Question for Short Debate
To ask Her Majesty's Government what assessment they have made of the deferred payment scheme for funding older people's care.
My Lords, it is hard to recall the shock at the time, but it is only a few weeks ago that the Conservative Party decided that it would not have a large overall majority after all. The form this took, you will remember, was a pledge in the manifesto that everyone would have to spend themselves down to £100,000 before they got help with care costs. I think I knew what they were doing when they did it because I happened that afternoon to be on a platform for the dementia society’s conference with the Health Secretary, Jeremy Hunt. He made a short reference to this proposal and I was asked what I thought of it. I said, in the words of Sir Humphrey, “Very brave, Minister”. I may have misdetected it but I thought he went a little bit pale.
Why do I start with that story, which has absolutely nothing to do with deferred payment? It is very difficult to see why they did this. It could have been an accident. It could have been an outburst of honesty with the British people, which was laudable if not successful. I have another theory: that this Government have learned from long experience that you can do anything you want on care and nobody much notices—perhaps there would be more people here tonight if that were not the case. The case of deferred payments seems to me to be an extremely strong example on which the Government now need to focus and come clean with people on what they are going to do and put it into place.
Let me tell you a story—I am starting off down nostalgia lane. In 1999—I have the right decade, I think—I was sitting on the Royal Commission on Long Term Care. In parenthesis, one of my colleagues was Lord Joffe, whose death was recently announced, and who was one of the truly great and lovely men that I have had the pleasure to meet in my life. The majority of the commission—it beggars belief when you hear it now—wanted all social care to be free. That was their recommendation. I cannot really within a 10-minute speech spell out the number of noughts on the end of the cost of that proposal. It was bonkers for two other reasons. First, nearly all the extra money was going to the better-off, not the worse-off. Secondly, and to Joel and I more importantly, it did not provide an extra penny to care services. It simply made it easier for people to pay for care. Well, that is very nice and desirable if you have the money, but it is very different from providing the care services that our country desperately needs. So we did not go along with this and signed a note of dissent, as it was called.
I comfort myself that history shows that it is only minority reports or commissions that have any effect, looking back to Webb and the Poor Laws. There was one on the fire brigade, where the main dissident report was written by the chairman. Only minority reports have any effect, and that was true in one sense in this case. We never got free care and I am very glad that we did not.
However, Joel and I, when writing our dissenting report, were aware that people were suffering considerable distress as a result of the means-tested system. In particular, it caused people to sell their houses to pay for care. So without conceding the free care principle, we felt that something should be done about that.
I quote paragraph 57 on page 123 of the Note of Dissent: “We therefore propose that the state offers a virtual guarantee that no person will have to sell their home against their will. This will be put in practice by a state-sponsored loan against the value of the home of any older person in need of care who does not want to sell”. I think that that was right in principle because going into a home is for many people a dreadful thing to have to do. It is made worse if you know that your house is going straight on to the market with no chance of ever getting it back.
However, let us face it, there was a lot of politics in that. We wanted to fend off free care for all and in order to do that we thought it right to do something that would make redundant the headlines which the Daily Mail used to specialise in: “Homes sold to pay for care”. There was a general acceptance of that. The Labour Government legislated in due course. They did so ineffectively and left it to local authorities to put the schemes in place. Many local authorities did not get around to it, so it did not work. The Conservative Government seemed not even to have noticed that that had been done. David Cameron, who some will remember was then the Prime Minister, went around saying that the Government would legislate so that,
“no one will have to sell their home to pay for care”.—[Official Report, Commons, 8/5/13; col. 25.]
The 2014 Act was brought forward and it did indeed establish a national scheme for deferring payment for care, except that it did not apply to people with more than £23,250 in non-housing assets. That is a terrific limitation and it destroyed what the scheme was meant to do. You would be absolutely mad, if you possess a large house, to let your other assets run down to £23,250 so that the income on that sum would have to pay for all the other little things in life you might like. It made the proposal completely defunct. That point was hammered home in this place. I remember making a speech about it at Third Reading with strong support being expressed across the House. The noble Earl, Lord Howe, gave the impression, although I may have been naive, that this would be dealt with and they would up the £23,250 limit. In the light of that, I withdrew my amendment. They did not; they stuck to it and the figure did not change. Of all people’s word to break, they broke the word of the noble Earl, Lord Howe.
