Elderly Social Care (Insurance) Bill [HL]

Second Reading

Moved by

That the Bill be now read a second time.

My Lords, after 37 years in Parliament, I am grateful to have secured a place in the ballot entitling me to bring in a Private Member’s Bill. This Bill is about social care for the elderly, a subject that has preoccupied me for more than 25 years, since I was Secretary of State for Social Security.

I know from recent debates and committee reports of your Lordships’ House that noble Lords are seized of the crisis in social care provision in this country, which has been growing over decades. Local authority budgets have been squeezed to the bone, demand is rising, as we are living longer, and costs are rising, not least because the national minimum wage raises the pitiful earnings that many dedicated staff in the social care sector have had up to now. Many care homes were teetering on the brink even before the pandemic and are now in an even more precarious situation. Every winter, beds in the NHS are blocked as places cannot be found for patients in the social care sector.

Successive Governments have backed off from tackling the issue. That is because there is a live rail running alongside the basic issue, which has given an electric shock to those who have touched it. That live rail is the understandable and natural concern of home owners and their heirs that the potentially catastrophic cost of social care will consume the value of the home that they hoped to bequeath or inherit.

In 2010, Labour’s plan for a tax to finance social care was labelled a death tax. In 2017, Theresa May lost her majority when Labour retaliated by labelling her plan a dementia tax. In between, the Dilnot plan, legislated for by Cameron, was abandoned as too costly. All the solutions so far suggested have proved either unsaleable or unaffordable. At the last election, Labour promised to set a cap of £100,000 on the maximum cost that anyone would incur while in residential social care. Today, we read in the Daily Telegraph that the Government could, as early as next week, adopt that policy, hoping, no doubt, for bipartisan support. However, it is not Labour’s support that they need but that of home owners and the general public. The problem is that a £100,000 cap would be fine for the owner and the heirs of a £10 million mansion in Mayfair, even if they spent decades needing substantial care for dementia, but the owner of a modest, partly mortgaged home in Middlesbrough will see its value disappear entirely in two or three years. That is not a good proposal to go down well with red wall voters.

On the other hand, raising the value of assets shielded from means testing will still mean many home owners having to sell their homes to pay for longer periods in care. Both those options break the Prime Minister’s promise, repeated in his first speech as Prime Minister,

“to protect you or your parents or grandparents from the fear of having to sell your home to pay for the costs of care”.

My Lords, we must thank the noble Lord for providing the opportunity to debate this crucial issue—one very much of the moment, as evidenced by the front pages of today’s Times and Telegraph. Unfortunately, I do not support the Bill because it misses the point. Put simply, I cannot support a system that depends on housing tenure and the geographical lottery of the housing market. The noble Lord said that everyone would have the option of adopting this plan, but those who do not own their house would not have that option. This Bill is a diversion. Instead, we need a comprehensive national care service, paid for by a fair taxation system. However, the proposal usefully illustrates one fundamental point: the solution cannot be left to the private sector.

I will use my remaining time to put this debate in context. We must keep on reminding people that in his first speech as Prime Minister in July 2019—two years ago—Mr Johnson stood outside No. 10 and said

“we will fix the crisis in social care once and for all with a clear plan we have prepared.”

We are still waiting. This clear plan that has been prepared was not in the Tory election manifesto. Now we are told in the Times:

“Boris Johnson is backing proposals for a new tax to pay for reforms to Britain’s social care system under plans that could be agreed within weeks.”

Note the words “could be agreed”; in other words, they have not yet worked it out. The report goes on to tell us:

“Intensive work is under way … to finalise a deal”,

with Downing Street wanting to make an announcement to coincide with the second anniversary of Johnson’s “clear plan” promise. With key elements of policy clearly yet to be finalised, I confidently predict that, even if an announcement is made, it will be light on details and no more dependable than all the other vague promises made by this lightweight Prime Minister.

My Lords, I have no personal financial interest in this Bill because I do not own any home in England, but I have a very strong interest in the proposal that my noble friend Lord Lilley has made.

I realise that, for many people, the need to leave their home and go into care is a very emotional difficulty. If they come to realise—and they quickly will—that the costs are likely to eliminate the value of their home, that will be an even more severe emotional blow. I do not suggest that these are all the people of the country, but they are people who are entitled to be considered, and that is what the Bill does. It considers these emotional stresses put upon people who very often have very modest homes, but homes which they have come to enjoy for quite a while and to love as an appropriate possession. The difficulty of dealing with that is obvious, but I think that my noble friend Lord Lilley, with his skill and experience, has proposed a workable solution. Of course, it does not solve the whole problem facing the Government in connection with the care of the elderly. In view of my age, I regard myself as somewhat under the shadow of that difficulty. But it is sufficient for me to say that I have the strongest sympathy with the people who find that a difficulty.

