My Lords, I am afraid that I cannot be so succinct this time. I might be acquitted of exaggeration if I say that the House's discovery on Report of the Government's proposed £23,250 limit on the non-housing assets people could have to qualify for the deferred payment scheme has caused something of a furore. I am not sure that Norman Lamb, the care Minister—a Minister for whom I genuinely have huge respect—will think that it was his finest hour when he described people with £23,250 in non-housing assets as quite wealthy. They may not be poor, but they are not likely candidates for the Chipping Campden set either.
My amendment would prevent the Government imposing such a limit. I have moved it in this form because we want to have a free-ranging debate this afternoon. I do not say that the matter will necessarily be resolved in this House this afternoon, and I make it clear that I am not an absolutist in this matter. The £23,250 figure is out for consultation—and following the furore a lot of people out there now know that it is out for consultation, which they did not know when it appeared in paragraph 150 of the consultation document. If at the end of that consultation, as I hope and expect, the Government decide to set a much higher figure, I shall reckon that a result.
Let us remember who this scheme is intended to help. It is not aimed at poor people who own their own homes, because they would not be sensible to avail themselves of its provisions. If they kept their homes under the scheme, they would have virtually no money in the bank and could not afford the little things that make life in a care home tolerable: presents for the grandchildren, a newspaper, sweets. At current interest rates, someone with £23,250 would have no more than £700 a year in income from that capital sum. They might have other bits of income but they are not going to be living a life of luxury in a care home off an income of £700 a year.
In arguing for the cap, the Government have tried to argue that it will not exclude most people. They claimed—or at least newspapers have reported that
they claimed—that 35,000 of the 55,000 homeowners who enter care each year have assets of less than £23,250. These figures are contestable, as all asset figures are. A very good analysis in the Sunday Telegraph showed that the average 75 year-old had around £100,000 in other assets—a much higher figure than the Government were putting forward. However, that is not the main point I wish to make about the claim that most people have less than £23,250. My point, which I have been raising throughout, is not that the limit would exclude most people but that it would exclude most of the people who would sensibly take advantage of the Government’s proposal. That is why I have said, and maintain, that a £23,250 cap would kill the scheme stone dead and that if that figure remains unchanged, there will be practically no takers for it.
As I have already said, it makes no sense for the poor to do it. If they went down this line, they would be left with so little cash that they would not be able to afford the luxuries of life. But let us be equally clear that it would not make any sense for anybody at the top end of the scale to do it—the Chipping Campdens with millions in the bank who Norman Lamb rightly said would be excluded. If they go into a care home they do not have to sell their home anyway—they can pay the fees out of their investment income or by selling a few shares. They could follow the famous advice that Nicholas Ridley, as Environment Secretary, gave to people who were having difficulty paying the poll tax, to sell a few pictures. A cap excluding them will do no harm since they were not going to take advantage of the scheme anyway.
I can quite see why the Government might wish to avoid promoting a scheme that could easily be portrayed—wrongly, as it happens—as giving a handout to the rich. However, the scheme as devised by Dilnot, as accepted by the Government and as amended, sadly, by the consultative document, is not aimed at the poor or at the rich. It is aimed to help people on middle incomes who have worked all their lives and saved a modest sum. That is why the Daily Mail and the Telegraph—which have appointed themselves, fairly enough, as the spokesmen for such people—have mounted their admirable campaigns against the Government’s proposed cap.
Therefore, the question is, “What cap will ensure that these people benefit?”. The answer is not—I repeat, not—£23,250. When we look for another figure, there is a logic that points us in the right direction. Why £23,250? It is an odd little figure and not something which you would dream up overnight. It happens to be the present upper limit for getting help under the means test. If you have more than £23,250 in assets, you get no help under the means test; if you have less, you get some help.
However—this is quite curious, but I can only explain the facts—the £23,250 cap is going to increase dramatically. Under the Dilnot recommendations, as embraced by the Government, the upper limit will increase to £118,000 in 2016, when the new cap on care costs comes into force. Many more people will get help with their care costs, and there will not be the current precipice whereby people who have a small amount of money—although Norman Lamb describes
them as being quite rich—will be disqualified. Instead there will be a much longer plateau stage, when people lose a little bit of money if they have more money in the bank.
If the limit is to be £118,000, it seems that the logical thing would be to say, “Let’s forget £23,250. If the new means-test limit will be £118,000, let that £118,000 also be the limit for the deferred payment scheme”. At a stroke, that would deal with the problem of middle-income people who have worked hard all their lives, while excluding the rich people who do not need help. Job done. That may not happen in this House this afternoon, but I am sure that it will be done when the Bill reaches another place.
This is all quite new stuff, which was only discovered in the past couple of weeks, and I want to make two points in conclusion. Some people worry that if we do as I suggest the scheme would impose a high cost on the state. They need not worry. Loans will be repaid in full with interest when the old person dies, and the average time in a care home is about two and a half years. So the Government’s cash flow will hardly be adversely affected for long, and the scheme certainly will not be loss-making.
The second reason why the scheme will not cost much is that not very many people would be well advised to take advantage of it. For most people it would mean either leaving their former home empty—with the roof rotting and the price that it will eventually fetch for their family, out of which the debt will have to be repaid, declining—or letting it out, which would not be easy for somebody in a care home to manage. For some people—those, for example, who have always had the dream of their children living in their house—it will be a huge comfort to see that dream realised when they go into a care home. I speak with some feeling, because my own mother, who is in a care home, has been able to give her home to her other son and that gives her, as well as him, huge pleasure.
This scheme would prevent forced sales at bargain prices when the market is particularly depressed. It would also give the old person, who might initially have said, “Well, maybe I might return home one day”, time to come to terms with the fact that that may not be so. That can take a bit of time—and some people, miraculously, can return home. The scheme would protect some people, but there will not be very many of them. I would expect the take-up to be in the low thousands, if that, and any cost to be exiguous.
Finally, some noble Lords have come up to me in the Lobby and said, “But surely it’s right that old people should use some of the assets they have accumulated in their lives to pay for their care”. This thought is reflected in the reported remarks of the noble Lord, Lord O’Donnell, about the benefits that we give to old people. I empathise strongly with that school of thought. Indeed, it is what has, entirely unexpectedly, led me to spend the past 15 years trying to stop the feeble-minded proposal of the majority on the Royal Commission on Long Term Care for the Elderly that the state should pay for free care for everybody, and then—with my noble friend Lord Warner—tackling the Government and succeeding in stopping the insane proposal of the Brown Government
that care at home should be free for all when care in homes should be paid for. I remember the stout support that I had from the Minister for that successful campaign.
I want people to contribute to the cost of their care, but I believe profoundly that a deferred payment scheme will make that easier, for it will remove an injustice from the present system and therefore pave the way to a new public-private partnership in paying for care—a stable basis on which people can plan for their old age, freed at last from fear.
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