I did not have to do much research to know what would happen. What has happened is that we now have a totally failed system. The Government estimated that the new scheme would bring the uptake of deferred care up from 4,000 in 2012 to 12,300, but it has not. In fact the uptake figure hovers at around 3,600; that is, even less take-up than before. The research to show that was carried out by the think tank Reform, which is not unsympathetic to the Government. That number is simply those who are eligible but who choose not to claim it—one third of the number that the Government said would. There are also all those people who are completely excluded from it by the arbitrary rules that the Government have set. Those were Cameron’s words backed by his party and both Houses of Parliament but they have been completely overruled and ignored.
I believe that Parliament was misled and that the time has come to do something about it. I believe—I hope the Minister will confirm this—that the Government are reviewing the deferred payments scheme and its impact. On the facts as we have them, I do not think there can be any doubt about what the conclusion of such a review should be. Of course, this is all part of the broader picture on social care. I, for one, welcome the review that has been carried out in the Cabinet Office, and the fact that we did not dash into that manifesto pledge and that proper, serious consideration is being given to this issue by proper, serious people on the basis of proper, serious research.
I beg the Government to look at this again, because you can make a case for the scheme or you can say that people should have to sell their houses to pay for care, but I say in all seriousness that I think it is unforgivable to mislead older people. They find this system extraordinarily complicated and extremely hard to get their heads round in any case. To leave them in the state of confusion that now exists as to whether or not they can get deferred care payments seems to me—I hesitate to use this phrase—an act of cruelty. The Government can put this right. It does not cost anything, because this is merely money that is lent to them being paid back. They should produce a clear, workable scheme so that those who do not want to sell their houses to pay for care will not have to, as David Cameron said.
My Lords, I thank the noble Lord, Lord Lipsey, very much because this is a very important issue. I think I have been involved in it for longer than anybody else. I have tried to get the issues around social care, care homes and how to pay for care right. This is a persistent, complex and very difficult subject, and we have to do something about it. If we started again, I think we would have a unified system but, let us face it, the majority of people who have to go into care homes are very old and have some form of cognitive dysfunction or dementia. They are shuffled between healthcare and social care. We are once again talking about how these people are going to be funded. It is very important that eventually we get this right. All these terribly frail people cannot go on waiting year after year while David and I meet regularly at events. Those events are not perhaps as important as being here, but they are occasions where people try to deal with this subject.
It is very hard to know what the prevalence of deferred payment agreements is because the data collection is now mandatory but the 2015-16 data collection was voluntary. Data collected by Care England, Age UK and NHS Digital found that out of 55 local authorities in England, just 1,300 DPAs were written in 2015-16, the first financial year in which the mandatory scheme was in force.
If we assume that this sample is representative of the 152 local authorities offering adult social services in this country, these data suggest that only 3,600 DPAs were issued in 2015-16. That is less than a third of the Government’s original estimate and lower than the figure in 2012. Meanwhile, Reform suggests that a higher figure of about 6,000 DPAs were issued in 2015-16 compared with the Government’s projection of 12,300. But whatever figure we use, the uptake and availability of deferred payment agreements has been very much lower than expected.
Reform concluded that tighter than expected eligibility is the principal reason why the Government overstated the number of people who would take up a DPA. These outcomes are despite councils having a statutory duty to offer DPAs under the Care Act. However, there is no government target for the number of DPAs issued by local authorities. To redress this imbalance, Reform argues for the DPA means-test threshold to be increased from £23,250 to £100,000, which would raise the percentage of self-funders who are eligible for support from 45% to 62.6%. One major challenge, however, is the lack of public awareness. Different councils develop different approaches and the pause in the Care Act is also something to be contended with.
All this has led to a huge amount of confusion. First, people do not understand the difference—they never have—between healthcare and social care. I have spent years saying that somebody who has a terminal disease, such as one of 100 different types of dementia, needs only social care, according to the rules, whereas somebody with a chronic illness such as back pain is given health service care. It is all very odd, really.
There is huge confusion in people’s minds, particularly about deferred payments. Neither is it transparent to the people who provide care or to people admitted to homes under a DPA, who would otherwise have been self-funders paying the home directly. DPAs also work by placing some people under a council contract, at council fee rates, and the home does not know their true status, which might mean that they have enough money to pay for it. So, as much as I deplore the fact that we have different criteria for healthcare and social care—as we always have had—it works both ways. Some people who really have enough money are not paying, because we know that councils pay very much less, which is one reason why so many care homes are going out of business.