In my opinion, my noble friend Lord Lilley has worked out a practical solution, and I believe that it is one which is as good as can be proposed. I do not suggest for a minute that there may not be other proposals that could improve on it but, so far as I am concerned, I have studied carefully the detail of it and have noted, for example, that my noble friend Lord Lilley has proposed to make a provision for changes in the future by government regulation, but he has required that these regulations should be approved by both Houses of Parliament before they come into force. I think it is right to have regard to the future, because things may change in ways that I cannot anticipate at the moment. Many things have happened in the last year or two which I did not anticipate for a minute. I must say that I think this is a good proposal, and I shall certainly support it.

My Lords, I congratulate the noble Lord, Lord Lilley, on bringing forward this Bill and on seeking to address the long-running concern of home owners that care costs could necessitate the sale of their home and deprive their heirs and successors of their inheritance. I declare my interest as a vice-president and past president of the Local Government Association.

I have three points to share with your Lordships. First, drawing on the extensive work of the APPG on Housing and Care for Older People, I would emphasise that the best way to address rising care costs is to prevent or postpone the need for personal care and, in particular, the need to move into residential care. The APPG has spelt out the significance of ensuring that older people have a manageable, accessible home through adaptions to their existing accommodation or through rightsizing to somewhere more suitable. So, my first point is that the most positive way of tackling care costs comes from investing in better housing for later life.

Secondly, if a care insurance scheme is to be considered, this Bill’s version seems to have some flaws. The voluntary nature of this scheme may mean a low take-up for multiple reasons, and it may be unworkable because of adverse selection—take-up mostly by those who feel fairly sure that they are going to need personal care, perhaps because they have underlying health problems, are overweight, are smokers, have early signs of dementia and so on. However, insurance could be a practical solution to meeting not the costs of care but the “hotel” costs, which, at around £25,000 per annum, are roughly half the total charges for living in a residential care home. But these costs are outside the scope of the scheme proposed by the noble Lord, Lord Lilley.

Thirdly, in supporting the excellent report from your Lordships’ Economic Affairs Committee, chaired by the noble Lord, Lord Forsyth, I would both affirm the urgency of an immediate injection of additional funding for local authority adult care services and underline the core recommendation for free personal care in the future in place of the current unfair, complex, underresourced arrangements. To illustrate just how long these same conclusions have had widespread support, I must quote from a Joseph Rowntree Foundation inquiry—incidentally with Sir Andrew Dilnot among its members—which reported exactly 25 years ago. This inquiry concluded that artificial

My Lords, I too am grateful to the noble Lord, Lord Lilley, for creating this opportunity for such an important debate this morning, but I am afraid that I cannot recommend a rather convoluted homemade attempt at a sticking plaster for the gaping wound that is our national care crisis.

The regressive conceptual contortions that some will go to to avoid the logic of paying for essential public goods by taxing the wealthiest corporations and individuals in our society are almost as ingenious as attempts to privatise such public goods—whether our health data or the desire to care for our vulnerable people—or indeed the highly successful attempts of the wealthiest 1% to avoid paying their fair share of tax.

Our National Health Service is probably the greatest communitarian experiment in world history, and it is so easy to be truly patriotic about it. Given the working people from all over the world who have contributed to it, it encapsulates a positive patriotism that is not remotely xenophobic, yet years of underfunding and its current limits have been cruelly exposed in recent times. Last year, many of our elderly were tipped out of hospitals, untested, into private care homes with inadequate PPE provision, social distancing and testing arrangements, constituting one of the biggest scandals of the Government’s pandemic management—about which the future inquiry will no doubt have much to say.

But this fault-line between health and social care is a more permanent design flaw in a model that cares for the terminal cancer patient at public expense but puts caps, charges and all sorts of constraints on our provision for the patient of identical age and means who is suffering instead from dementia. Such anomalies are only increased with the ageing profile of our population. It is simply unacceptable to leave our older people, or indeed many much younger vulnerable people, isolated, destitute or at the mercy of profiteers who pay too many carers minimum wage on zero-hours contracts.

My Lords, I am grateful to my noble friend Lord Lilley for introducing this Bill, and he is absolutely right that social care is in crisis and that successive Governments have ducked the difficult decisions. But the heart of this crisis, as others have said, is not the worries about selling homes. The origins of this issue are, first, the artificial distinction between what counts as NHS care and what is called social care, and, secondly, the demographics of our ageing population, which we have not prepared for. This is not really like home or motor insurance, so I find it difficult to relate to the figures that my noble friend used to illustrate his scheme.

