Clause 34 - Deferred payment agreements and loans

Care Bill [Lords] – in a Public Bill Committee am 4:15 pm ar 16 Ionawr 2014.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People) 4:15, 16 Ionawr 2014

I beg to move amendment 104, in clause 34, page 30, line 46, at end insert—

‘(9) The Secretary of State shall make available to all local authorities a model deferred payment scheme and all local authorities must follow this model unless they can show due cause not to.’.

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 105, in clause 35, page 31, line 15, at end insert—

‘(3A) The regulations must require any interest incurred on an adult’s deferred amount or interest on an amount charged under subsection (1)(b) to count towards the set level above which an adult starts receiving financial assistance with the costs of their care.’.

Amendment 106, in clause 35, page 31, line 20, at end insert—

‘(4A) The regulations may not specify any threshold of other assets above which a person is not eligible to receive a deferred payment loan.’.

Amendment 107, in clause 35, page 31, line 27, at end insert—

‘(5A) 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.’.

Amendment 96, in clause 35, page 32, line 12, at end add—

‘(11) The regulations in subsection (1) are subject to the affirmative resolution procedure.’.

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

We now come to another important clause in the Bill, which is about the deferred payment schemes: council loans to people who require care to help them pay for their residential care. Such loans are absolutely at the heart of what the Government claim the Bill will achieve. Hon. Members will have heard the Prime Minister and the Health Secretary say many times that the Bill will ensure that nobody has to sell their home to pay for their care. However, that is not true; they will have to sell their home to pay for their care, but after they have died. The Minister had the foresight to include the second part of that sentence, but when the Prime Minister and the Health Secretary regularly say that no one will have to sell their home to pay for care, that is not the case. They will—after they die—to pay off the loans.

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

The hon. Lady will be aware that someone cannot sell their own home after their death, so the statement by the Prime Minister is absolutely accurate. The point is that when someone does die, there is generally a division of the assets among the beneficiaries, which are normally many in the case of any estate.

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

I am saying that the Prime Minister especially should be careful about what he says, because many people have heard his statement and think that they will not have to sell their homes. I want to be careful and accurate in my comments on this.

Amendment 104 states that the Secretary of State has to make a model deferred payment scheme, or one of the loan schemes, available to all local authorities, although they can opt out if they so choose. Amendment 105 specifies that the interest that people would incur on the loans will not count towards the cap on care costs. We discussed that issue on Tuesday. Amendment 106 would remove the means test for the loans, which was not recommended by Dilnot, who wanted a universally available system, and the matter was sprung on people when the Government issued their consultation document on the deferred payment schemes just before the summer.

I pay tribute to Lord Lipsey for raising the issue and moving the amendment in the other place. He was the first person to highlight the fact that the new loan schemes will not be available to everybody as was intended, but are being means-tested.

Amendment 107 states that local authorities must direct anybody considering taking out such a loan to a financial adviser so that they can be well advised about the best financial options for their situation.

Amendment 96 calls for regulations on deferred payment loan schemes to be subject to the affirmative resolution procedure of both Houses of Parliament.

To provide some background, the loans are widely available but not widely taken up. I did a freedom of information survey on local councils and 95%—we had a high response rate—said that they offered the loans but do not often promote them—

Norman Lamb rose—

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

Perhaps what I say will prevent the Minister from intervening, although if it does not it does not matter. That is why the duty in the Bill requiring councils to offer the deferred payment schemes and the Minister’s commitment on a public awareness programme is important. The loans are available but councils often do not tell people about them. Does the Minister still want to intervene?

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

As the hon. Lady says, there is no duty at the moment. If they are theoretically available that is one thing, but if the local authority does nothing to publicise that fact and if they attach all sorts of conditions, limitations and restrictions, the reality is that they are not available.

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

I agree. I was just explaining, because some people will think that this is a brand new thing, although it is not. It does exist, but needs to be more widely available.

