Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

New clause 13—Funding for new costs arising from Part 1

‘(1) The Secretary of State must provide local authorities with sufficient funding to enable them to meet new costs arising directly or indirectly to them by virtue of this Part.

(2) The costs mentioned in subsection (1) include (but are not limited to)—

(a) costs of introducing the new measures set out in this Part;

(b) on-going costs of implementing those measures (to be allocated through the annual spending review);

(c) costs identified by the Department of Health to be funded through the Better Care Fund.’.

New clause 14—Social care free at the point of use

‘The Secretary of State must prepare a report on the costs and benefits of requiring, and providing funding for, local authorities to offer all social care free at the point of use. This report must be laid before each House of Parliament within 12 months of section 3 coming into force.’.

New clause 15—Joint Care and Support Reform Programme Board: assessment of funding

‘(1) Before any provision of Part 1 is brought into force, the Joint Care and Support Reform Programme Board must have informed the Secretary of State whether sufficient funding is in place or will be put in place to ensure that the provision in question can be implemented satisfactorily.

(2) In subsection (1), the “Joint Care and Support Reform Programme Board” means the board of that name consisting of representatives including the Local Government Association, the Association of Directors of Adult Social Services and the Department of Health.’.

New clause 16—Ministerial advisory committee

‘An independent ministerial advisory committee shall be set up to keep under review the workings of the set level as set out in section 15, and the means-testing arrangements set out in section 17.’.

New clause 17—Initial funding assessment

‘The Secretary of State must ask the Office for Budget Responsibility to complete by the end of 2014 a review of the funding of adult social care that assesses—

(a) the adequacy of current public funding of these services;

(b) the proposals for funding the provisions in this Act;

(c) the implications of the Act and its funding for the NHS over the next five years; and

(d) in particular the short and long term costs of setting the eligibility criteria at the level set out in regulations.’.

New clause 18—Impact assessments of regulations

‘(1) Before bringing into force sections 13, 17 and 35, the Secretary of State must lay before Parliament an impact assessment of the regulations set out in those sections.

(2) In relation to the regulations set out in subsection 13(6), the assessment must show how the provisions will affect the likely impact of the set level above which an adult starts receiving financial assistance with the costs of their care.’.

I apologise for not being present for the start of the Committee. I had a meeting with a Transport Minister on a constituency matter which was arranged before I was put on this Bill Committee.

I am pleased to speak to new clause 13, which is in essence probing and important to the cost of implementation. I have identified—for the Ministers, who are paying great attention to what I am saying—that the new clause relates to the new costs identified in the Bill. I will give one or two examples of where such new costs occur for local authorities in measures under part 1.

For example, for clause 9, “Assessment of an adult’s needs for care and support”, it is estimated that the changes will require councils to carry out 500,000 additional assessments of people with eligible needs in 2016-17. My own local authority anticipates a significant increase in demand for assessments, with implications for costs and work force capacity. It fears that a two-tier system of assessment may be required to deal with high-end, complex cases and simpler cases, in which the assessment is conducted simply to start the care account running.

My hon. Friend the Member for Leicester West has already talked about the cap on care costs and I will not refer to that again. I want to spend a moment on clause 34, which covers the universal deferred payment scheme, because it is likely to lead to increased debt and costs.

An LGA analysis of the ongoing costs of deferred payment shows that the total value of loans would increase from £122 million in 2015-16 to £1.1 billion by 2024-25—I am worried that I might need care by that time, but hopefully not—which compares with £139 million to £230 million in the Government’s impact assessment. There is a huge difference between what the LGA, which represents many councils of all political colours, says and what the Government’s impact assessment says. The main factors affecting the cost to councils will be demographic pressures, inflation and the cost of borrowing. Clause 34 also constitutes a significant financial and reputational risk for councils, threatening the long- term sustainability of local government funding. The Government have not to date provided reassurance that  additional funding for local authorities to meet the cost of the universal deferred payment scheme will address those risks.

