Clause 15 - Cap on care costs

Care Bill [Lords] – in a Public Bill Committee am 4:45 pm ar 14 Ionawr 2014.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People) 4:45, 14 Ionawr 2014

I beg to move amendment 99, in clause 15, page 14, line 33, leave out ‘cap on care costs’ and insert

‘set level above which an adult starts receiving financial assistance with the costs of their care’.

Photo of Hugh Bayley Hugh Bayley NATO Parliamentary Assembly UK Delegation, NATO Parliamentary Assembly (President)

With this it will be convenient to discuss the following:

Amendment 100, in clause 15, page 15, line 6, leave out ‘cap on care costs’ and insert

‘the set level above which an adult starts receiving financial assistance with the costs of their care’.

Amendment 101, in clause 15, page 15, line 27, leave out ‘cap on care costs’ and insert

‘the set level above which an adult starts receiving financial assistance with the costs of their care’.

Amendment 102, in clause 15, page 15, line 22, at end add—

‘(9) The Secretary of State must report to Parliament—

(a) in advance of this section coming into force with the Government’s assessment of the likely impact of the set level above which an adult starts receiving financial assistance with the costs of their care; and

(b) annually once the section is in effect, with the Government’s assessment of the impact of the set level above which an adult starts receiving financial assistance with the cost of their care, in particular its distributional impact across different levels of income.’.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People)

We now come to another critical clause. Amendments 99, 100 and 101 change references to the cap in the Bill to

‘the set level above which an adult starts receiving financial assistance with the costs of their care’, and amendment 102 requires the Secretary of State to report annually on the impact of the cap. I shall explain the amendments further in my comments.

I reiterate that Opposition Members welcome the principle of any cap on care costs. Protecting people who face catastrophic care costs and risk losing everything that they have worked for and saved for—even their homes—is an important step forward. I have always said that, and I continue to say it. However, Committee members need to be clear about how the Government’s proposals are different from the original proposals made by Andrew Dilnot and his long-term care funding commission, and we should be aware of the risks of using the word “cap”.

I understand that the issue is fundamental to the Dilnot proposals. During the cross-party talks, I raised it with Mr Dilnot, saying, “The problem, Mr Dilnot, is that the cap isn’t really a cap; it won’t feel like a cap to people.” It would not be fair of me to give his response, other than that it was an economist’s best way of expressing it, to put it diplomatically.

My real worry is that what happens with complicated areas of policy is that something gets reduced to a word and the public, when they see the results, will think, “Hang on a minute; I thought my costs would be capped at this amount,” when in reality they are not. I shall come to that in a minute.

I remind hon. Members that the Dilnot commission proposed that a cap on care costs should be set between £25,000 and £50,000, recommending £35,000 as the best figure. The commission’s report said:

“Anything above £50,000 could mean people with lower incomes and lower wealth would not receive adequate protection…moving outside the range of £25,000 to £50,000 could mean that the overall reforms would fail to satisfy our criteria on fairness and sustainability.”

Photo of Bill Esterson Bill Esterson Llafur, Sefton Central

I want to make a brief point about the regional effects of the cap. There will be a skewed effect. Far more people in the south-east in particular will tend to benefit, because wealth, particularly in housing, is far greater there, especially in London. Does my hon. Friend agree?

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People)

I was about to come to that point. If the so-called cap were set at £72,000, many of my and my hon. Friend’s constituents could see all their homes, or a large and substantial chunk of their homes, go. The effect will be differential, depending on house prices across the country. Dilnot proposed a carefully balanced package. He recommended that the cap be set at that level because he thought that that was the right balance between fairness and sustainability.

Photo of Paul Burstow Paul Burstow Democratiaid Rhyddfrydol, Sutton and Cheam 5:00, 14 Ionawr 2014

Does the hon. Lady agree that the Dilnot recommendations were based on 2010 prices and that the proposals for the cap being introduced in 2016 will effectively be at the prices of the time? With the benefit of that period of time having elapsed, even Andrew Dilnot would accept that £50,000 will very nearly become £72,000.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People)

The right hon. Gentleman is courageous for thinking that he might know what on earth house prices will be like in the years ahead. Dilnot was clear on where he thought the cap should be set. Even in 2015-16, for many of my and other Members’ constituents, the level is above what Dilnot recommended. Sustainability and fairness are both issues.