So the use of DPAs is not transparent to the provider and, as an example of the rather covert nature of this landscape in which DPAs operate, the Department of Health recently completed an internal review of them in order to inform policy making, but it has chosen not to make the findings public. Perhaps the Minister can say why. It would be useful to know. There has not been a detailed analysis of the deferred payments scheme since 2013, when an impact assessment was published alongside the Care Act. At the time, the analysis suggested a highly patchy take-up of the scheme. There was a lot of regional variation, ranging from 1% to 40%. A new analysis to see how much take-up has changed is very much overdue, in my humble opinion.
Expectations from citizens, however, have risen. We know that they experience social care and healthcare as a continuum. The current financial challenges make the delivery of such expectations completely untenable. Taxpayers really are not getting value for money, so I endorse Care England’s view that, for DPAs to become a constructive part of a secure funding environment, a long-term vision with strong central leadership is required to take duplication and unnecessary administrative burdens out of the system. At the national level, much more clarity is needed about the partnership between the state and the individual in terms of funding. Locally, commissioners and providers need to agree the suitability of an individual’s care package, rather than this being seen as part of an arbitrary standard price.
DPAs are only part of the solution to funding social care fees, and the promised consultation on funding is a key opportunity to think about what sort of society we want to live in. Therefore, key questions on this issue are: when will the consultation be published and what form will it take, and in the meantime what short-term provision will the Government be recommending to tackle the current levels of unmet need? I hope that the noble Lord will be able to answer at least some of those points.
My Lords, this has been a short but very interesting debate, and I am grateful to my noble friend and to the noble Baroness, Lady Greengross, for the way in which they have addressed the dilemma that undoubtedly faces us, not just in relation to deferred payments but more generally in relation to funding appropriate social care.
It was interesting that my noble friend Lord Lipsey took us back to the royal commission. Over nearly 20 years we have seen a continuing debate, any number of reports and some measures on the statute book, yet we still seem no nearer to solving the conundrum of how to fund social or long-term care. I have to agree with my noble friend: there are those who argue that social care should be free at the point of use but I regard that as a fantasy. It is very unlikely that over the next 20 years any Government will in reality be able to afford it.
The problem is that, even though Governments have accepted some proposals in principle, when those proposals are costed, in reality they step back from them, and we are left in a hiatus of a completely arbitrary and unfair system. The noble Baroness, Lady Greengross, referred to this problem, which is, if you like, a boundary dispute between such care being free at the point of use in the NHS and means-tested personal social care. Understandably, tensions often arise within NHS hospitals as families try to resist an individual who is receiving care which is free at the point of use in the NHS ending up in the care system, where a means test takes place. I do not think that anyone can say that we have a fair system. In my view, it is equally unfair that self-funders in care homes effectively subsidise local authority-funded residents. Speaking from where I am, I suppose you could regard that as a kind of regressive taxation. It is so arbitrary and so unfair that I believe it is very difficult to justify.
It seems to me that either we try to solve this problem or millions of people over the next 30 years will carry on living in what is sometimes abject misery, uncertainty and fear about their financial future and about their families, to whom they would like to pass on some income where they are in a position to do so. If one were putting odds on it, one would say that at the moment one sees very little likelihood of anyone coming forward with a cohesive package of things which can be funded, which is thought to be fair and which would get public support, although clearly that is what we seek to do.
The deferred payment arrangement is very disappointing. Clearly, David Cameron’s pledge was widely welcomed and was seen to be progressive. My noble friend talked about the increased estimate that the department gave, going from £4,000 to £12,300, but in any case £12,300 seems a pathetic amount. We seem to have a complete failure in the marketplace. There is no easy way for people to translate a housing asset into care home support while retaining the ability to leave some of their resources to their loved ones when they die.
A number of organisations have commented on what has happened to the deferred payment scheme. Clearly, bringing in such a tight means test undermined what we thought Mr Cameron had been offering. The point was well made by the noble Baroness, Lady Greengross, that we need, at the very least, to see how the scheme is working. I know that the Minister, in an answer to my noble friend in March, said that the department is continuing to monitor the success of this scheme and that an update of these deferred payment schemes across all local authorities will be available later in the year. I hope that he may be about to give us a progress report on that.
