My Lords, this has been a great test of my filing system, which fortunately has stood up to it on this occasion. Each of these three amendments in my name is entire of itself and could be passed on its own, but they are designed as a package. Taking them individually to start with, they would do three things: first, to make the tariff for the means test proposed by the Government less draconian; secondly, to increase the allowance given to people helped through the means test to pay for their personal expenses; and thirdly, by abolishing overtime of current nursing care allowance to pay for both the above and leave some money over for better care services.
Let me explain this thinking. I am a supporter of Dilnot—at the margin, I disagree with my noble friend Lord Campbell-Savours on this. I do not regard Dilnot as perfect, but I regard the distribution of ill effect, which I quite agree with him exists, as a small price to pay for the advantages of Dilnot, namely the danger that people quite at random are chosen to be wiped out financially. So I support Dilnot’s scheme. However, I am, as my noble friend is, aware of its defects. The plain fact—Dilnot is perfectly clear about this—is that it helps only one lot of people and not another lot of people. The Minister quoted figures about who benefits from the system as a whole before the dinner break, but the reality is that, under Dilnot, the poorest gain nothing from a cap; they are paid for by means-tested benefits anyway. Nearly all the benefits go to better-off people. That is a serious defect and it is very expensive—not as expensive with the cap at £72,000 as it would have been under Dilnot’s original proposals, but very expensive. This means that it will compete in practice with another set of problems, namely the sheer lack of resources going into long-term care, a short-fall that is getting worse as the number of older people rises and which will go on getting worse as the demographics described in the House’s report on the ageing population continue. So we have a serious problem.
The package is not designed to take apart the fundamental architecture of Dilnot. It does not take from anyone a single penny that they would gain under Dilnot. It is designed to spread the benefits
more widely, all without increasing public spending by a single penny. Is that magic? Your Lordships will be the judge of that.
That is the easy bit, I am afraid, and I apologise to the House for any lapses in techno-speak in the words that follow. The first amendment refers to the tariff. I will explain briefly what the tariff is, because it is not altogether familiar. Suppose that you are above the minimum threshold for the tariff, which is around £14,000 at the moment, and you have some assets. For every £250 in assets, you lose £1 a week in benefit, about £50 a year—the equivalent of an assumed 20% return on your capital. That continues under the present system until you reach the £23,250 cap for the means test, but will continue under the Government’s proposals in 2016 until £118,000 is reached, the top level of the cap. You are fined £1 a week for every £250 that you have in assets. If you start applying that to the government system you discover something that has been virtually unremarked upon in the Dilnot proposals. Although the Government are, in theory, raising the upper limit to £118,000, the fact is that someone with £118,000 in assets will gain virtually nothing under the changed means test. That is for two reasons.
First, once you start to claim local authority help with your care, you stop receiving attendance allowance four weeks later. Indeed, according to Philip Spiers of the old persons’ charity, FirstStop, many people with £100,000 or more in assets, if they were properly advised, would be worse off, not better off, if they claimed local authority support, because they would lose £79.15 a week in the higher rate of attendance allowance, or around £87 when inflated to 2016-17 prices. In other words, the apparent cap for means testing under the Dilnot proposals is actually much lower because you do not need much in assets.
The second thing is that the tariff is ripping into your entitlement. Suppose that you are in a home where the fees are £400 a week—if you live up north, and that is what the local authority allows. Say, for example, you have £100,000 in assets above the lower threshold. It is not nothing, but it is not a large amount. On £100,000, the tariff will amount to virtually all the benefits you get under the means test. There you are, getting quite excited because the Government have improved the means test to help you, but you suddenly find that they have not. You will notice that this feature of the Dilnot proposals was not emphasised by either Andrew Dilnot or government proposals. That is a cruel system to confiscate the wealth of people who have only a little bit of it. If the Bill goes through with this feature intact, I predict that we are laying the basis for disappointment and even anger among a generation of older people and their families—people of modest means—who deserve something better.
