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Care and Support (Deferred Payment) Regulations 2014

Volume 757: debated on Tuesday 9 December 2014

Motion of Regret

Moved by

That this House regrets that the £23,500 asset limit proposed in the Care and Support (Deferred Payment) Regulations 2014 is at odds with Her Majesty’s Government’s pledge that no-one will have to sell their home in their lifetime to pay for care. (SI 2014/2671)

Relevant document: 14th Report from the Secondary Legislation Scrutiny Committee

My Lords, I imagine that the tummies of some noble Lords are starting to rumble, but I must detain the House a little longer. Inevitably, this is a complex matter. Let me start with the history of the deferred payments. I think that my noble friend Lord Joffe, who is beside me, and I were the people who invented them when we were involved in the minority report of the royal commission. We were against the majority view that all social care could be free because it was unaffordable and greatly benefited the rich. We thought it was right that people with means at the end of their life should dip into those means to pay for care.

However, we were very aware that a great deal of political heat had been understandably stirred up by one particular aspect; namely, that people could be forced to sell their homes to pay for care—homes which they hoped that one day their children would be able to live in. The Daily Mail, the Telegraph, and “Panorama” all have reported on this issue. We thought it was necessary to take the heat out of all that before a rational view on the future of care funding could be taken. We therefore recommended a scheme of deferred payments whereby in such circumstances the local authorities would lend people money to pay for their care, taking a charge on their homes which would be repayable on their death. The Labour Government accepted that but, unfortunately, we botched the implementation in 2002. Of the 55,000 self-funders who go into care each year, fewer than 4,000 sign up to the current scheme.

The next stage was the Dilnot commission, which recommended, as part of its package, a new universal deferred payment scheme. The Government immediately accepted this and proudly proclaimed, and continue to proclaim, that, under their scheme implemented by these regulations, no one will have to sell their home to pay for care. They probably meant it at the time, but the rats got at it.

As the Care Bill was going through the House last year, a proposal was smuggled out that meant the payment scheme was not universal in the true sense; namely, that it would be open only to those who had less than £23,250 in non-housing assets. Therefore, 30,000 of the 55,000 people who would otherwise have qualified for the scheme were disqualified by this measure. When this was pointed out to the House—it was headline news in the Telegraph and the Mailthe Government indicated a retreat. The noble Earl, Lord Howe, who alas is not here tonight, said the Government were,

“happy to consider a range of figures”,—[Official Report, 29/10/13; col. 1474.]

for the ceiling and No. 10 emitted similar emollient noises. Encouraged, the House decided not to amend the Bill. The Government by this stage had ratted on their original proposal of universal deferred payments. Now they are re-ratting, this time on their implied pledge that £23,250 would be increased. What is before the House now is, in effect, an extremely limited scheme from which in my opinion, and as we will see in reality, very few people will benefit.

Have the Government and the Prime Minister, who must have authorised the No. 10 briefings, lied? Perhaps I should rally to the best defence I can find. This scheme is universal, just not in the original sense that it was available to everyone. It is universal in that the same scheme—or broadly the same scheme—applies in every local authority. Indeed, no one will be forced to sell their house when this scheme is in place. Take a family of fairly modest means with £75,000 in non-housing assets. The Government expect them to run down those assets until they have got only £23,250 left in the bank. It would pay £500 in interest a year, if they were lucky. It is not enough to cushion them from the uncertainties of life, not enough for presents for the children and so on. Who in this House would ever be happy if they had only £23,250 in their old age to sustain them for the rest of their lives? None of us. Nobody of modest means will take advantage of that scheme and run their savings down to £23,250. The last government proposal I said was batty; I would say that anybody who did that would be pretty well crackers. I have never met an adviser to the elderly who would advise them to do so. They are not forced to sell their house; they can do something completely ridiculous that leaves them in penury for the rest of their days. That was not the intention of the minority of the royal commission or Dilnot and it is not the intention the Government wish to convey to the public at large.