I have had evidence from Royal London and some of the charities. Royal London, for example, looked at the inconsistency between local authorities. It said that despite access to deferred payment agreement being a legal right—I am not sure that that is quite how I read the Act, but we know what it is getting at, because it is in the Act—10 local authorities told Royal London they had not entered into a single agreement since the scheme was introduced in April 2015. That is a pretty poor show. I ask the Minister: in light of the work that we hope will be published later in the year, what are we going to do about local authorities which simply refuse to operate the scheme at all?
My final point comes back to the Government’s manifesto proposal, their retreat and the intention set out in the Queen’s Speech to consult on how we improve the social care system. I refer the Minister to the Care Act 2014, a marvellous piece of work. It was consensual, it came from Dilnot and we spent weeks in your Lordships’ House in a consensual approach, yet it is dead and gone. There are some bits in it that are good, still, and which I very much applaud. It is a puzzle that the Government have never explicitly said whether they regard the whole thing as dead and gone and that is why they put the new proposals in their manifesto.
What is the consultation going to be about? Will it be about making the scheme that the Government put in their manifesto slightly more generous—raise the level, reduce the floor—or are they prepared to actually look again at Dilnot, which everyone said was a sensible approach, even if the figures may not be the right figures? Of course, the Government’s rate was much less generous than the original Dilnot proposal, but at the end of the day, whatever information the Minister can give us about the consultation, which we hope can be comprehensive, would be very welcome.
I thank the noble Lord, Lord Lipsey, for bringing forward this debate. I know that he has been a tenacious proponent of deferred payments and of reform of the care system. I pay credit to him for that—it is very rare that we have a debate where I can thank everyone individually, so I also thank the noble Baroness, Lady Greengross, and the noble Lord, Lord Hunt. Unfortunately, I did not have the opportunity to know Lord Joffe, but I know how much the House has mourned his passing and have noted the contribution he made. I want to acknowledge that as we talk about this issue.
We have had a bit of a trip down memory lane today, although others might call it Groundhog Day. We seem to be going over this issue repeatedly without properly resolving it. Of course it is not easy; the ageing population is probably the greatest social challenge, at least the greatest domestic social challenge, that we face. It is not one that we have grappled well with in the past, and that is true of Governments of all hues. That is for a number of reasons, including obviously the money and the changing nature of society, particularly working patterns. What has been highlighted by all noble Lords is the interplay between the taxpayer funded, free at the point of use National Health Service and a social care system that works on a different basis. It means that any attempt, whether it is a Labour-proposed national health and care service or through integration at STP level, is made very hard, particularly as things move. So I do not underplay the importance of this issue, and, of course, as we think about the narrower issue of DPAs, it has to be set in a context of what is happening elsewhere.
In the short run, more money is going into local authorities to try to provide the social care that is required. It is particularly focused on delayed transfers of care. That has some interplay with this issue precisely because of the concerns about moving from one part of the health system into another, something mentioned by the noble Baroness, Lady Greengross, and the noble Lord, Lord Hunt. It is about the difference between continuing healthcare and social care and the quite radical consequences of the different funding situations for families that are necessarily trying to navigate through it at a time of stress. It is a challenge, but we are trying to address it through this additional funding.
In the long run, as noble Lords have pointed out, the intention is to bring forward proposals on social care reform for consultation. The objective in the consultation—I am glad the noble Lord mentioned the Care Act—is to achieve the widest possible consensus. It should not be a completely open-ended “what shall we do” process, but it should try to put forward some proposals that, inevitably in the process of consultation, will change but will try to achieve some kind of consensus. The noble Lord, Lord Hunt, specifically asked about Dilnot. There was a lot of agreement around Dilnot, but I still come across people who think that Dilnot was the worst thing that could ever have happened. There is a more nuanced picture. If anything, that just underlines the importance of taking care as we try to build a consensus.
Moving forward to the specific issue of the debate, which is deferred payment agreements, as has been outlined, they are a means by which individuals can access equity in their home to pay for care without having to sell it, meaning that they do not have to sell their home in their lifetimes. As the noble Lord, Lord Lipsey, pointed out, DPAs have been in existence for a number of years and the issue was addressed in the Care Act precisely to attempt to create a more thoroughgoing national system to replace what had obviously been quite a patchy one. Even though some elements of the Care Act have not been taken forward, in particular the social care reform agenda, as has been pointed out, the Government took the decision to move ahead with the implementation of DPAs in order to fulfil the pledge of the previous Prime Minister—to whom both he and my noble friend Lady Sugg owe their position in this House—that people should not have to sell their homes in order to go into care during their lifetime.