I want to talk a little about funding adult care and rising demand. As we have heard many times in the Committee, adult social care budgets are under pressure. They have been reduced by £2.68 billion over the past three years—20% of the budget. That is compounded by the cost of demography—more people are getting older, with more needs—which is approximately 3%. Just meeting ongoing demographic pressures costs £400 million a year—that is just to stand still. The overall context in which we are considering the Bill—the need to identify further savings across the public sector, even for the needs we are meeting now—does not fit well with the aspirations of the Bill, which we have said many times we are all behind.

LGA estimates are that spending on care will pass 45% of council budgets by 2019-20, which is a huge amount. Part of that is of course due to the savage cuts this dreadful Government have made to local government. [Interruption.]It is not a laughing matter, Minister. The leader of my local authority says that the cuts are more savage than any of those experienced during the dreadful years of Margaret Thatcher, and that view is backed by my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and my hon. Friend the Member for Sheffield South East (Mr Betts), who have led local government in the past.

We must ensure adequate funding for the reforms. [Interruption.] This is not a laughing matter. It is crucial to ensure that we meet the aims and objectives of the Bill, which we are all behind. We must strive for individual well-being. A survey of County Councils Network members, many of which are Conservative-controlled councils, showed that 70% are in favour of the reforms in the Bill, but due to financial concerns, only 30% are confident of delivery. The network says:

“Unfunded reforms, including universal deferred payments,” as I identified,

“will add further unsustainable strain to adult social care services, threatening the success of the reforms and quality of existing services.”

It is not only local government saying that. The Chartered Society of Physiotherapy says:

“Integration needs to be properly funded and is not fully achievable by moving existing NHS financial resources to social care, or visa versa. Access to integrated care services needs to be based on NHS principles—funded through taxation and free at the point of delivery, based on need and not the ability to pay.”

I share the concerns the hon. Lady raises, but she made a point about council cuts. Does she not think that her council would be better off using the £160 million it has in its reserves to fund such services?

The hon. Gentleman displays his ignorance. Councils do not sit on reserves that they can use to fund services willy-nilly; they have commitments that they have to meet. When I was a councillor many years ago, I recall my city treasurer saying that reserves can be used only once. It is not sensible to use reserves for revenue. They are needed for a wide range of issues.

Several hon. Members rose—

I will not give way, because I want to stay with this issue. There is no way that the Government, by saying such things, can hide from the real impact that their cuts are having on local government.

Let us get back to the funding for new things in the Bill, some of which the Opposition support and some of which I support. What funding has the Secretary of State already outlined? The 2013 Budget set out reforms that would mean additional spending of £1 billion in 2016-17 and 2017-18, but there was no detail of how the care cap would impact on costs beyond 2017-18. We know of £335 million for implementation in 2015-16, which breaks down as follows: £145 million for early assessments and reviews; £110 million for deferred payment, including the cost of administering the loans and the loans themselves; £20 million for capacity building, including recruitment and training of staff, which we all know is vitally important for cultural change; £10 million for an information campaign; and £50 million for capital investment, including IT systems, that sits within the better care fund. For the better care fund, there will be a £3.8 billion pooled budget between health and social care. It is, however, not new money, but rather a pooling of existing resources. Allocations to clinical commissioning groups will provide £1.9 billion, and the rest will be made up from a variety of existing funding schemes—[Interruption.] The Minister is gesticulating to say that he has not hidden that fact. He has not, but the impact is that things that are being done now will have to stop. While it may be possible to stop some such things, I do not accept that there will be no impact on services—[Interruption.] I am going to keep going, Mr Bayley, because the nature of the Minister’s role means that he gets to reply at the end, so it makes sense if I keep going.

When speaking to the Health Committee, Sir Bruce Keogh, NHS England’s medical director, said that there was “great scepticism” that the £3.8 billion better care fund would achieve one of its stated aims of reducing demand on A and E services. Pooled funding carries inherent risks by withdrawing significant funds from the NHS front line at a time of unprecedented pressure on the service. The NHS Confederation has said that it wants to see care moving into the community and that local health services need a period of time, during which current services continue to be funded in parallel with investment in new models of care. That was precisely how changes were made when the National Health Service and Community Care Act 1990 was implemented in the early 1990s, which led to greater success.