Photo of Grahame Morris Grahame Morris Llafur, Easington

I want to bring the discussion back to the amendment and the reasons for changing the wording from “cap.” We have been at pains to say that local authorities must behave transparently and openly so that people are aware of the charges. Surely the Government should also be absolutely open about how the cap will apply so that people with moderate care needs, for example, will know that those costs will not count towards this thing that we are calling a cap. Those costs could be many tens of thousands of pounds. Is that not rather disingenuous?

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People)

My hon. Friend rightly moves me on to the substance of my amendment, but I thought it was worth reminding hon. Members of the original Dilnot proposals.

For many people, the cap simply will not be a cap on the costs that they actually pay. First, as my hon. Friend has just said, if someone is not assessed as having eligible care needs, which we know will be set at substantial care needs, money spent on care will not count towards the cap—any money spent on home care, on someone to help with the shopping, on grab rails or on stair lifts by someone with low to moderate needs will not count towards the cap.

Secondly, the cap is based not on what someone actually pays for their care home but on the standard rate that their local council pays. Currently, the average rate that councils pay for a care home is £477 a week. Many hon. Members will know that the weekly charges for care homes in their constituency are much higher than £477.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People)

Let me make some progress before I give way.

We asked the House of Commons Library to analyse the trend of increases in the past five years in the difference between what councils pay and what care homes actually charge. The Library said that in 2016-17, when the cap is due to start, the average council rate for residential care is estimated to be £522 a week, but that the actual price of a care home bed is estimated to be £610 a week—hundreds of pounds more in many areas. The average price that people actually pay covers both council-funded and private care homes. The figure for private care homes alone is far higher than £522 a week. The difference between the council rate and what people actually pay will not count towards the cap.

If a person manages to survive long enough to hit the cap, they will still have to pay the extra costs. The only alternative is that they would be forced to move, and we know how risky that is for elderly people in residential care homes. Unfortunately, we know that too often such people pass away. The care Minister has been slightly better behaved than some of his colleagues, particularly the Secretary of State, who said:

“The cap is not saying that we expect people to pay £75,000”— which is what they were saying at that stage,

“towards their care costs. We are saying that that is the maximum anyone will have to pay”—[Official Report, 11 February 2013; Vol. 558, c. 600.]

That is simply not the case.

Photo of Norman Lamb Norman Lamb The Minister of State, Department of Health

I understand the shadow Minister’s point: the pressures across the system and the argument that some local authorities do not pay the full amount that it costs in some care homes within their areas and so forth. But does she argue that all the costs that someone pays in a care home should count towards the cap? If that was the case, then better-off people who choose to pay for the more luxurious care homes would get more benefit—and quicker—than other people.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People)

What I am asking for is Ministers, particularly the Secretary of State, the Deputy Prime Minister and the Prime Minister, not to say a wrong amount when telling people the maximum cost they will have to pay. That is what I am asking for—for people to be straight.

I know that the Minister will raise the issue of living costs. We have never asked for people’s so-called hotel costs—living, heating, fuel, lights and food—to be paid, because if they were staying in their own homes they would be paying for them. Andrew Dilnot recommended that these living costs should be set at between £150 and £190 a week, but the Government have raised the figure to £230 a week.

Those extra costs will also count towards the cap. If we take both factors into account—the living costs that people will be charged and the gap between what a council pays and what the people in the residential care home actually pay—we see that on average people will have to pay not £72,000 before they hit the so-called cap, but £150,000. It will take people on average almost five years to hit that cap. We need to be clear that the  average length of stay in a care home is just over two years. What this means is that six out of seven people will be dead before they hit the cap.

