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Mr. Burns: Has my hon. Friend considered the possible financial implications for local authority providers of residential care? There is much evidence that local authorities that still have residential homes do not receive in their Government grant the financial resources that will be necessary to upgrade the quality and structure of their premises to meet any minimum standards that the Secretary of State may set under the Bill.

Mr. Hammond: My hon. Friend is absolutely right to point out the difficulty in which local authorities find themselves. Local authority accommodation is some of the least compliant of any accommodation, and the Government's recognition of that is the main factor behind their intention to bring it into the regulated system. They want to create a level playing field and to ensure that the quality of that accommodation is improved. I say to my hon. Friend, however, that local authorities' ability to improve their accommodation, particularly through capital works, will depend ultimately on the Government making funding available or authorising local authorities to finance the necessary works in unconventional ways.

Many private care home operators, particularly the smaller players in the market, do not have the luxury of being able to anticipate capital grants from central

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Government. As I shall show in a moment, they have found that the capital markets are closed to them because of the uncertainty created about the potential standards for nursing and care homes.

Mr. Ian Bruce: I do not know whether, in Committee, my hon. Friend received any assurances from the Minister that the Government would ensure that those who provide standards higher than the minimum--which, in looking after people, would be a natural way to get business--would not be financially penalised. It should not be possible for someone to say to them, "Although you are giving value for money in your provision, the minimum standards mean that you can provide the services for less," because that would force providers down to the minimum standard.

Mr. Hammond: My hon. Friend has made an important point. One introduces minimum standards with the best of intentions, but if the contracting price is set at the minimum standard level, one compels anyone who wants to participate in the market to reduce their standards to the minimum. As I said in Committee, I fear that that is inevitable unless the Government introduce a method to incentivise the provision of care over and above the minimum standards. I shall not digress further because that is another debate.

New clause 4 would require the Secretary of State not only to undertake the usual consultations, but to use his powers to require the commission to evaluate the likely impact on aggregate supply and cost. That is to ensure that decisions are properly informed and that the full impact of proposed national minimum standards is properly taken into account. The new clause provides for that information to be made available to Parliament. That would mean that a quasi-independent body would be required to review the cost and supply implications of any proposed standards or changes to standards. It would not be right to characterise the commission as a fully independent body because it is required to act on directions in writing from the Secretary of State. The new clause would therefore introduce objectivity into the debate about new or changed standards.

7.15 pm

I shall contrast that with what the Government have achieved with their draft standards for residential care homes. As many hon. Members will know, the Government commissioned a report, which they have put out for consultation. I believe that it contains some 280 recommendations, some of which are not controversial and will not have significant cost implications. Others, however, are highly controversial, and many of my hon. Friends will know from their postbags that the standards relating to staffing ratios and room sizes, in particular, have alarmed providers.

There is no doubt that the standards set in the draft document--10 sq m for rooms in existing accommodation and rooms of 12 sq m for wheelchair users and in newly built accommodation--would drive some providers out of business. I refer to particular individual providers whose accommodation is of a certain type and, perhaps, incapable of being easily converted. Other standards

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would have a more general impact across all providers in the sector; for example, recommendations for staffing ratios would have the straightforward effect of increasing costs for providers of all sizes.

Mr. Bercow: My hon. Friend's grasp of the detail is positively Powellite, and I want to probe him on subsections (5) and (6) of the new clause, which properly require that a draft of the proposed national minimum standards should be subject to approval through a resolution of each House of Parliament. My hon. Friend will understand that I am troubled because it is not entirely clear from either subsection that the resolution of approval will require a debate.

Mr. Hammond: My hon. Friend raises an important point. Subsection (6) says that the national minimum standards will not have effect until they are approved by a resolution of each House of Parliament. I understand that that is what we know as the affirmative procedure.

Mrs. Lait: On a point of information, my hon. Friend has mentioned smaller homes, but what regime will cover three-bed homes?

Mr. Hammond: All homes will come under a standard regime. As my hon. Friend implies, some of the proposals in the draft minimum standards document will be more onerous for small providers than for large providers. If, for example, there were a requirement to have a member of staff in a management position who was supernumerary to the established staffing ratio, that would clearly be a more damaging blow to a very small home than to a large home provided by a large corporate provider.

I shall give the House some measure of the impact that "Fit for the Future?" would have on provision in this country if it were implemented in full. I do not want to mislead the House: the Minister has made it clear that the document will not be implemented in full. On this issue, he can be characterised as a man on a bicycle pedalling very fast backwards, but unfortunately we do not know where he will have got to when he stops pedalling, so uncertainty still hangs over the marketplace.

