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Dr. Ladyman: That is why we have made a building capacity grant to local councils and have put substantial sums into the reimbursement scheme in the Community Care (Delayed Discharges Etc) Act 2003. We want to enable councils to make preparations for the requirements of that measure, and I shall deal with that in more detail later.

Mr. Paul Burstow (Sutton and Cheam) (LD): The Minister has just cited research by the personal social services research unit, which found that a 1 per cent. reduction in dependency rates would stabilise the number of people going into care homes. Does he nevertheless accept that people receiving care at home are becoming increasingly dependent and are receiving more hours of care? Consequently, fewer people are receiving care at home, so the aim of reducing

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dependency is hampered by the fact that the Government are not providing sufficient support for home care for people with lower-level needs.

Dr. Ladyman: I thought that the hon. Gentleman was about to make a sensible intervention, but at the end of his question he lost the plot. We are increasing the number of hours available for home care and are targeting them on more intensive packages that enable people to remain at home. We are giving huge amounts of extra resources to local councils so that they can continue to build capacity for intensive home care. However, I agree with the hon. Gentleman's sensible suggestion that, as there is an increase in the elderly population and life expectancy, and as we want to keep people out of care homes—the LSE figures suggest that we might be able to do so—we must maintain many more people at home through intensive care packages. It is the Government's policy to provide resources to achieve that.

Mr. Mark Todd (South Derbyshire) (Lab): My hon. Friend is making a coherent case, but he has not touched on the fact that when we talk about market forces and the effect of home closures, we must recognise that the residents of those homes are clearly involved in the delivery of that market force effect. We should consider using a methodology to regulate that effect better. My hon. Friend commended research by Laing and Buisson, which has suggested a methodology for negotiating a proper rate for home care. Has he considered whether it is appropriate?

Dr. Ladyman: I congratulate my hon. Friend on his constructive approach—I only wish that Opposition Members were equally constructive. I am considering the possibility of developing a model to allow the fair negotiation of price, and I shall discuss that later. The hon. Member for Isle of Wight (Mr. Turner) is not in the Chamber today, but there was recently a strike by care home operators on the Isle of Wight because they did not like the price that the local council was offering them. That price was calculated using the Laing and Buisson model, so it does not always meet people's needs. We must take that issue into account.

Loss of care home capacity in areas where there is a significant over-supply is not a problem, provided that closures are managed sensitively. There is a greater problem when losses occur in an unplanned way in areas where there are few other alternatives or where supply and demand have not yet reached a balance. When that happens, it is important that action is taken by local authorities to rebalance provision. That might mean increasing fees, either to attract homes to expand or to encourage new homes to open. It might mean working with social landlords to create new care choices, or it might mean the local authority stepping into the market and providing council-owned homes. Those are all valid options for local decision, and cannot possibly be controlled successfully from the centre, which is why I

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have resisted calls for a national review of care home fees or demands that I try to impose particular solutions from Whitehall.

Mr. Chris Mole (Ipswich) (Lab) rose—

Chris Grayling rose—

Dr. Ladyman: If my hon. Friend the Member for Ipswich (Mr. Mole) and the hon. Member for Epsom and Ewell (Chris Grayling) will forgive me, I want to make some progress, but I shall give way later.

To tackle the problem, we have given local authorities substantial extra funding, together with the responsibility to manage care home capacity in their own areas. We have given resources dramatically above the level of inflation since 1997. We gave local authorities 20 per cent. more funding in real terms for personal social services between 1997 and 2003. We gave them a 6.3 per cent. real-terms increase on top of that this year, and we have promised them a 6 per cent. real-terms increase next year and the year after, as well. Compare that with a 0.1 per cent. annual increase between 1992 and 1997.

This year councils have just over £13 billion to spend on personal social services; by 2005–06 they will have around £15 billion. That will be close to double the amount available when this Government came to power. Before anyone argues with these figures, the percentages I have used have been calculated on a like-for-like basis and adjusted to take account of additional responsibilities.

Mr. Andrew Mitchell: I do not dispute what the Minister says about the additional resources that have been made available. Can he explain why the Birmingham social services department, of which I hope he is well aware, remains in such a shambles?

Dr. Ladyman: Birmingham social services has serious challenges to meet; there is no question about that. One of the things that that department has decided to do, as the hon. Gentleman says, is to maintain its own care homes, because it believes that that is necessary to rebalance provision in its area. It has taken exactly the sort of decision that we are encouraging councils everywhere to take—to look at their local area and ask themselves, "What do we need to do locally to make sure we provide for our older people?" I realise that the hon. Gentleman has a problem because the social services department pays more to those homes than to the private sector. My advice to him—I think I have given him the advice before, but if not, I give it to him now—is that the department can do that only if it has carried out a best-value review and can justify the extra cost on the basis of increased services or quality. He and his constituents just need to get hold of that best-value review and they can find out why Birmingham chooses to pay a differential in rates between the two types of care home.

The money that we have given to councils is money that they can use in any way they want. As I said, they can increase fees locally, if that is what they need to do; they can invest in new capacity locally, if that is what they want to do; they can make their eligibility criteria

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for social care more generous, if that is what they want to do; and they can cut the charges that they seek to impose on people who have to contribute to the cost of care at home, if that is what they want to do.

Some councils have reacted to local challenges with increased fees. Fees paid by councils to independent care operators have increased by an estimated 8 per cent. on 2002–03 figures, well ahead of wages. If anyone is in any remaining doubt of that, again I refer them to the annual reports of the chairman of Univent plc and his boast of increased margins. The key, of course, is to establish a fair market process. Falling demand has created a buyers market, and we expect care home owners to take on board what the market throws at them. But they are entitled to ask that councils also respect the market and do their share to create a level playing field on which businesses can compete to provide services. It is not acceptable for councils to decide how much they want to pay and to tell home owners to take it or leave it, knowing that most home owners will be unwilling to evict council-supported residents.

Services must be commissioned fairly, using a process that allows the market to establish a fair price for the job and allows individual providers to bid the price they believe appropriate to their business. Once that is done, the council is entitled to take the best price on offer, but it must allow reasonable annual uplifts reflecting genuine annual cost increases. This type of best practice is fair to providers, fair to council tax payers and, most important, fair to service users, but too few councils follow such best practice.

That is why I have announced a national series of conferences to disseminate best practice commissioning. They start this month, and there is no excuse for any council not to send a representative to those conferences. I will speak at the first one, and my speech will be recorded for the regional conferences to ensure that everyone understands that the Government expect councils to use fair commissioning practice. The Government have done their part by making resources available, and will continue to do so, but local democratic accountability is important too. While the Tories continue to believe in imposing solutions from the centre, and the Liberal Democrats pay lip service to localism, we believe in local solutions for local problems, and we have given councils the power and resources to address them.

Mr. Mole : On local choice, does my hon. Friend agree that it is regrettable that the motion does not refer to the option of delivering in partnership with registered social landlords the sort of sheltered housing schemes that deliver extra care, offer people choice, meet modern standards and provide continuity of care as older people's needs change? Such schemes also give older people their own front door and the level of dignity in later years in which we, as a party of choice, believe. The only thing I ask him to do is continue his dialogue with the Office of the Deputy Prime Minister about the

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availability of local authority social housing grant funds to local authorities to enable more such schemes to be brought on stream.

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