We live in a time of some crisis with the political class, of which I am a long-established member. People out there worry that we use words in a different way to them. We use words that are literally true but, when you examine them under any form of illumination, they turn out to be weasel words designed to hoodwink. That is what the Government have done here. They have used words that are strictly and literally true to hoodwink the public as to what they are proposing. I think the use of clever language to disguise intent is desperately sad and is essentially part of the crisis we are facing in this country. It is for that reason I ask the House to regret that situation this evening.

The Minister will reply in a minute, but let me get my retaliation in first by dealing with two of the arguments she could use. A proper universal deferred payment scheme, she could say, would mean state support for the rich. I empathise with that. I would not want to be handing state money to the rich, but we are not talking about the rich here—we are talking about £23,250. There would have been a perfectly sensible course for the Government to take. Under the new means testing for social care you can be helped if you have up to £118,000 in assets—£23,250 is the present upper capital limit and £118,000 is going to be the new limit. The Government could have set the same limit for this scheme and aligned the two. That would have been perfectly logical and completely right. Instead, today they are saying that somebody who has accumulated £30,000 in savings and a house should be disqualified. How can they say that such a person is rich? That person has worked hard for what they have, has played by the rules and is being betrayed by a Conservative Government who claim that that is the kind of person to whom they want to appeal.

Secondly, the Minister could say that to change this would cost public money—a higher ceiling would mean spending more money. That is simply untrue because the loans would be made at interest—the interest on gilts—so in the long term the Government would get back every penny that they spend. Indeed, they have gone to great lengths to ensure that they do because people will be charged for the administrative costs of taking out one of these. There is no cost to the Government. It is true that there is a cash-flow cost because in year one the loans are paid out and then the repayments come back later—not much later because the average loan lasts only 18 months.

But there are plenty of ways that a similar saving could be made within the current budget for care without slapping middle England in the face. As I proposed earlier, they could have introduced this scheme a year later, boosting the public finances in a tight year next year. They could reduce the £144 to be allowed to individuals before they have to contribute to their care home fees—some six times the amount allowed for personal expenses to people under this scheme than applies to people who are getting means-tested benefits. I look forward to discussing this with my noble friend Lord Joffe, since we were responsible for it, but they could freeze the nursing cost allowance paid to everyone in nursing homes or reduce its amount for new claimants. We could debate the merits and demerits of these alternatives all night, but none of them is half as bad as the scheme that the Government are putting before the House tonight.

As happened when the royal commission was considering these matters—and we two stood shoulder to shoulder against the weight of the majority who came to loathe us for our unwillingness to dip into taxpayers’ pockets for paying for care—again, siren voices are being raised in favour of making personal care free for all. That was the recommendation of the recent Barker report for the King’s Fund. It even sometimes seems as if Andy Burnham, the shadow Health Secretary, has flirted with such an idea, but it is noticeable that it does not appear in the shadow manifesto that the party produced yesterday, and I am glad to hear it. That is one side of what might come out.

On the other side are the sane and sensible proposals of the Dilnot plan, albeit with a higher threshold than Dilnot recommended, of which universal deferred payments were an integral part. Tonight, with these recommendations, the Government are effectively demolishing a keystone of the Dilnot proposed universal scheme.

I am under no illusion that the Government are likely to give way on this tonight, but your Lordships, who so often have been the bulwark against arbitrary and misguided government, should have this chance to debate it and, unless the Minister says something wholly unexpected, if necessary, to vote against it. I beg to move.

My Lords, I again thank my noble friend for bringing us back to a very important part of our debate during the passage of the then Care Bill some months ago. We need to remind ourselves of the fanfare with which the Government introduced that Bill. As my noble friend said, there was an explicit statement that older people would no longer have to sell their homes to pay for their care. As he has carefully outlined, that is strictly true even within the provisions of the deferred payment regulations. But as he said, it is not in the spirit with which the Government actually announced this policy. Instead of a scheme that would have brought comfort to thousands of people, they have produced a very mean-spirited scheme that will clearly exclude many people who one would have thought should have taken advantage of its provisions.