Let me illustrate the scale of the problem. The Department of Health has estimated that 20 to 23 per cent. of independent sector residential homes, 12 per cent. of independent sector nursing homes and 55 per cent. of local authority residential homes would not meet the draft space and amenity standards; and that 53 per cent. or more of nursing homes would not meet the draft staffing standards. Even those alarming figures ignore the impact of economics, considering only the possibility of meeting the standards by reducing the number of places and, thus, income; in the real world, in many cases, reducing the number of places would drive the home out of business.

Regional and local variations are even more striking. In the Southampton area, more than 50 per cent. of capacity in the residential market will be non-compliant. In Hampshire, a survey has shown that, overall, 71 per cent. of nursing homes and 68 per cent. of registered care homes would be non-viable. The position is worse in Portsmouth, where 88 per cent. of registered care homes and 65 per cent. of nursing homes claim that they would be non-viable if the draft standards were imposed in full. In the constituency of the other Minister of State,

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Department of Health, the hon. Member for Southampton, Itchen (Mr. Denham), 82 per cent. of registered care homes and 85 per cent. of nursing homes would be non-viable. In Blackpool, a staggering 91 per cent. of care home provision would be non-compliant with the 10 sq m standard; and I am told that in Blackburn that figure is an astonishing 100 per cent. of provision.

The problem is serious and, unsurprisingly in view of the figures I have just read out, it has provoked--in a masterly understatement--a reaction in the market; actually, it has produced something nearer to panic. Lenders have withdrawn; many potential sellers of homes have found that they are unable to sell their property because the buyer cannot know whether it will be compliant with a standard as yet undetermined and unpublished; potential new entrants are being denied access to capital, because no one knows what the final standards will be; and the presence of distressed sellers unable to sell causes a downward spiral in values. The overall result is chaos and blight in the market.

Mr. Ian Bruce: New premises have to be larger to comply with the regulations, and someone selling a business will, in effect, lose his registration. Will a new business taking over the same premises with a new registration come under the regulations for new premises, or those for old premises?

Mr. Hammond: That brings me back to my description of the Minister as a cyclist furiously peddling backwards. The concern that my hon. Friend expresses was circulating widely in the marketplace until very recently. However, the Minister recently wrote to me specifically confirming that transfer of ownership will not constitute a trigger event that would cause a change of status requiring the larger room size standard.

To be fair, as I always try to be, the Minister has been doing his best to stem the tide of speculation that has been rising for the past year and causing considerable harm; he has been engaged in a damage-limitation exercise, drip feeding pieces of information as and when possible, in an attempt to dampen expectations of the final standards. However, the fact remains that he has been unable to make a definitive announcement of either the standards in the key areas that are the source of disruption in the marketplace, or, most critical of all, the time scale for compliance. To be frank, those are the only two pieces of information that will calm the market.

The story becomes worse, degenerating into Whitehall farce. At the beginning of the Standing Committee's consideration of the Bill, the Minister said that he should be able to

on the standards by the time that Committee reached consideration of the relevant part of the Bill. At that time, it was common knowledge that negotiations were being held with providers of residential and nursing accommodation about the detail of the most contentious remaining issue: room size. As the Committee made progress, hon. Members were delighted to be invited to the Department of Health, there to partake of the largesse of Her Majesty's Government and to look at a little display showing what the different room size options meant in practice: helpful plastic cut-outs had been laid on the floor and some plans prepared by NHS Estates were hung on the wall.

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That lunch set alarm bells ringing in the minds of some, because the plans clearly showed that the area of the room occupied by the sweep of the door as it opens--that arc--was to be excluded from the calculation of usable space, as were any en-suite bathroom facilities. I questioned the Minister in the Committee that same afternoon; he replied that it had always been intended that only usable space would be measured. I and people outside took that as confirmation that the area swept by the opening door and the en-suite bathroom would be excluded.

I am happy to say that the Minister has since made matters clear in correspondence, which I have faxed on to everyone I thought might be interested. He has stated that it is not now the Government's intention to exclude the door-opening area and en-suite bathroom facilities when calculating usable space. I am delighted to hear that; otherwise, we would have faced the absurdity of care home owners who two years ago had spent large sums installing en-suite bathroom facilities--as one owner that I met had--being forced to take them out to comply with the minimum standard. That would have been bureaucracy gone mad, especially as surveys consistently show that the facility most valued by residents in care homes is an en-suite bathroom.

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