Let me illustrate my point with an example from Norfolk, the county of the Minister’s constituency. We rang the council to ask the standard rate that it paid for residential care in its area and it refused to tell us, so we had to do a freedom of information request. Norfolk council told us that its rate for a week in a residential care home is just £321.33. That is what it pays. Then we rang four or five care homes in the area and the average cost was £550 a week. Some were a lot more than that, as the Minister will know.

If the prices continue to increase at the rate of the last five years, in 2016-17 a bed in a Norfolk care home will cost £610 a week, but all that will count towards the cap is £339. Once we take away the £230 a week in living costs, just £109 of what the person actually pays will count towards the cap. At that rate, a self-funder in the Minister’s constituency will spend over £400,000 in care bills over the course of 12 years before the state steps in. If they live long enough to reach the cap, once they have hit it they will still have to pay £270 a week, or £14,000 a year.

I do not know whether some hon. Members’ eyes are glazing over because it is late in the day or because of the nature of my speech, but it is really important that we understand the complexity of this issue. People are already sick of politicians. They think that we do not tell the truth and that we claim things that we do not deliver. If we go around saying that a cap is at £72,000 and it is not—and that it will be different in different areas—we run a real risk.

Like the Minister, I am sure, I have had conversations with constituents, or their friends or families. People might say, “It’s all right, because at least we know that our costs will be capped”, but I have to reply, “No, they won’t be.” They say, “Well, what will I have to pay?” I reply, “I don’t know—because of your circumstances, which care home you go into—what the prices are likely to be.” That is the point that I am making: the situation is unclear.

My final point on the so-called cap is about the interest. People might decide to take out a deferred payment agreement; we will come more on to deferred payments later, but this is an important point to do with the cap. The council gives people a loan to pay for their care, meaning that they do not have to sell their home while they are alive, although it has to be sold once they are dead. The Government have said that people will not have to sell their homes to pay for their care; they will, but after they are dead.

Councils will charge interest on the loans. The Government’s consultation document stated that the rate will probably be set at roughly 4%. The interest on the loans, however, will not count towards the cap. A loan to cover the average length of a stay in a care home, two and a half years, would clock up extra costs of £3,500 in interest alone.

Someone who happened to live in a care home for five years—about one in eight care residents do—would face almost £14,000 in interest charges over the period, and those interest charges will not count towards the cap. People might think, if they had taken out a loan to  pay for their care costs, that the interest on the loan would be part of the care costs and count towards the cap. In fact, it will not.

I have explained why we are so concerned about calling something a cap when it is not one. Our amendments seek to ensure that the language in the Bill reflects the reality. In truth, changing the legislation will not make the difference on being clear with people; the issue is about Ministers not making claims for a policy that cannot be delivered in practice. We must be straight with people, so that they can plan properly for the future. The system is complex; making frankly unacceptable claims that costs are being capped when they are not is bad for people. It is also not fair when families are trying to plan for the future.

We also tabled amendment 102, which would require the Secretary of State to report to Parliament in advance of the so-called cap’s coming into force, and then every year on how the cap is affecting people across the income spectrum, in particular focusing on the distributional impact of the cap on people with different levels of income and assets. This is an incredibly complex system and Members of the House should be clear, when they vote for a Bill, whom it will affect. What kind of families will be affected? Does the Bill have the right balance between protecting assets and helping the poorest? What kinds of families or assets and which different parts of the country will be affected? We are unclear on all that.

The Government, in pushing forward their changes, should be clear about who the Bill will benefit. That is tough. I am not saying that the Bill is not a step forward; the Minister knows that I believe it is, but where will the public money be going? Who will it benefit? Which families will benefit? We need an assessment of how the cap works and interacts with the eligibility criteria and the means test, which we will be coming on to. We are talking about public money on a really important issue—we need to know who will benefit. There are a lot of complex issues out there and that is why we have tabled our amendments.