There are questions about the level of additional funding required beyond the first two years, because most people are unlikely to have reached the cap by the time that local authorities will have to fund the cost. There is no account for the socio-economic differences between local authorities. There may also be a case for a consistent national approach to the whole area of systems development, including data sharing between local authorities and within the NHS, rather than having 150 locally developed systems.

The amendment is probing. Significant costs are involved for new services, and new money is required up front to help local authorities and the NHS to put in place the  services and systems to enable them to stop doing some of the other things and to reduce those emergency cases of people ending up in hospital when they do not need to be there. That is what is required, and I look forward to hearing the Minister’s response.

It will probably be helpful if I remind the Committee that, formally, this is a debate on whether clause 72 stand part of the Bill, but grouped with that question is this batch of new clauses on funding for care and related issues. The debate may range over any of the matters in the various new clauses, but not points about the performance of an individual council or such matters.

New clause 15 states that before any of part 1 of the Bill comes into force, the Department of Health’s joint care and support reform programme board must inform the Secretary of State whether there is sufficient funding to implement the Bill satisfactorily. New clause 16 would establish an independent committee to advise Ministers on the workings of the so-called cap on care costs, the level at which it is set and the working of the means test. New clause 17 would require the Secretary of State to ask the Office for Budget Responsibility to conduct an assessment of social care funding, including the adequacy of current public funding, the proposals for funding the provisions in the Bill, the implications of the Bill and funding for the NHS over the next five years, which is crucial, and eligibility criteria. New clause 18 would ensure that before the Bill’s provisions on eligibility criteria, the means test and deferred payments come into force, the Secretary of State must publish an impact assessment of them.

New clause 15 takes forward the points that my hon. Friend the Member for Sheffield, Heeley made very powerfully. The Government have given repeated assurances that they have provided enough resources to implement the Bill. Many councils thought that those resources would be additional, but we have discovered that they are not. As my hon. Friend has just said, in the June 2013 spending review, the Chancellor announced £335 million in 2015-16 so that

“councils can prepare for reforms to the system of social care funding.”

That covers early assessment, the cost of setting up deferred payments, training, and a whole load of IT systems that will have to be set up to develop people’s care accounts so that they can see how much they are clocking up towards the cap.

When the Government spelled out further details of the local government funding settlement in July 2013, we and the LGA discovered that that money was not new, but was top-sliced from existing council budgets. Following that, the Department of Health announced that it had figured out that it needed another £130 million to pay for implementing the adult safeguarding boards, putting carers on a par with users in terms of assessment, and for setting the national eligibility criteria. Again, that money is not new. It has been taken from the better care fund. The £3.8 billion integrated budget for the NHS and social care, as we have heard, is not new money, but a pooled budget. They are taking money out of that to set up care accounts, assessment and other things. Almost £500,000 of implementation costs will come from existing budgets. That will mean taking  money away from existing services and existing users to pay for setting up care accounts, adult safeguarding boards and so on.

With the best interpretation, that is not what the Government claimed when they made their announcement. They said that there would be additional funding, fully resourced. There is a concern that setting up a care account and doing all the necessary assessments under the Bill will take money from existing users who are already struggling desperately to get the care they need. They are getting 15-minute home visits, we have staff on zero-hours contracts and people are not getting their home adaptations. That is the reality of this Bill: £500 million from existing users to pay for setting up the new system.

Our new clause says that we have to be clear where the money is coming from, whether it is enough to implement what is going on in the Bill and what the consequences are. ADASS and the LGA rightly say that the joint care and support reform programme board within the Department of Health must make a thorough assessment of that. If we are being asked to vote on a Bill, we need to know where the money is coming from and who it is coming from.

New clause 16 proposes setting up an independent committee to keep under review the workings of the cap and the means test and to advise Ministers. We have said throughout the passage of this Bill that we are really concerned about who the cap, means test and eligibility criteria will benefit: which people, in which parts of the country and which levels of income? We want a fair and just system that helps those on low and middle incomes, the people who have worked hard and saved all their lives, not just those at the top. However, we cannot see how this will work.