It is important to ensure that everybody sets up a deferred payment scheme that is simple, easy to understand and easy to use. Our amendment 104 would require the Secretary of State to have a model deferred payment scheme that local authorities should follow, unless they show good reason not to. Each local authority, as the Minister just said, has designed and implemented different  schemes and they will have to set up different care accounts to keep an eye on how much money people are spending and how much they have taken out in a loan. This is a big undertaking. Allowing councils to do this in different ways is potentially wasteful and could lead, as the Minister said, to variations in the schemes; some could be good and others could be poor quality. A simple single model that could be opted out of would aid councils. That could be a good way to have simple, clear, universal access, cutting back on bureaucracy and waste and saving the taxpayer money. This is a value for money and efficiency proposal, which I hope that the Minister will accept.

Amendment 105 relates to the interest on the loans. Let me clarify. I am sure that the Minister will correct me if I am wrong. Currently, councils are not allowed to charge interest on the loans while the person is alive. Interest can be charged once they have passed away. Our freedom of information survey shows that the rate councils charge varies between nothing and 8%. Once people die, their home has to be sold to pay back the loan. Some may sell a home quickly, but others may not. The interest really matters.

We do not disagree with the Government’s saying that interest should be charged on the loans. Councils are not going to be able to balance their books if lots of people take out the loans and they do not have that money in the bank. We are not disagreeing about interest. However, we have never heard that said by anyone, even the Care Minister, until we raised this issue in the media. It was in the fine print of the consultation document, but there has never been a big public statement saying, “You’re going to get these loans and interest will be charged.”

As I told the Committee, if interest is charged at 4%, as the Government’s consultation document suggests, for an average stay in a care home of two and a half years that would cost some £3,500. For the one in eight elderly people who stay in residential care for five years that could rack up almost £14,000 in interest charges. As I said, the interest will continue to grow until the family home has been sold, even after the person has died. It would be even bigger for elderly people who live in areas where residential care is more expensive. We have calculated this according to the average price of a care home and some people face paying much higher bills. Our amendment would ensure that the interest on the bills counts towards the cap. That is what many elderly people and families would expect. They would expect that that was part of their care costs.

I turn now to amendment 106 and the new means tests on the loans. When Dilnot recommended that the scheme be made universal he said he wanted it to be available, obviously, for everybody who might want to use it. However, in the consultation document the Government issued this summer they unexpectedly proposed a £23,250 limit on people’s savings. In other words, those who have more than that in savings would not qualify for the deferred payments scheme. The concern about this relates back to these claims that no one will have to pay for their care. As Lord Lipsey pointed out in the other place, someone who spends all of their savings down to £23,250, which would be a lot of money for many people, would get £700 a year at current interest rates, or just £14 a week.

For many elderly people in residential care, that means they would not be able to afford the little things that make life in a care home tolerable and give them pleasure in later life: buying a newspaper; getting presents for the grandchildren; buying them sweets. It is this human aspect, this personal cost to people’s quality of life that the Minister seems to have forgotten in suddenly saying that people will not be able to get a loan unless they have less than £23,250 in the bank. Our amendment does away with the means test for eligibility for these loans and restores the Dilnot principle of universality.

Amendment 107 relates to the point we have frequently raised about financial advice. Opposition Members and Government Members, particularly the hon. Member for South Derbyshire, have been engaging in the discussion about financial advice. There is concern about the deferred payment scheme and the loans and providing proper financial to people is really important. For some people it might make more financial sense to rent out their homes rather than to take out these loans because of the cost implications later on. People must get that good quality advice because they may not understand how the loan will affect them.

We have had this debate before but we still have not nailed this down. I would certainly want my constituents or my parents to get proper financial advice on whether the loan would benefit them because of the cost implications. I hope that the Minister takes this issue away. It has come up many times before. This is yet another reason why people need proper financial advice from properly trained and qualified advisers to ensure that all these issues are covered when they are thinking about the cap on care costs and this deferred payment loan.