Photo of Norman Lamb Norman Lamb The Minister of State, Department of Health

I will first deal with the level of the cap. As my right hon. Friend the Member for Sutton and Cheam made clear, Andrew Dilnot’s proposals and the suggestion of a range between £25,000 and £50,000 were in 2010-11 prices. At such prices, the cap proposed by the Government comes out at just over £60,000. Yes, it is outside the range, but it is not that much outside the range. The important thing is that Andrew Dilnot, who came up with a whole package of proposals, very much supported the proposals that the Government are taking forward. Contrary to what the shadow Minister said, the cap maintains the integrity of the package as a whole.

The bottom line is that, whatever the Government put forward has to be affordable. The remarkable thing is that, despite extraordinarily difficult public finances, the Government have taken the bold step of committing public resource to implementing the Dilnot proposals, which is massively overdue. The Government commissioned Andrew Dilnot and his panel to do the work for the report. He came up with a proposal and I think that everybody, including, I suspect, the Opposition, believed  that we would not do it, but we have done it and we should all be very proud of the coalition Government for taking that bold step.

If the shadow Minister is saying that the Opposition would be more generous, we need to know, and we need to know how that would be paid for. If it comes back to what we said earlier about a wringing of hands on how things need to be better, without a commitment to do anything about it, we need to understand that that is the position.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People) 5:15, 14 Ionawr 2014

The Minister was not there in the cross-party talks. We were really serious about them. We tabled a fully written paper about all these issues, including the deferred payments scheme, the means test, which we are coming on to, the care accounts and the implementation costs—all of that—and we have not received one response. The care Minister knows that we were serious about those talks. We asked all those questions because we wanted to make it work and we wanted it to be the best available system. I wanted to remind hon. Members what Dilnot really proposed, and the bulk of my comments was that the Minister should not make claims that are not met in practice, because that is not fair to older people or their families.

Photo of Norman Lamb Norman Lamb The Minister of State, Department of Health

I am grateful to the shadow Minister for that clarification, but we have to understand whether the Opposition accept the Government’s proposal or whether they are arguing for something more generous. I have not heard any argument for something more generous, and the public need to understand that. She fairly makes the point that we need to be clear, open and honest with people about what the proposals do and do not do—in a moment, I will offer her a deal—but equally the Opposition have to be open and honest. If they are not proposing something that is more generous, they need to say so.

It is all very well saying, “We will come out with our proposals at some later date nearer the election”, but we need to know what the Opposition—[Interruption.] There is a lot of complaining going on, but we need to know now whether the Opposition believe in offering something more generous or whether they do not have an alternative to put forward. If the hon. Member for Oldham East and Saddleworth will enlighten us on what they are proposing, I am happy to give way.

Photo of Debbie Abrahams Debbie Abrahams Llafur, Oldham East and Saddleworth

I will tell the Minister what we are not doing: we are not committing to something that we are not going to do. The amendment would remove the idea that it is a cap on care. My hon. Friend the Member for Leicester West has made a compelling argument on why it is not a care cap. The amendment would remove what is not true.

Photo of Norman Lamb Norman Lamb The Minister of State, Department of Health

Let me come on to the substance of my offer. I offer to the shadow Minister that we will work with her and her party on an awareness-raising campaign, so that the public understand exactly what is and is not on offer, as well as the substantial advance achieved with the clause combined with everything else in the Bill and the focus on well-being. In return, she would commit to supporting a strong set of proposals.

Earlier, I quoted the then shadow Secretary of State and his comments in the immediate aftermath of the publication of the Dilnot proposals. At that point, the Opposition were fulsome in their support and absolutely recognised the importance of protecting people against catastrophic cost. Now it is all about how what is proposed is not enough and needs to go further, but without any commitment to any more money. Let us all agree that this is worth doing and is a very substantial advance; then we can have a discussion about getting out there and telling the public about it, so that everybody understands exactly how they will benefit from the proposals. That is the offer, and I would very much welcome joint working on that.

Photo of Sarah Newton Sarah Newton Ceidwadwyr, Truro and Falmouth

I am grateful for the very sensible and generous proposal that my hon. Friend the Minister has put forward. One of the major benefits of Dilnot was that a market would develop for financial products, so that people could insure themselves against catastrophic risk. Unless we get united communication, and if there is constant carping about the level of the cap, it will cause confusion and prevent what everybody agreed at the time was a benefit of the Dilnot proposals.

