At last, the big event of the day —the one you have all been waiting for. First, I declare an interest as an unremunerated president of SOLLA, the Society of Later Life Advisers, which is the body that accredits financial advisers who work with the elderly.
As there could be some misunderstanding, perhaps I may explain that there will be two separate debates and I will be making two separate speeches. This will not take any more of the House’s time, but I think it will make it a much less confusing debate than it otherwise would have been. I will speak, other noble Lords will speak, my noble friend Lord Hunt will speak, the Minister will speak, and then we will decide the first Motion; and then we will do the second one.
I turn to the first Motion, which is the fatal resolution. In a world of logical governance it would be taken for granted that the whole post-Dilnot package should be implemented in one—the new deferred payment scheme covered by these regulations together with other elements including the cap on how much people have to spend on care. The Government, however, have proposed that the deferred payment scheme should take effect in April 2015 and the cap and the rest of the measures in April 2016. By this new system, they have set a course for potential chaos. There will be chaos in local councils. The LGA says, quietly, that,
“the timetable is challenging for councils”.
A recent report by the National Audit Office says:
“It may not be feasible for local authorities to implement all the proposed changes to the indicated timetable”.
There will also be chaos for financial advisers whom, through SOLLA, I represent. There will be one development this coming April; the next the following year. How can they give coherent advice to older people on how to proceed in the gap year? As SOLLA has written to the Minister:
“This does seem to add a level of unnecessary complexity to an already difficult system”.
If advisers are struggling to understand the relationship between the two sets of proposals, how are older people themselves or their families supposed to understand? How are they to make the choices before them? It is batty—I can use no less a word. That is the unanimous view of all the experts with whom I have discussed the matter. My noble friend Lord Warner, who is a member of the Dilnot commission, has given me authority to say that, in the commission’s view, there should be one proposed date, not two.
Why? The answer is 7,600. This is the Government’s estimate of the number of extra people who would benefit in 2015-16 from the scheme taking effect in April 2015, rather than waiting another year for the rest of the package. The detailed calculations are set out in the impact assessment, pages 107 to 147. As there are 40 pages, your Lordships will be glad to learn that I do not intend to read them all out now. Broadly, this is the logic. There are 55,000 new self-funders going into care each year. Of these 25,000 are eligible for the new scheme. We will debate how 55,000 go down to 25,000 in my second Motion. If 40% of these take advantage of the scheme, that will be roughly 11,500 claimants in all. Take off the 3,900 who would get it under the existing, defective deferred payments scheme and the Government end up with an additional 7,600—the answer to the question, in their view—as a result of introducing the scheme in 2015 and not in 2016. That is a significant number.
I know it is difficult to take all these numbers in swiftly but I want to question whether this 7,600 estimate is anywhere near correct. The first law of statisticians—and I speak as chair of the All-Party Parliamentary Group on Statistics—is that if a number looks wrong, it probably is wrong. Having been involved in this subject for 17 years, I think it is, since the noble Lord, Lord Joffe, and I were on the royal commission, I have to say this number feels completely wrong to me. No one can take advantage of the scheme unless they know about it. Do you find people rushing up to you in the street saying: “Oh, it’s great. In April I’ll be able to take out a deferred payments scheme”? No, nobody will start to know about it unless the Government have planned some information measures.
Secondly, to take out a deferred loan to pay for your care in this scheme is exceptionally unattractive to most people. It means that their wealth is tied up in a home—probably an empty home, with no income earned on it. Meanwhile, they are paying interest on the loan that the council is making to them. Interest is rolling up at compound rates. So the circumstances in which it is possible to conceive of an older person wanting to do this are quite rare. I sympathise with the Government in making these estimates. It is not surprising that they completely changed the estimates from the first impact assessment to the second one only months later, because it is very difficult to get an exact number. However, I think that the 7,600 is an exaggeration in itself.
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There is a further point. There is a schoolboy howler in this. Of course there will be additional claimants in 2015-16 if the scheme is introduced in April 2015; there is no question about that. What will the people who would have qualified if it came in in 2015 do if it does not come in until 2016? It is pretty obvious what they will do—they will wait. Suppose you are retiring in March 2016 and would like to do a deferred payment. If the scheme is not coming in until April, you may borrow a bit of money from your family or ask the home to let you pay it next month. You wait the month and then claim the scheme the following year.
So it is perfectly true that, as a result of this, the figures go up by a certain amount—though not by 7,600—in 2015-16. However, that is then compensated for by fewer claims than there otherwise would be in 2016-17. It is just a transfer of people who are claiming—not an extra number, as the Government have claimed.
The Government recognise the logic of this. I refer noble Lords to paragraph 8.33 of the impact assessment, which allows for extra claims from those people already in homes who will qualify under the new scheme. I should be surprised if the early introduction of the scheme made a big difference to the total number of claimants and astonished if it came near to the Government’s estimate of 7,600 extra, at the cost of causing disarray in local authorities, distress to old people and despair among the best financial advisers. So why are they doing it? Why are they doing something so palpably absurd? The noble Baroness is not batty—of course she is not. The Care Minister Norman Lamb is not batty; I have a high admiration of him. I do not personally know the Secretary of State, Jeremy Hunt. I have not taken advice on his mental state, but I do not suppose that he is batty either.
I am drawn reluctantly to this conclusion. This is nothing to do with good orderly government, nor with helping elderly people. It is about the imminence of the general election and the Government wanting to say, truthfully or otherwise, that they have done something to stop people having to sell their homes for care. It is all about electoral votes and the group that the Government think might be attracted to UKIP when the election comes. I have been around democratic politics long enough to know that these things happen, but it would be sad if they happened without your Lordships’ House having had a chance to express its distress and dismay at what the Government have decided to do.