In terms of the actual performance of the scheme, we had a year of voluntary data collecting for 2015-16, although it is now compulsory. A helpful note tells me that the next iteration of the data is 2016-17, and NHS Digital should be publishing them towards the end of October. We will then have a really thorough look at what is happening. The previous year showed that about one-third of local authorities responded, so it was only a partial picture. Nevertheless, it was disappointing that fewer DPAs were agreed than had been anticipated. Indeed, the noble Lord, Lord Lipsey, pointed this out as likely to be the case in the debate on the regulations. I will come to what we can do about it, but these are of course a means to an end in themselves. This is why I am not convinced that having a target is appropriate because it is about enabling a choice and adding to the choices that are available for people by providing a means of deferring payment until after death. There are many reasons why people may not choose a DPA, and of course the private market is evolving all the time. But we need to understand why there were fewer DPAs than anticipated and to ensure that those who are eligible for them can access one. If there are local authorities where not one has been signed, that suggests that something is going wrong at the local level in terms of communication between the local authority, individuals and the social care sector. So we need to know why that happens.
In the noble Lord’s very helpful response, he referred to the private market. He mentioned that not everyone thought Dilnot was the right answer, because one of Dilnot’s aims was, by capping costs, for the insurance market to come in when they have been reluctant to. I wondered whether part of the consultation would seek to answer the conundrum of what could make the insurance market come into this area more enthusiastically. Clearly, that would be one way that we could solve some of the problems.
The noble Lord makes a good point. I do not know if that will be laid out explicitly. We have talked a little about the manifesto and how it was a movable feast over the course of a weekend. We ended up with a floor and a cap. At the point at which you have a cap, in theory, you have an insurable product. It depends whether it is insured by the private market or the state, but that was clearly at the core of the Dilnot design. There was lots of disagreement about how you could take forward that principle, but I think it useful so that, in keeping with the nature of the market, you have a mixed economy of funding.
We have been talking to local authorities to understand why people may not be accessing DPAs. There are a number of barriers, such as lack of awareness, interest charges and administrative fees. We are considering what actions can be taken locally and nationally to raise awareness and understanding of the scheme. One example of that is that is the wide variation in administrative fees charged by local authorities. Clearly, it is important that those fees are not set at a prohibitive rate, nor that local authorities are or seem to be profiting from the fees. They are meant to be covering costs. However, I think interest rates provide quite a positive picture, because the interest rate is around a third of that offered by the standard equity release scheme on the market. With wider awareness, that would prove more attractive than it has done.
Regarding the eligibility criteria, £100,000 is a magic fee in this social care debate—even more so after the election. That was the point that the noble Baroness, Lady Greengross, made about the reform proposal and widening eligibility. There are two points I would like to make on this. First, the Government’s aim in establishing the scheme was particularly to ensure that people did not have to sell their homes, rather than run down other capital. I know that that is more limited than noble Lords might like, but that was nevertheless the aim of the scheme.
The second point is that, in expanding the criteria, a local authority should in theory be able to recoup its costs, but there may be some costs in taking on a wider group of qualifying people. There is always a balance to be struck, particularly in cash flow terms, between helping a group who are by definition better-off people, and fairness to local taxpayers. That is one issue that needs to be considered.
The noble Baroness, Lady Greengross, asked in particular about the deep dive that happened. She will be disappointed to hear that departmental protocol is that these are for internal use only, so I am afraid I am not in a position to share that information with her. It sounds like she has the detail on what happened anyway, so I am not sure that that would necessarily reveal anything that she does not know.
To conclude, it remains a departmental priority to make the scheme accessible to all those who are eligible and would benefit from it. We will continue to monitor the scheme and, once the data are published, may look at some of the ideas suggested by noble Lords on how to give this scheme more momentum. Clearly, the intention of it is not to be de minimis, but to reach the original target and more people beyond that. We are open to ideas on how that can be achieved.
Finally, any DPA scheme must in the long run fit into the wider context of social care funding and provision. That point has been well made in this debate. As the proposals come out for consultation, considering the interplay of DPAs and the overall funding environment will be critical in whether reforms are successful. I conclude by thanking the noble Lord, Lord Lipsey, again for tabling this debate and other noble Lords for their contributions. I look forward to working with them on getting consensus on real reform in the sector.
Committee adjourned at 5.38 pm.