Photo of Norman Lamb Norman Lamb The Minister of State, Department of Health

I very much agree with my hon. Friend. The problem until now was that the financial services industry could not take the risk of offering products, because this was open-ended. Now, there is a defined amount of money that it can work with, and it can offer people the chance to plan, prepare, budget and save for their old age—if they choose to. That is not required or obligatory, but the measure will give them the opportunity to do so. We cannot predict what will happen ultimately, but from the discussions that we have had with the financial services industry, I am very hopeful that businesses will enter the market and see it as an area of real potential opportunity for them, both as a business and to fill a gap that is absolutely there; at the moment, people simply have no means of preparing themselves for the risks of old age. In future, through the Government’s reforms, we will give people that opportunity.

Protecting people from the risk of catastrophic care costs is at the heart of our funding reforms, as the former shadow Secretary of State made clear. It is vital that we enable people to plan better, to prepare, and to provide for the risk of future care costs. The introduction of the cap on care costs represents a significant step forward, ending decades of uncertainty by providing much-needed protection against unlimited care costs. It will provide greater clarity about what people will be expected to contribute towards the cost of their care, and about the support that they can expect from the state.

The hon. Member for Leicester West has suggested that the terminology was wrong as the cap on care costs was not a cap, but in my view, that is not true. Let me explain. The cap on care costs is what it purports to be, and what was recommended by the Commission on the Funding of Care and Support—the Andrew Dilnot commission. It is a limit on what an adult has to pay towards the cost of care to meet their eligible needs. We have always been clear about what the cap on care costs does and does not include. It does not include daily  living costs for those in residential care. That is a simple matter of ensuring parity with those receiving care in their own home, and of ensuring that there is not a perverse incentive for people to move into residential care earlier than they otherwise might. Again, that is taken from the Dilnot commission’s recommendations.

I intervened on the shadow Minister, but did not really get a response to my point, which was that if someone chooses to spend a lot more money and enjoy the luxury of an expensive care or nursing home, for example, it is not right that the state should be allowing all those costs to count, because in those circumstances, better-off people would benefit far more and earlier than other people. Covering what the local authority assesses as the cost of care in their area, but no more, is the best way to ensure that people with modest means benefit from the provision, and that wealthier people do not excessively benefit, which, I suspect, would end up being the result of the shadow Minister’s proposals.

There is currently no protection at all from catastrophic care costs, and little that people can do to protect themselves from the risk of future care needs. Our proposals will mean that everyone has more peace of mind about care costs, that many more people will receive more support from the local authority, and that no one should be worse off. No one can argue that that is a step in the wrong direction; indeed, to be fair to her, the shadow Minister has been generous in accepting that these measures are a step in the right direction, though I think she ought to be a little more generous in her recognition of the advance that the Government are making.

Photo of Bill Esterson Bill Esterson Llafur, Sefton Central

On the Minister’s point about the increase in the number of people who would be helped to avoid “catastrophic care costs”, as he phrased it, does he accept that only one in seven people would benefit if the cap is set at £72,000?

Photo of Norman Lamb Norman Lamb The Minister of State, Department of Health

That is what the then shadow Secretary of State was making clear when he said in response to the Dilnot commission:

“Our concern is to protect the one in 10 of us who have to pay over £100,000 for the costs of care in older age.”

The problem we all have is that none of us knows who of us it will be. As we grow older, we all live with the fear of catastrophic costs destroying everything and, as the shadow Minister said, taking away everything we have ever worked for. The great value of the Dilnot proposals is that they reassure everyone that they are protected against catastrophe, because any of us could be in that position. My hon. Friend the Member for Truro and Falmouth made the point that that greater certainty will allow people to plan for old age.