Finally, hon. Members will be pleased to hear, amendment 96 calls for the regulations about the deferred payment loans to be subject to the affirmative resolution of both Houses of Parliament. This is yet another complex area. There is complex interplay with the cap and complex interplay with the means test. We need to see more details of all of this: the interest rates on these loans and whether they will be means-tested and at what level. It is essential to understand the combined package of who will benefit, and how, across the different income levels. The Minister is moving in an unsure way—[Laughter.]—with his eyebrows.

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

We have to take decisions in this House based on who benefits from a proposal, according to their level of income and which part of the country they are from. Who does this benefit: the poorest, those in the middle or the better off? It is very confusing for us to decide as MPs who really benefits. My concern is that unless we see all the details, including of the loan scheme, we are not clear about who benefits. That is an important issue for Opposition Members and, I hope, for Government Members.

Photo of Paul Burstow Paul Burstow Democratiaid Rhyddfrydol, Sutton and Cheam

I wish to pick up on a couple of points made by the hon. Lady and to ask a question of the Minister. Deferred payment is fundamentally about  having a mechanism that avoids the family facing the trauma of a fire sale of the property at the moment of crisis. Having a deferred payment gives that peace of mind of knowing that is not something they have to address at that point.

It also ensures that the property is not sold at a point when everything else is going on, potentially at a lower price than it would achieve if properly marketed over time. It is an important protection of the asset, but a much more important protection of the emotional crisis that a family is in at the point at which this takes place. That is the best way to understand what deferred payment should be about.

It was great that the previous Government, with one of the few things it did following the recommendations of the Royal Commission on long-term care, sought to introduce deferred payments. What is great about this Government and their determination to see it through is that they have legislated and made it a mandatory requirement that they are delivered. They were never mandatory. As the hon. Lady said, because of that many local authorities had them, paid lip service to them, but did not deliver them, and they were highly variable. This is a good step by the Government.

The other reason that deferred payment is important goes to a point made by the hon. Member for Sheffield, Heeley about reassessments being done in a timely fashion. Someone who has a crisis, who is a self-funder and admitted from a hospital into a nursing home, may recover social function and function, but because they are a self-funder that all too often becomes invisible, and they live for years in that home spending a large amount of money on their nursing home fees, and as a consequence they fall back on the state because they have spent everything they have.

Deferred payment also provides the breathing space to allow those things to be sorted through and provide assurance. There is an issue there about how this can be exploited in a proactive way to achieve another public policy goal, which is to spend money where it most has effect. That is about helping people recover, not helping people increase their dependency.

We have already debated clause 4 but it is relevant to this clause. Clause 4(3)(a) states that local authorities must identify the people

“who would be likely to benefit from financial advice”.

I want to press the Minister on the point about regulated financial advice and seek further clarification on how he envisages the guidance being crafted so as to ensure that local authorities do bear that in mind. There is a huge reputational risk for local authorities and a huge risk to the individual. I was in this House when misinformation around the state earnings-related pension came to light. As a consequence, the then Government had to sort out and compensate many people who had been told effectively to opt out of the state earnings-related pension and were in a less advantageous state as a result.

My fear is that, unless an individual has had the benefit of regulated financial advice, what will come back to haunt either the Government of the day or certainly the local authority in question is that they did not act diligently, and did not fulfil their duty of care and ensure that the individual received the right advice.  In some ways, this product mimics equity release, which is why it should be treated as a financial product for the purposes of regulated financial advice.

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

It is legitimate to debate this concern, but does my right hon. Friend agree that this is ultimately a low-cost loan? As he and the shadow Minister have already said, deferred payments have been around for quite some time, albeit not widely available in reality. Is my right hon. Friend aware of any circumstance in which someone who has taken out a deferred payment arrangement—in the whole time since their introduction—has later claimed that it was mis-sold to them? We might expect that assertion to have been made by now were it a genuine and legitimate fear.

Photo of Paul Burstow Paul Burstow Democratiaid Rhyddfrydol, Sutton and Cheam

I accept the Minister’s challenge, but I do not have the answer off the cuff. My only other point in response is that that, in and of itself, is not a sufficient reason not to ensure, when designing a national obligation on local authorities, that we look around the corner and guarantee that the Government design a system that makes it certain that such a scenario does not play out.

