Examination of Witnesses (Question Numbers
280-299)
MR RICHARD
HUMPHRIES, MR
JAMES LLOYD
AND MR
DONALD HIRSCH
5 NOVEMBER 2009
Q280 Sandra Gidley: I think we will
move on to the Prime Minister and a question for everybody. He
recently made an announcement regarding free personal care at
home for those with the greatest need. Has that been costed?
Mr Humphries: The figure that
the Department of Health are quoting is £650,000 or in that
region.
Q281 Sandra Gidley: It seemed quite
low.
Mr Humphries: Yes.
Q282 Sandra Gidley: Suspiciously
low.
Mr Humphries: I am not quite sure
how you can arrive at a definitive cost for free personal care
for people with the highest needs unless you define what is actually
meant by those terms and those terms have not been defined. I
think discussions were going on with local government about how
it is implemented. I suspect the costings are more in the nature
of a budget that the thing has to be financed through rather than
what it will cost to give free personal care to people with the
highest needs. That is my interpretation of it.
Q283 Sandra Gidley: Do any of you
see any possible unintended consequences of the policy if it was
put into practice?
Mr Humphries: Potentially several.
The obvious one is that free personal care is free at home but
not in residential care. That obviously creates an issue for local
authorities with a cash limited budget, potentially making residential
care more advantageous financially. That is a real worry. I think
we would say that this might have a place as part of a package
of reforms but on its own it could cause some difficulties. The
other question is where the money comes from. We are told that
some of it will come from Department of Health budgets and others
will come from local authority efficiency savings.
Q284 Sandra Gidley: That old chestnut.
Mr Humphries: Which begs the question
of how many more efficiencies can local authorities produce to
do these things and if it is so easy, why were they not doing
it before? There is a lot that we do not know about this proposal
and the crucial question is: how does it fit in with the wider
package of measures proposed in the Green Paper, especially when
the Green Paper told us we could not have free personal care because
it was not affordable. Apparently this is. There is an incoherence
there, is there not, which we have yet to understand?
Mr Hirsch: The biggest unintended
consequence could well be to affect the scope for openly debating
and considering in society what we want in the longer term and
in particular whether these Green Paper options should be introduced.
All the options do have an element of this idea that everybody
pays some consistent amount across the board, that you have a
regime which affects people in care homes, people with high levels
of domiciliary care, people who need wider levels of support,
possibly lower levels of support. What this seems to be saying
is that here is a group of people with a particular set of needs
who are going to get it free. First of all, that is pre-empting
some money which could otherwise be spread across the system on
a co-funded basis but it is also making it very difficult to turn
your back on that. It is very difficult to create something which
is then co-funded and say "Sorry, it's not free any more".
Another thing I should say about this Caring Choices consultation,
which did involve a very wide number of organisations—I
think 14 organisations involved—so it was quite a thorough
consultation, is that people there felt very strongly that the
way to go was not just to focus on the very high needs, that just
as important was to ensure that people with a relatively lower
level of needs, people who were vulnerable, people who might have
falls in their home, that we should make sure they are getting
what they need as well and a whole language of care and support
in the Green Paper seems to be about that; it is trying to look
at it as a package. If you really just focus on what is high end
need, that is the continuing care criteria I mentioned earlier,
then you are distorting things. It does seem to me very odd in
terms of its timing and it really seems to cut off a line of debate
about what the whole system should look like.
Mr Lloyd: I would echo those comments.
If implemented it will create some strange pernicious unintended
consequences, for example this apparent cliff edge in entitlement
based on needs. If you never reach the level of need which would
entitle you to that free personal care but you have a level of
need just below it and therefore do not receive anything and you
have had that level of need for five or ten years, then you will
experience catastrophic care costs and you could burn through
thousands and thousands of pounds without ever getting that entitlement
to free personal care. So it will create some very strange inconsistencies
and outcomes which will appear very, very unfair to people. I
would also echo comments around the overall Green Paper debate,
whether or not this was actually connected or is even coherent
with the Green Paper and the difficulty down the line for any
government saying to the public that they will have to make some
sort of contribution towards long-term care, because the public
has just registered the fact that it is actually going to be free.
Indeed it reinforces the point that is often made in these debates
that this is an area that absolutely requires political consensus.
Even before we start putting proposals to the public there has
to be absolute political consensus. You cannot have reform arriving
from political debate. We need people to be able to trust that
if they are going to buy into a system, that system will not change
with a change of government.
Q285 Charlotte Atkins: There has
been criticism of the Green Paper, that it fails to set out clearly
or in detail what the funding options will actually mean for service
users and particularly in relation to people of working age. Would
you agree with that criticism or do you think it is unfair?
Mr Humphries: We touched on this
in an earlier answer. The detail is not there. I have some sympathy
with the authors of the Green Paper because Green Papers inevitably
are aspirational documents; they are trying to set out broad options
in the direction of travel rather than specific detail. If they
go into too much detail, people then criticise it saying they
have made up their minds already. If it is too general and too
much principle, people will say, as they are on this occasion,
"Where is the beef and how can we understand this?".
It is difficult to look at the impact on individuals, especially
for working-age adults because of what we said earlier about the
default assumption being that they will continue to get it through
general personal taxation and the obvious inappropriateness of
insurance-based options. Some of that is about language quite
frankly and it could be clearer what the position is for working-age
adults. We will not be able to make a confident assessment of
what the impact would be for individuals until the Department
publishes the underlying data and the modelling.
Q286 Charlotte Atkins: Do you think
it would be easier for people to understand if there were actually
two separate systems, one for older people and one for working
age people?