The amendments renaming the cap on care costs would be detrimental to our aims. They would cause not only inconsistency with the rest of the Bill, but confusion for those we are trying to help to prepare for the risk of future care needs. Helping people to understand what that means will be key to the success of the Bill. I repeat that I am happy to work with the Opposition to get across to the public the message about what the changes will and will not do. I am committed to being completely open, honest and straightforward about what we are seeking to achieve, because I strongly believe in  and feel confident in it. That is why we have adopted the terminology used by the independent Commission on the Funding of Care and Support. It is not something that we have come up with as a wheeze; we are applying the terminology that Andrew Dilnot suggested.

Amendment 102 would require an impact assessment before the clause commenced. That has already been done, and includes the distributional impact by income. We will update that before we publish the regulations that set out the detail of how the cap will operate. In advance of that, we are also working with our partners in local government to better understand the impact of the reforms at the local level.

The proposal requiring subsequent annual assessments is not necessary. The Bill already requires the Secretary of State for Health to review every five years how the cap on care costs is operating, and the results of that review can be used to inform decisions on whether to change the cap, or any other parameters. We think that five years is the correct interval and that annual reviews would be excessive and cause significant instability that could undermine people’s confidence in preparing for the risk of future care costs.

The amendments would not improve the Bill, but provide more confusing and inaccurate language, and greater bureaucratic burdens and instability. I therefore urge the shadow Minister to withdraw them.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People)

I thank the Minister for his response, and would like to make a couple of points about what he said. First, the only people who are running a public awareness campaign about what the Government’s proposals really mean are Opposition Members. I am not saying that lots of the detail has not been put in the consultation documents, but someone reading the headlines and the spin—particularly from the Prime Minister and the Secretary of State for Health—in newspapers would end up thinking something that is not actually true. We are trying to make people outside this place aware of what the measures entail.

Secondly, I wanted to emphasise that when the proposals initially came forward, my right hon. Friend the Leader of the Opposition and the then shadow Secretary of State for Health were clear: we actually called for the cross-party talks. We also said that we welcomed the Dilnot commission, which, let us not forget, said that we needed money in the baseline as well as reform in the future. We were happy to discuss all that, and I do not think that the Minister should throw those words back at us. We were serious about getting the matter sorted out.

My final point is about financial services. I hope that I am proved wrong, but I am not that optimistic that the financial products that are needed will be brought forward. I have had discussions with people working in financial services who have said that because of all the issues I have been talking about today—what the local authority rate will be when the cap comes in, what care costs  people will have to face and when their care costs will start to be counted as eligible—they are concerned that the situation is complex and that they will still not be able to offer the products that are needed. I hope I am proved wrong, but we will see.

I am happy to withdraw amendment 99, and will not press amendments 100 and 101 to a vote. Those amendments were our attempt to make the Bill clearer, but in reality only the words of Ministers will do that. However, I think that the Minister—and as a responsible Minister, he should agree—should look at the impact of this policy, to see who it is affecting and how. Reviewing the implications of a policy to see who it is benefiting is simply decent Government policy. I know that we are at the end of a long and busy day, but I will press amendment 102 to a vote.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 102, in clause 15, page 15, line 22, at end add—

‘(9) The Secretary of State must report to Parliament—

(a) in advance of this section coming into force with the Government’s assessment of the likely impact of the set level above which an adult starts receiving financial assistance with the costs of their care; and

(b) annually once the section is in effect, with the Government’s assessment of the impact of the set level above which an adult starts receiving financial assistance with the cost of their care, in particular its distributional impact across different levels of income.’.—(Liz Kendall.)

The Committee divided: Ayes 10, Noes 13.

Rhif adran 6 Decision Time — Clause 15 - Cap on care costs

Ie: 10 MPs

Na: 13 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

Question accordingly negatived.

Clause 15 ordered to stand part of the Bill.

Clause 16 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(John Penrose.)

Adjourned till Thursday 16 January at half-past Eleven o’clock.

Written evidence reported to the House

CB 11 The Equity Release Council

CB 12 Northumberland County Council

CB 13 Chartered Society of Physiotherapy

CB 14 Royal College of Nursing

CB 15 Alliance for Inclusive Education

CB 16 Royal College of Surgeons

CB 17 Elizabeth Ayres