Photo of Grahame Morris Grahame Morris Llafur, Easington

On that point about the national obligation to establish deferred payment schemes in 150 authorities, which is a low-cost but not a no-cost option, would it not be advantageous and more efficient to have a model scheme that all 150 authorities could adopt?

Photo of Paul Burstow Paul Burstow Democratiaid Rhyddfrydol, Sutton and Cheam

I am about to come on to that point, about which I had the benefit of a conversation yesterday with representatives from the Local Government Association, who are canvassing such an idea. Under the powers to delegate functions, it would of course be possible for local authorities to act in combination to operate a national scheme, but I dare say that that may be one argument that the Government could use to counter the case for it. There is, however, a case for the Government giving more thought to having a clear national offer around deferred payment, because this whole area of financial advice is so important. The personal social services research unit says that 40% of self-funders could benefit from existing financial products, so it would be good for people get such advice so that they can consider the alternatives to a deferred payment scheme, which is part of the point here.

The £23,250 means test is being unfairly characterised, partly because it happens to be the same figure as the threshold for access to financial support for care itself, which allows for some inadvertent conflation. That was certainly not intended by Lord Lipsey, who raised some important points. It is the case that this specific proposal, which was also present in consultation papers issued by the previous Government, excludes the property that the person is living in. The proposal aims to address those who have considerable wealth beyond the property in which they live.

Earlier, the shadow Minister rightly told Government Members that we need to focus on those in the middle. The way in which the Government are trying to craft the rules for access to deferred payment is doing exactly that. It is about addressing those in the middle, not those with super-wealth, who will be able, through good  financial advice, to access other products more suited to their circumstances, or to self-insure using their resources. That issue has not been fairly discussed. The Government have none the less consulted on it, but I have not yet heard the outcome of the Government’s deliberations. It would be useful to know when the Minister expects to share with us whether the Government intend to stick to the £23,250 figure, because they need to move past this argument.

My final point is a question. In a scenario where a person takes out a deferred payment in one area to move into a care home there, then perhaps for reasons of family or something else, they choose to move to another care home which is not in that local authority’s area, who will have responsibility for the deferred payment? Does it stay on the loan book of the local authority which issued it in the first place, or will it transfer to the other local authority? I am not sure that the Bill makes this clear. It would be another reason why perhaps a national framework would be useful for this purpose. It would be helpful to the Committee, and I suspect others outside, if the Minister answered that.

Finally, I hope that those who follow our business in this Committee—and they follow it closely on these matters of financial advice—will take up the Minister’s challenge. I will be only too pleased then to come back to him with some further answers.

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

I would be happy to hear back from my right hon. Friend when the cases come in. May I respond to one specific point, about how guidance will ensure that local authorities have in mind the need for financial advice around deferred payments? We are developing statutory guidance in partnership with local authorities and the financial services industry, including representatives from the financial advice sector. We are committed to providing local authorities with the implementation support that they will need to implement the scheme well.

With regard to my right hon. Friend’s other point about what happens when someone moves to another area, we will write to him and other hon. Members to confirm the point. He has managed to flummox both me and, I suspect, officials with that question, but I have no doubt that we will have an answer and we will enlighten him.

To make a very gentle, political point, some of the debate around this has been unfortunate. Whatever the intention, it has ended up being somewhat misleading in its intent. It is slightly irritating—if I can go that far—because I remember that in 1998 the then Prime Minister, Tony Blair, that great man, said words to the effect: “I do not want to live in a country where people have to sell their homes to pay for care”. Thirteen years later, tens of thousands of people have had to sell their homes to pay for care because nothing was ever done. I know that predecessors of mine shared that frustration, and I know that many of those who have held this job were completely frustrated that the previous Government failed to act—[Interruption.] My right hon. Friend says: “And me”.

The great thing is that this Government are acting. They commissioned Andrew Dilnot to do the work and we are now getting on with righting a wrong that has been in existence for far too long. The shadow Minister  made the assertion that deferred payments are not a new thing and have been around for a long time. What is new, and so important, is the duty.

