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Personal Care at Home Bill

I am sorry, but the hon. Gentleman completely misunderstands what I am saying. I am not disputing the benefits of extra care housing. What I am disputing is the fact that, in their contrivance that free personal care will be available to people with critical care needs who live in extra care housing, the Government, whether intentionally or not, are creating a potential loophole for people who are currently in long-term residential care, who would not be regarded as being in extra care housing. They will inevitably restructure their arrangements at the point at which they enter care in order to make themselves eligible for free personal care, by distinguishing the accommodation element from the care element. The Bill does nothing to prevent that from happening. That seems to be an obvious flaw in the legislation. The Bill is not well thought through, but is it well costed? Let us have a look at its impact assessment, which has one or two obvious flaws. On page 2, it manages to state that the average annual costs and benefits are exactly the same—£670 million—even though the total benefits are calculated as being £454 million more. Given that the Government are arguing—on the first page of the impact assessment—that the total benefits are greater than the costs, one would have thought that the average annual benefit would therefore be greater than the cost. That might be a simple error in how the impact assessment was transcribed, but as the hon. Member for Corby (Phil Hope), the care services Minister, signed it and the error was on page 2 of what he signed, he might also be able to explain why that should be the case. It is also estimated in the impact assessment—based on what evidence we do not know—that 10 per cent. of the flow into residential care will switch to home care. On page 15 of the impact assessment, the net flow into residential care is stated as being 178,000 older people a year, 10 per cent. of which would be 17,800. However, in the table calculating the costs by reference to the number of people who would access free personal care, the figure referred to by the Government is not 17,800 a year, but just 2,384. Such a large difference in the number of claimants would mean an extra £77 million a year to provide free personal care that has not been taken into account. In calculating the benefits of the policy in the impact assessment, the Government admit that most of the cost is a straight transfer payment from taxpayers for the benefit of those who have previously paid for care themselves. The calculation of the benefit of that is based on two elements. The first is the equity assumed to be gained by transferring cost from the general population to older people who fall into, on average, lower segments of income distribution in the population; therefore, there is a distributional equity gain over the population as a whole. Unfortunately, the calculations in the impact assessment are mathematically incorrect. They also use the upper weightings of the Treasury Green Book, rather than the mid-point averages. If those two things were corrected—the mathematics and the use of the mid-point averages—the overall benefit of that element would be reduced to zero. The second element is the assumption that people benefit because they would pay extra for certainty, in the same way that they pay extra for the certainty reflected in an insurance premium. In the impact assessment, the Government use US health insurance as a proxy for UK personal care insurance. They therefore assert that the medical loss ratio on health insurance would apply equally in this country to personal care insurance. Both points are wrong. There is no justification for making the assumption that health insurance is treated by people in the same way as personal care insurance. We know that that is so here, because we do not have a market for social care insurance; as things stand, people are not willing to pay for that certainty, whereas large numbers of people are willing to pay a premium for medical insurance in circumstances where, frankly, they often do not need to. The difference between health insurance and personal care insurance is perfectly obvious, but in any case, the Government assume in their Green Paper that only 20 per cent. of people would pay voluntarily for care insurance. If we simply reduced the benefit to 20 per cent.—at the moment, the Government have assumed that everybody getting personal care would have valued it as if they had been willing to pay for personal care insurance—the overall benefit in the calculation would be reduced from £365 million to £51 million. The overall effect of reducing those benefits—the benefits that justified the cost-benefit analysis in the impact assessment—is that the total costs exceed the benefits. In addition, when the £402 million opportunity cost of raising the taxation required to fund the measure is taken into account, as it should be, the policy has a significant cost in excess of the benefit. Of course, the care services Minister was no doubt untroubled by any of those thoughts when he signed the impact assessment on 22 November. I am sure, therefore, that he will wish to disclose in full to the House his scrutiny of the impact assessment in responding to this debate. If he does not do so, he will doubtless want to do so in response to the freedom of information request I made today, asking him what questions he asked on the impact assessment before he signed it. This is a short Bill, but it requires amendment to become much more flexible if it is to help in the longer-term process of delivering social care reform. It needs to accommodate insurance-based solutions. Amendments are also required to make much clearer the range of preventive measures and solutions that can be provided by local authorities. As I have said, the Bill also seems to have a serious potential flaw, in that it would distort the care market. It therefore also needs to show flexibility regarding domiciliary care and long-term residential care. Members of the Labour party in another place have been pretty critical of the Bill. Lord Lipsey said:""There was this Green Paper process going on, and then came along what somebody somewhere dubbed the Exocet:"—" I am not sure who dubbed it the Exocet; perhaps he did—""the Prime Minister's conference speech in which he proposed free personal care for all at home…the suspicion is born that it owed less to a careful policy consideration and more to the natural desire of all politicians to have a nice announcement to put in their conference speech."—[Official Report, House of Lords, 26 November 2009; Vol. 715, c. 546.]" In the same debate, Lord Warner said:""I do not see it as likely to be a particularly useful stepping stone to the wider reforms that the Government were…engaged on. It is not thought through and, to many people, it looks like a political gimmick."—[Official Report, House of Lords, 26 November 2009; Vol. 715, c. 541.]" The Government could of course close their ears to criticism now and use their majority to push the Bill through the House of Commons, but it would then get bogged down in the House of Lords. Alternatively, they could make time available to work with us in this place to try to make the Bill a genuine bridge towards the reform of long-term care and support, to make it enabling rather than prescriptive on the structure of care and funding, and to allow it to promote a portable assessment of need and financial support, with a continuing central role for local authorities in commissioning and funding social care services in their areas. It is clear that local authorities and the NHS must be partners in this, and that they must enable individuals to exercise greater control. The last thing we need is what the Health Service Journal described last week as a takeover grab by the NHS for adult social care, or for primary care trusts to become responsible for all the commissioning activity and all the budgets. The Bill needs amendment and further consideration in this place. We will not divide the House on its principle, but it must be made flexible. That means it should be given time in Committee and on Report in this House not only to investigate what it actually means—the need for that is becoming more evident as we ask questions—but to amend it. The programme motion seems offensive in terms of parliamentary scrutiny. The Government seem to be making the assumption that, because the Prime Minister stood up at the Labour party conference and announced something, it should be passed through this House without scrutiny or question. The Prime Minister does not control the other place, but it is an abuse of this House for the Government to behave in that way. The Bill is required to be considered in Committee before its Report stage, and it needs to be reported to the House in the normal way, with an opportunity for further amendment and debate after adequate further reflection. So, although we shall not divide the House on the principle of the Bill, we shall divide on the programme motion later this evening.