My amendment makes the tariff less harsh. Instead of losing £1 for every £250 in assets, you lose £1 for every £500. According to estimates by Ruth Hancock of the University of East Anglia and her colleagues at the PSSRU, the substitution of a £500 tariff for the current £250 would cost around £150 million in public expenditure. That is element one of the package.
I am sorry, but this will take a while because I have three amendments wrapped together. The second component of the amendments is the increase in the personal requirements allowance. It deals with a nasty feature of a very nasty means test. I think that Dilnot himself said that it was the nastiest means test in Britain. If you are on the means test for your care home fees, you are left with just £23.90 a week for all your personal needs. Perhaps you want to give your child or grandchild a birthday present, buy cosmetics or some little comforts, a few sweeties, or even pay for taxis to the doctor when you cannot get about. All that comes out of £23.90 a week. That is not a rich reward for the poorest people in our society to be left with at the end, many of whom have worked long and hard. My amendment raises that to £32.75. That figure, I hasten to add, is completely arbitrary. It is because it costs the same—£150 million—as the change in the tariff. It helps the poorest among us. Thus I have one proposal that helps people of modest means, and one proposal that helps the poorest people. All it means is that they get a smallish share of the goodies handed out by Dilnot to the better off.
9 pm
However I am certainly not proposing any increases in public expenditure—not in the present climate. Neither do I want to erode the benefits given by Dilnot. The case for Dilnot seems to me, on balance, to be made. I propose instead the euthanasia of the nursing care allowance.
What is the nursing care allowance? It is paid to people in care homes at one of two rates, irrespective of their means, to contribute towards the provision of services which can come only from a registered nurse. According to the Minister’s answer to a recent Parliamentary Question, nursing care allowance costs some £540 million now, and it will rise again by 2016. The saving from abolishing it would be slightly less, since there would be some additional means-tested spending—not much, according to PSSRU.
Why are we handing out £540 million irrespective of whether people need it? It is not going to people who have built up an awful lot of expenditure through years of care, such as those Dilnot helps; it is paid to everybody on above average means but to nobody on below average means. It seems a crazy use of public money. Whose idea was that? I am afraid that the answer, in part, is mine, because it was one of the recommendations of the minority report. Although I defend most of the minority report fairly fervently, on this one we were wrong. What my noble friend Lord Joffe and I had in mind when we recommended it was this: nursing care was free when provided in the health system, and so it should be free in an old persons’ home too. We wanted comparable services paid for in social care.
However this recommendation ran counter to the main thrust of the minority report, which was to concentrate services for the less well off. A corollary of that was that people would have to pay more for their own care when they could afford it. It was a universal benefit, and since the poor got their care free, in practice it has benefited only the better off. Removing the allowance would cost those in the lowest two
income quintiles £7 a week, but those in the highest £21 a week, according to Professor Hancock. In other words, this is a strongly progressive proposal.
The cost of the allowance has escalated since we reported. Indeed, I think that had we known what the figures were going to be, we would not have recommended it. We thought that it would cost £110 million, rising to £280 million in 2021. That was the costing in the minority report on the advice of the PSSRU. Now we estimate it north of £500 million today, and it is rising fast. However, it does not buy us much. I had virtually forgotten that we had recommended it until I saw a credit for the amount on my mum’s care home bill. I have tried this on quite a lot of people, and nobody knows they are getting it.
I would not recommend abolishing this allowance immediately, and not just because of my mum—that would be too much. It is not a good idea to take away benefit from people who are already getting it. They make far more noise than people who gain from the benefits they receive as a result. The people who are having them taken away feel their pockets have been picked, and the people who are receiving the benefit think that they are not getting anymore than they were due anyway. However we do not need to abolish it. We simply bar, as my amendment would, new claims from April 2016. Since most recipients of the benefit are old, and not in a good state, their life expectancy is not good. I hope, of course, my wonderful mother is an exception. Therefore, in a few years’ time—probably three or four years—the total cost of the benefit will be saved. Through that, we will provide enough to pay for the less severe tariff and enough to pay for increased personal requirements allowances, while leaving more than £200 million over to fill part of the black hole in the provision of services to older people. What is not to like about that?