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

I know and I do not seek to claim that the hon. Lady did not say that, but it is important to assert the fact that in the past deferred payments have been theoretically available in many areas, but without a duty to provide them, they have not been available for many people. My right hon. Friend made the correct point that the protection of individuals and families from having to sell at a moment of distress is what makes this so valuable. Having to sell at the moment when someone goes into care, or soon after, when it has to be done to pay for those care costs, is a deeply unfortunate situation. My right hon. Friend also made the valid point that the availability of a deferred payment may also enable someone to recover and return home, if that is possible.

The shadow Minister had a go at the Prime Minister and others for the words that they used, but the deferred payment can of course be paid off using other assets; it does not have to be paid off from housing assets following the death of the individual. That is a matter for the beneficiaries to decide, subject—of course—to the amount of money that is available.

The introduction of the universal deferred payment scheme will provide protection and peace of mind for those people who face having to sell their home in their lifetime to meet the cost of their care. Our open approach to this legislation will not cease with the primary legislation completing its passage through Parliament but will continue as we develop regulations and statutory guidance. It will remain as we develop the necessary support to ensure that all local authorities are in the right position to offer deferred payment agreements from April 2015. We will provide this support in a consistent way and we have already committed to making a model scheme available, which directly addresses the shadow Minister’s concern. The guidance will say that local authorities should use the model scheme, unless there is good cause not to use it. In effect, that will mean local authorities have to use it, so we will achieve what she seeks to achieve. I do not believe that any of the amendments are necessary to clarify our commitment to collaborative working or to ensure successful implementation of the reforms in the Bill.

The purpose of amendment 105 is to provide that any interest or charges on deferred payment agreements would count towards the cap on care costs. Deferred payment agreements do not have any relation to how much a person is expected to contribute towards the cost of their care and nor will they necessarily have any relation to the rate at which a person meters towards the cap. Instead deferred payment agreements are a mechanism that people can choose to use—if they wish to do so—to pay for their care costs. The method by which a person chooses to pay should not affect how much they are expected to pay before they reach the cap. I do not believe that people should meter towards the cap faster  if they choose to pay through a deferred payment agreement than people who choose to pay, for example, through an immediate needs annuity, an insurance policy or, indeed, by selling their home. Why should we benefit one group of people over other groups in reaching the cap faster as a result of counting interest? This is a low-cost loan, giving people a very valuable facility, but they should not be advantaged over and above others in that regard. To do so would simply be unfair and that would be an undesirable result of the amendment.

Photo of Liz Kendall Liz Kendall Shadow Minister (Health) (Care and Older People) 4:45, 16 Ionawr 2014

When elderly people or their families receive advice about this scheme, will they be clearly told about the interest, how much interest they will clock up and that the interest will not count towards the cap?

Norman Lamb rose—

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

How will the Minister guarantee that they are told those things?

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

Yes, of course people will be told about the interest that is payable, and I am sure that it will be part of the provisions in the guidance on the model deferred schemes that the hon. Lady’s amendment sought to achieve, but that amendment is not necessary, as I have tried to explain.

Amendment 106 would prohibit the use of any asset-based criteria for access to deferred payments. First, I will take a moment to refresh our memories about the Dilnot commission’s report. It recognised that people who can afford to contribute towards the cost of their care should do so. The commission’s recommendations sought to define a new partnership between the individual and the state and to focus the money available on those who need it most: those with the fewest assets or who face catastrophic care costs.

Amendment 106 would go against that principle. It would not target those people who most need support but instead ensure that anyone, even those with assets of great monetary value in addition to their main home, can have a deferred payment agreement. I simply disagree with that principle. I do not think that the public purse should be helping people who do not need financial support to pay their care fees. A person with a substantial sum in their bank account would not be

“unable to afford care charges without selling their home”.

Such a person would therefore not be the principal purpose of a deferred payment agreement, as set out by the commission. In effect, if the shadow Minister presses the amendment, Labour would be advocating cheap, Government-subsidised loans for millionaires.

