be so. That can take a bit of time—and some people, miraculously, can return home. The scheme would protect some people, but there will not be very many of them. I would expect the take-up to be in the low thousands, if that, and any cost to be exiguous.

Finally, some noble Lords have come up to me in the Lobby and said, “But surely it’s right that old people should use some of the assets they have accumulated in their lives to pay for their care”. This thought is reflected in the reported remarks of the noble Lord, Lord O’Donnell, about the benefits that we give to old people. I empathise strongly with that school of thought. Indeed, it is what has, entirely unexpectedly, led me to spend the past 15 years trying to stop the feeble-minded proposal of the majority on the Royal Commission on Long Term Care for the Elderly that the state should pay for free care for everybody, and then—with my noble friend Lord Warner—tackling the Government and succeeding in stopping the insane proposal of the Brown Government that care at home should be free for all when care in homes should be paid for. I remember the stout support that I had from the Minister for that successful campaign.

I want people to contribute to the cost of their care, but I believe profoundly that a deferred payment scheme will make that easier, for it will remove an injustice from the present system and therefore pave the way to a new public-private partnership in paying for care—a stable basis on which people can plan for their old age, freed at last from fear.

--- Later in debate ---

[Earl Howe]

My understanding is that the short answer is yes. There is no reason why potential beneficiaries should not use other moneys to pay the debt, in which case the legal charge over the house would be released by the local authority.

[Lord Lipsey]

My Lords, I thank the Minister for his reply. It is tempting to go further into the minutiae of these issues, but I think I have been in politics long enough to recognise when a Minister is elegantly preparing for a government retreat. Believing that we have just heard an exemplar of such a speech, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.