The proportion of people needing care for their everyday living is potentially one in two of every couple, and that makes the cost of insurance so prohibitive. Private insurance cannot be an option when you have a 50% or even a 30% probability of needing to call on the insurance, and possibly needing to spend tens of thousands of pounds for insurance against something that you may or may not experience.

My noble friend is right that we need social care insurance and that it needs to be run by the state. However, we already have social care insurance, only we do not call it that. We are artificially assessing illnesses such as cancer as being worthy of NHS free care, while others, such as dementia, get no payment and are excluded. But the National Health Service is about care. That is why what we really need is to incorporate social care into the NHS, providing free care for all citizens who are not well enough to live without assistance, funded by a national social care insurance premium, which would take the NHS and social care together outside the so-called tax system, but with its own national contribution from everybody’s income, so that everybody contributes.

I believe that if Beveridge were designing our welfare state now, he would include what we currently call elderly care needs in both the state pension system, where no provision is made for the cost of needing support in later life, and in the NHS. Life expectancy has increased; that is great news. Medical advances help keep people alive longer; that is great news. But at the moment, our system does not adequately support the rising numbers of elderly people who need care and are being refused.

I welcome the opportunity provided by this Bill to discuss funding adult social care, but I cannot support the Bill, which offers only a partial, voluntary solution to this challenge and offers nothing to renters. Instead we must develop a sustainable system for funding social care, one that commands enduring support from the whole of society and which gives young people confidence that it will be there to support them in future.

The Intergenerational Fairness Forum, which I chair, held a year-long inquiry to consider a sustainable means of funding social care which meets the test of intergenerational fairness: one in which all current generations share the cost burden, with the heaviest burden falling on those best placed to contribute, so that the costs are not imposed unduly on future generations.

We recommended that a state-hypothecated, mandatory system of social care insurance should be established, overseen by a social care contributions agency. Under our system, the Government would be the insurer of last resort, protecting people against the risk of catastrophic care costs. This will be affordable because risks will be pooled at a population level. We proposed that mandatory social care insurance contributions should be set at the rate of 1%, to be deducted alongside income tax and NICs from the incomes of all working adults from the age of 40 until they stop working. This could rise to 2% for those aged 50 and over if additional resources were required to meet rising care costs. As contributions would be set at a percentage of income, it would be a progressive system.

Sadly, it will take years to accumulate enough resources through social care insurance contributions to pay for current care costs, so, at least for a transitional period, additional revenue-raising policies will be necessary to support public expenditure on adult social care. Our forum recommended a number of additional revenue-saving and revenue-raising measures, with the revenues raised to be ring-fenced for social care.

My Lords, with the greatest respect to the noble Lord, Lord Lilley, this Bill fails to address the crisis properly. Cuts of nearly 40% in government support have driven local authorities to cut the cost of social care, although demand for it has, in contrast, increased. Demand now runs at 1.9 million requests per year, more than 5,000 per day. Cost-reduction has been achieved by outsourcing social care to private companies. Whereas 90% of social care was provided in-house 25 years ago, only 10% is today.

That is because outsourcing social care is cheaper. How is that achieved? Simple: the earnings of the workers are slashed. Twenty-five per cent of our 1.49 million care workers are on zero-hours contracts. Many are falsely declared to be self-employed, and some forced to work under personal service companies with no employment rights. The career progression and pensions that care workers had when in local authority employ have evaporated. The democratic input they had into the conditions of their working life is no more. Then, their unions bargained collectively to set terms and conditions across the sector. Employers knew that they would not be undercut by competitors. Workers knew they would enjoy NJC conditions.

Their voice is now silenced. Private employers do not bargain collectively. They compete for tenders on the basis of the lowest labour costs they think they can get away with. Terms are set unilaterally on a “take it or leave it” basis. That is why there is a 10% vacancy rate and a third of care workers leave the sector within 12 months of starting. That is not merely damaging for the standard of life and dignity of care workers; it is catastrophic for those receiving care. They never know who is going to attend them from one day to the next. Caring relationships become impossible.

Neither this Bill nor the Government will give us the national care service the country needs, but there is one step we could take which would improve the lot of carers and the cared-for: the restoration of collective bargaining across the sector. Professor Lydia Hayes wrote a book a few years ago called 8 Good Reasons Why Adult Social Care Needs Sectoral Collective Bargaining. I commend it to the House.