Liz Kendall indicated dissent.

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

She shakes her head, but that is what it would be. A low-cost loan is a very attractive proposition. Anyone with a lot of financial savvy and a lot of money in the bank would go for it. Why on earth should  hard-working people on relatively low incomes help to subsidise the cost of giving low-cost loans to millionaires? I simply do not understand where Labour is on that, and I find its whole argument deeply frustrating.

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

I do not want the Minister to misrepresent what Andrew Dilnot said. He said that the loan should be universal. Is that the case?

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

The loan is universal for anyone who may be forced to sell their home to pay for care. I also find the principle of having a threshold over which the loan would not be available to be remarkable, because, clearly, if someone has £100,000 in the bank, they are not in a position in which they would be forced to sell their home. Does the hon. Lady believe that someone with £100,000, or indeed £1 million, in the bank should be entitled to a loan? That is what her amendment would provide for.

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

What we are saying is that someone with, say, £20,000 in the bank—they may want to pass on those savings to their children—might be living off the interest on those savings, which does not actually provide that much per week. That is the point raised by David Lipsey in the House of Lords. It goes back to what Andrew Dilnot said. The Government have constantly said that they are putting in place what Andrew Dilnot and the Law Commission recommended, but Andrew Dilnot said that the loan should be universal. If the care Minister wants to disagree with what Dilnot recommended, he should say so. We are questioning why he has changed the fundamental principle of a universal, all-in system.

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

I absolutely believe that it is a universal system. We will make the loan available to anyone in this country who would be forced to sell their home to pay for care. It is universal.

Let me tempt the hon. Lady once more. Her amendment would mean that someone with £100,000 in the bank is entitled to a cheap, Government-subsidised loan. Does she support that?

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

The hon. Lady does not have to ask Minister to give way. She might refer to the question when she replies.

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

I think the silence is very telling. In the dying days of the last Labour Government, Labour finally, after 13 years of waiting, came up with a scheme. It was a crazy scheme, and I suspect that in her private moments the hon. Lady agrees, but none the less the scheme included a universal right to a deferred payments scheme. Do you know what? The assessment provided for a threshold of £23,000, or whatever the amount was subject to price rises. It appeared to be right for Labour’s deferred payments scheme; why is it wrong for this Government’s deferred payments scheme? I am happy to give way on that.

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

I just make the point that the threshold is exactly the way that Labour proposed to do it. I hope that we can agree that the principle of having an upper  threshold for non-housing assets is a sound one that is in line with the conclusion of the debate on this issue in the other place. I am sure that there are different views within this room on what that amount should be.

Although the matter is for regulations, I hope to build some consensus on the principles that should determine that amount. First, I expect it to be an amount that prevents people from being forced to sell their home in a moment of crisis to pay for their care. Secondly, the amount should, as far as possible, complement and align with the new charging system to facilitate smooth transitions. Thirdly, the amount should be targeted not at those who are looking for a cheap loan and have enormous assets, but at those who are most in need of the flexibility and peace of mind that deferred payment agreements can offer. I think that those are reasonable principles, and I hope that the Opposition agree with them. These principles will guide the development of regulations on the deferred payment access criteria, alongside the responses we received to our consultation and the views of our partners in local government and the care and support sector who will develop the regulations with us.

Amendment 96 is not necessary for regulations specifying the interest rate for deferred payments to be subject to the affirmative resolution procedure. We have already consulted on the issue and asked for evidence in our consultation on funding reform. We have committed to consulting on draft regulations this spring, before regulations are laid in Parliament. Such consultation on the first use of these powers is sufficient scrutiny, especially when we have been clear that the interest rate is about making the scheme cost-neutral and not about raising revenue for local authorities.

Finally, amendment 107 is on financial advice for people considering a deferred payment agreement. I agree that it is important that people make well-informed and considered choices on the care they receive as well as on how to fund their contribution towards its cost. That includes people considering a deferred payment agreement. The local authority has a central role to play in ensuring that its local population is aware of the range of information and advice, both regulated and non-regulated, that is available and how to access it. We have set out the active and facilitative role that we expect local authorities to take in meeting the duty in clause 4 on information and advice, which includes financial information and advice.