As these are regulations, we tend to ask technical questions. I have two questions for the noble Baroness, on which she may want to write to me. On the impact of the relevant figure on pensions, how will a pension pot be treated in relation to the calculation of the non-housing asset? Do the Government expect the new flexibility in assessing pension savings contained in the Taxation of Pensions Bill to have any effect on this policy? Will those savings be counted towards the £23,250 cap? I would be very happy for the noble Baroness to write to me on those points.

My noble friend Lord Lipsey came to the crunch of the matter when he said that he did not expect a scheme to be available to the wealthy and the very asset-rich. I endorse that. My noble friend Lord Warner wrote to the right honourable Norman Lamb a year or so ago. My noble friend was a member of the Dilnot commission but is unable to be here tonight. He wrote:

“As a commission we accepted there had to be some eligibility criteria because this was never intended as a scheme that was available to the wealthy and asset rich”.

However, as he said, and as my noble friend Lord Lipsey said, being required to spend down to assets of £23,250 seems far too restrictive to deliver a viable scheme or to reflect what the Dilnot commission recommended.

Surely, even at this stage, the Government need to reconsider this scheme. It is very disappointing that the consultation has taken place, we had a very good debate on it and yet the Government have moved not one inch on this policy. If it goes ahead, it will be very disappointing for many thousands of people who had every reason to expect that they would take advantage of the scheme. The noble Baroness may say that we should not worry because local authorities will be able to offer schemes above the threshold of their own volition. However, I very much doubt whether many local authorities will take advantage of that. Therefore, I support my noble friend. I am delighted that he will push this measure to a Division tonight. We are very happy to support him.

My Lords, I shall also have to take exception to the noble Lord’s second Motion today on the eligibility criteria. The eligibility criteria are not, as he has suggested, at odds with the overarching policy intention that people should not be forced to sell their home within their lifetime to pay for their care. Indeed, they ensure that protection and support is available to those who need it.

Noble Lords will recall that in my earlier speech I made reference to the conclusions of the Commission on Funding of Care and Support, chaired by Sir Andrew Dilnot. As I said, the commission supported the extension of deferred payments. More specifically, it recommended:

“Anyone who would be unable to afford care charges without selling their home should be able to take out a deferred payment”.

The deferred payment scheme that each local authority will be required to implement will achieve precisely this—it will provide protection to those at risk of having to sell their home to pay for their care.

It has been suggested that the eligibility threshold, which requires a person to have less than £23,250 in savings and assets on top of the value of their house to qualify for a deferred payment, has been set too low and will not achieve this aim. It has even been suggested that this policy would leave people unable to afford their basic living expenses. So allow me to shed some light on this debate by informing noble Lords that setting the threshold at this level means that 80% of people who develop a residential care need will qualify for either help from their local authority in paying for their care or a deferred payment agreement. This means that only the wealthiest 20% of people entering residential care—those who have savings and assets above £23,250 on top of the value of their property—will be asked to initially meet their own care costs before they receive local authority support. Crucially, anyone in this wealthiest 20% bracket would subsequently qualify for a deferred payment if their savings and non-housing assets fell below the £23,250 threshold. So if a person has a change of circumstances or has to spend down their savings to below £23,250, they would be eligible for the support and protection provided by a deferred payment.

My Lords, can the Minister clarify this? Taking the case raised by my noble friend of an individual with £30,000 of non-housing assets, under her definition these classify this individual as being in the wealthiest 20%. Is that so?

That is what has been assessed as wealthy. The £23,250 was set as a level below which you would be eligible for assistance.

While we want as many people as possible to benefit from the reforms, the eligibility threshold was set at this level because we wanted to focus the funding available for the scheme on providing protection to those at most risk of losing their homes. If we extended automatic eligibility for deferred payments to the wealthiest 20%, who can afford care without having to sell their home, it would mean having to take funding from elsewhere in the care and support system, where it could surely provide greater benefit. That is why the regulations that were laid before the House do not mandate that a local authority must offer a deferred payment to someone with assets of more than £23,250. This is necessary to ensure value for public money by targeting resources where they are most needed.