We want some independent advisers on this, drawn from academia, councils, the voluntary sector and others, so that we get a proper assessment of who this benefits, because we still do not know the answer to that question. New clause 17 is a fundamental requirement and is part of what I would argue is a long-term piece of public policy reform. It asks the Office of Budget Responsibility to report by the end of this year on its assessment of the funding of adult social care. I remind members of the Committee that Andrew Dilnot said that we need enough money in the current system in the baseline as well as reforms for the future. There have been huge rows, essentially, about this. The Government say: “We have put enough money into local councils,” ignoring many of their own party’s council leaders who say the precise opposite.

ADASS and the LGA say that £2.7 billion has been cut from adult social care so far in this Parliament. The Government say no—it is all efficiencies. I have no doubt that some are efficiencies. Our councils are working really hard to do that, but it is simply not credible to claim, when local councils’ budgets have been cut by a staggering third, that it is not having an impact on front-line services. We want the OBR to look at and assess the current level of funding in social care and, critically, to look at the impact on the NHS of what is happening to the local council care budget.

We have to stop looking at these two budgets separately. They are intimately linked. We have called for one budget across both the NHS and social care, so that we can really plan for the future. The OBR can look at this  for an independent assessment and say what it thinks, a bit like Derek Wanless did when he reviewed funding for the NHS under the last Labour Government. We need a long-term look at this, to decide what is adequate to meet the needs of our ageing population.

In the other place, Earl Howe said that the Government did not want a proposal like this, because the OBR was independent and should have nothing to do with politicians. However, it is precisely its independence that would give people using care, politicians and those working in care a proper sense of whether we are providing a sufficiently funded service. On new clause 18, as we have said many times before, we need to have an assessment of all these regulations on the means test, the cap and the deferred payments scheme if we are to properly judge the Bill.

As we are coming up to time, I want to ask a couple of final questions to the Minister about clause 72, on a stand part basis. This is about the Secretary of State needing to review the provisions in this Bill every five years: the means test, the cap, eligibility criteria and how it is working. I am surprised that the five-yearly review does not also look at one of the fundamental claims that the Government have made regarding the Bill, which is that it will create a market in long-term care insurance products.

Last year, the Prime Minister said in the House:

“By creating a cap on what people will be charged, we can create an insurance market so that everyone can try to protect themselves against the long-term costs of social care.”—[Official Report, 13 February 2013; Vol. 558, c. 856.]

In fact, during debates in Committee, the Minister himself has said that he is confident that products will emerge.

However, yesterday, there was a story in the Financial Times entitled, “Long-term care policy suffers setback”. There is a pretty glum picture of the Minister; I do not  know whether that relates to long-term care or to what else is happening in the Liberal Democrat party at the moment. The article states:

“Insurers have dashed government hopes of early products covering the cost of long-term care for the elderly, undermining one of the coalition government’s most trumpeted policy successes…Creating a framework within which people can insure themselves against care costs is seen in government as a key part of demonstrating that the Dilnot reforms will not simply help the better off…but will also enhance security for the less well-off. However, since the Dilnot recommendations were accepted, it has emerged that in many cases people will have to spend far more than £72,000 before attracting government help”; funnily enough, I think we were arguing that ourselves.

The article continued to state:

“An industry insider said this had undermined the certainty about prospective liabilities on which insurers had initially counted.”

So why will the five-yearly review of the Government’s policies not look at whether they will create an insurance system? The Association of British Insurers was clear in its report, saying:

“We do not believe that stand-alone products bought early in life are likely to be in demand”.

Finally, I am not clear whether the five-yearly review will look at the deferred payments scheme. All the reforms are intimately linked, and if there is to be a review, they need to be looked at together.

There are big questions with the clause about the long term. We want the clause to be a long-term and sustainable solution for the funding of social care. We are not fully convinced of that at the moment.

Ordered, That the debate be now adjourned.—(John Penrose.)

Adjourned till this day at Two o’clock.