I have already spoken of how deferred payments provide protection to people in a moment of crisis, typically by providing much needed breathing space, as my right hon. Friend the Member for Sutton and Cheam made clear, to decide how to meet the costs of care in the longer term. A balance needs to be struck to ensure that people have the information and advice they need to make a well-informed choice while maintaining access to deferred payment agreements in a moment of crisis. It is my view that mandating a local authority direction to advice from an appropriately qualified financial adviser would be too onerous, especially as not everyone will require independent advice to make a well-informed decision. Compelling them to seek it would simply be a waste of their time and money. Equally, having to go through a Government-mandated tick-box exercise could cause enormous frustration for people.

In light of what I have said, I hope that the hon. Member for Leicester West feels able to withdraw the amendment.

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

I know the Minister clearly feels passionately about this matter. He is many things, but a mind reader he is not, so for the record I want to say that his assertions about what I think are wide of the mark—he has no idea about that.

Let me go through things in turn. First, on amendment 104 and a model scheme being available, that is important and I welcome hearing about it. On the point about interest counting towards the cap, it is important for that to be spelt out clearly, not only in the fine print of a consultation document, but in the advice given: councils must be required to tell people that they will be charged interest and how much it could be, so that they can make a decision about the loan.

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

Does the hon. Lady still feel that it is right for interest to count towards the cap, advantaging those people, as against other people who choose equally reasonable and appropriate schemes to meet their needs?

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

The Minister made a good argument, and people need to be treated fairly. My point has always been that people need to know about the interest on the loans. That had not been made public except in the fine print—[ Interruption. ] I am sorry, I thought that the hon. Member for Burton was making an intervention.

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

I will give way once I have finished my point. It is important to be clear about the interest, because it could be fundamental to someone’s decision about whether to take out the loan—and how much for—or, in future, an insurance product to guard against such a level of interest rate.

Photo of Andrew Griffiths Andrew Griffiths Ceidwadwyr, Burton

I was talking to a colleague, but as the hon. Lady overheard me I will repeat what I was saying for the record. Is what she is offering actually a tax break for millionaires?

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

That is rich—excuse the pun, if it is one—coming from a party that cut the top rate of tax to benefit millionaires at a time when many others were suffering. I will come on to that point in a minute, though.

On qualified financial advice, we will keep returning to the subject, because it is important. I take the Minister’s point: has anyone seen an example of a person who was told about the deferred payment scheme and has anyone ever complained about it later? It is more complicated now, however, because the loan, the cap and the means test together are all complicated. The three are interrelated and that proper financial advice is required. I have no intention of setting up a system that predominantly benefits millionaires. As I think I said, Lord Lipsey said in the other place that if someone had £20,000 of savings in the bank and is living off the interest of those savings, it is not very much a month or a week. He was deeply concerned about that, and we are reflecting that issue today.

There is much more to be debated, and the Opposition will be thinking about this and many other issues and the implications for Report stage. I am aware of the time and of Members’ commitments. Although I am prepared to withdraw the amendment, more thinking must be done—

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

No, by the Government. I stress seriously that how the loans, the means test and the cap work together will affect who the Bill benefits—those at the top, at the bottom and in the middle. I do not think that anyone present is fully clear—I am happy to admit that I am not—about exactly who will benefit when all the different elements come into play. It is right that we scrutinise the Government’s legislation; the purpose of the Committee stage is go through things in detail. I hope that we have done at least some of that today.

We will think about what amendments we might table on Report, but for now I will sit down. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 34 ordered to stand part of the Bill.

Clauses 35 to 38 ordered to stand part of the Bill.

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

5.5 pm

Adjourned till Tuesday 21 January at five minutes to Nine o’clock.

 Written evidence reported to the House

CB 18 Local Government Association and Association of Directors of Adult

Social Services

CB 19 National Autistic Society