We have set these criteria so that people will be entitled to a deferred payment when they would be at risk of being forced to sell their home to pay for care. The criteria are also to ensure good value for public money and minimise the risk of bad debt. I trust that noble Lords agree that it is only right and proper that we should prioritise first, and help and support those most in need. There has also been some suggestion this evening that the Government have not been open about the £23,250 threshold, or that my noble friend Lord Howe, who is not in his place, was somehow disingenuous when he spoke on this matter in your Lordships’ House previously. The £23,250 asset threshold, discussed frequently during the passage of the Care Act, has been the subject of not one but two public consultations. First, it was discussed in the consultation on funding reform in July 2013; secondly, it featured in the draft regulations and statutory guidance published for consultation this summer.

These consultations have involved officials from the Department of Health proactively engaging with people, and travelling the length and breadth of the country to consult the full range of stakeholders, including service users, local authorities, members of the general public and the Care and Support Alliance. The policy has been developed in close consultation with an expert body, called the Paying for Care Transformation Group, whose membership includes a range of charities and third-sector organisations, including Age UK, Carers UK, the Care and Support Alliance, and Sense. Through this group we have ensured that the development of the universal payment scheme has been guided by the expertise and insight of those key organisations. It is hardly fair to say that we did not take a full range of views into account, or that the asset threshold is in any way a surprise.

On a point made by the noble Lord, Lord Hunt, about whether the pension pot should be included, that is covered in the statutory guidance on charging, but I am more than happy to write to him and place a letter in the Library.

The introduction of the universal deferred payment scheme will extend protection to those most at risk of having to face selling their home to pay for their care and support. The scheme will help provide reassurance and peace of mind to thousands of care recipients and their families who would otherwise be faced with making extremely challenging decisions at a most vulnerable time in their lives.

I hope that I have been able to provide assurance about the great benefits of the deferred payment scheme and how it will work from April next year. I hope that I have also convinced your Lordships’ House that these regulations should be allowed to come into force without further delay or hindrance.

My Lords, I shall be much milder in winding up than I would have been had the noble Earl been in his place. I recognise the care that the Minister put into those remarks, but I am afraid that she inadvertently displayed her lack of background in the field and I am sorry if she was advised to use some of the words that she did.

The Minister said that this issue had been discussed frequently on the then Care Bill. I will remind noble Lords what happened. There was no mention of the threshold in the Care Bill. The Care Bill went through Second Reading. It went through Committee. When it got to Report, it was only because I did the sort of thing that, as a geek, I do—reading through the 700 pages that the Government had produced to accompany it, and not just the bit on deferred payments but the bit on the draft statutory orders—that I discovered this proposal. I raised it at the last minute on Report. The Government freely admitted that there could then be an amendment at Third Reading, which the House indeed discussed, and it was the assurances that the noble Earl, Lord Howe, gave that caused us not to take it further. When the noble Baroness says that it was discussed during the passage of the Care Bill, it was, but no thanks to the Government. They had hidden it away in those 700 pages. I am inclined to make the noble Baroness read all 700 tonight—she will sleep better and she will know the true history of this affair when she has done so.

The second substantive point the Minister made was that £23,250 is high enough—it seems reasonable that it should be denied to people with £23,350. I will not dissect the 80% thing at this moment. Does she realise that she is kicking her own Government in the teeth when she says this? Her Government do not think that £23,250 is enough. Following the recommendations of the Dilnot report, they are upping that figure to £118,000 next year. Incidentally, that is a higher figure than Dilnot recommended because they decided that Dilnot was not generous enough. Next year they will happily be giving state support to people up to £118,000, with the exception of one small group of people—those who might use deferred payments—who will be confined to the £23,250 of non-housing assets. So I hope that there will not be any boasting about the coming of the £118,000 in the months to come, because the noble Baroness has told us that she thinks £23,250 is enough.

Anyway, we have debated this long enough. I hope that those who think that £23,250 is rich will vote with the Government and those who think £23,250 is not very rich will vote with me and the Opposition in favour of this Motion.