Mr Humphries: In terms of simplicity
across both groups, the simpler system would be a system which
is based on free personal care through general taxation because
that applies to everybody. There is no reason why you could not
combine that with some sort of insurance option for people with
high assets and wealth.
Mr Lloyd: It was my understanding
from the Green Paper that, from the perspective of users, both
working-age people and retirees would be using this national care
service. From the perspective of the user they will be interacting
with it in the same way. The question is just about levels of
funding, where the funding comes from and entitlements. As it
is, the majority of working age adults in receipt of care do have
it funded by the state because typically they are in low-income
households.
Mr Hirsch: For me the answer to
this question hinges a lot on how attracted one is to measures
which harness the assets of older people either on a voluntary
or a compulsory basis, as the second and third options in the
Green Paper suggest. Clearly the scope for doing that with people
of working age is different because it is based on the idea that
people with assets give up a certain amount of those assets on
retirement. If one is attracted by that as a novel way of harnessing
new resources when resources generally are scarce, that creates
a case for looking at the two systems separately to some extent.
Q287 Dr Taylor: Just going back to
hotel costs briefly, we talked about them in Scotland. The Green
Paper says they should still be met by individuals, what do people
think about that?
Mr Hirsch: May I say that I find
the definition of "hotel costs" is possibly an unhelpful
one or even "accommodation costs"? The implication is
that people have to pay for their accommodation anyway, they are
moving into a care home so you would expect them to pay for their
accommodation but the actual accommodation costs within a care
home are more often than not a lot higher than those people have
left behind. Is there not another way of looking at this and that
is to say not an accommodation cost but an accommodation charge?
You could even make that based in some way on the rental value
of the home you left behind so that you give people the option
of using their resources that they have been using for accommodation
for the same thing. Similarly with food. It certainly would not
look right to have a system which provides everything to people
when previously they would have been paying for those things,
food and accommodation, but if you could have a charge based on
what people can pay, then you would not have this issue. The evidence
in Scotland was that people often did not quite understand and
were perhaps rather surprised by the fact that they still had
to pay part of the fee because they thought that free meant free.
You have to be honest with people. The really important reason,
the attractive reason for saying "We will make a charge for
accommodation which people are able to afford without running
down capital" is that then makes the deal of the second and
third options a bit more attractive. The deal is really that you
effectively give up a certain amount of your inheritance but it
is a known amount and in exchange that is all you will have to
pay. That deal falls down if people feel there is still a risk
that they are going to have a lot to pay on the extra cost of
accommodation that they would not have been paying in their own
homes.
Mr Lloyd: I definitely echo that.
It does not make sense to push through an enormous reform, to
pool the risk of personal care costs and then just to ignore the
potential accommodation costs which can also be catastrophic,
which can also use up a lot of people's resources. A next stage
perhaps for the Green Paper is to think what kinds of options
would be available to deal with that and it might be that you
have some level of optional or subsidiary insurance to insure
yourself against potential hotel costs in addition to personal
care costs. If we were to go down the route of a state-sponsored
insurance scheme as the Green Paper outlines, you could have the
main scheme for personal care but alongside it have some extra
optional insurance for hotel costs. Or indeed it might be something
for which the private sector would be able to develop a product,
if personal care costs had been taken care of through a state-sponsored
scheme.
Q288 Dr Taylor: So it depends on
you knowing exactly what you are going to have to fund at that
time.
Mr Lloyd: It depends on you anticipating
that you may well go into residential care and recognising that
you will have to pay for it yourself and then wanting to insure
yourself from catastrophic costs for hotel charges.
Q289 Dr Taylor: I do not know whether
you are going to be able to answer the next one at all. Is there
any idea about how many people are going to have to sell their
homes to be able to go forward with this? Is it going to be a
large number? Is this really going to punish people for their
savings? Is there any estimate of the number of people who are
going to have to sell their homes?
Mr Lloyd: I would refer you to
the PSSRU as probably the best place.
Mr Hirsch: It is very hard to
estimate. We should not exaggerate this. Even though often the
accommodation costs can be up to half, although it is very difficult
to calculate, you must remember that people do have considerable
resources from their pension and from renting out their home to
go towards that. Certainly in Scotland the policy has been popular.
Most people probably do not have to sell their homes. The problem
is that it remains a big risk and this is about protecting against
risk. So even if a minority of people in care homes have to do
it, there are very few people now who lose anything like all their
inheritance because sadly when people move into very expensive
options often their life expectancy is not great. Even if it is
not many people, it is about protecting again that catastrophic
risk. I am suggesting that the way round would be to have a scheme
which does cover everything. It covers the fee, minus a charge.
The alternative is having two systems: a system which covers the
fee but they charge you something and get something back according
to how much you can really afford to put in on a recurrent basis
to pay for accommodation.
Q290 Dr Taylor: You have really answered
the question. You have really said very few people even now have
to end up selling their homes.
Mr Hirsch: Quite a lot of people
have to sell their homes. There is a big confusion between this
idea about running down inheritance and selling your home. If
you have a home worth £300,000 and that is being taken into
account and you simply do not have any cash and you do not like
the terms of equity release, you do not need to use your home
any more. You may well end up selling it but whether you use up
£10,000 or £20,000 or £300,000 of that, I think
there are very few people who would use it all up because of the
length of stay.
Q291 Dr Naysmith: One of the suggestions
in the Green Paper is that Attendance Allowance should be subsumed
into the social care budget. It is quite strongly opposed and
I know from my mailbag as an MP that a lot of people do not like
that and there was a lobby here yesterday of people articulating,
telling me to my face that they do not like the idea. It is only
a suggestion and is not definitely going to happen. However, it
does seem to be proving quite unpopular. People say it is intended
to cover extra costs not care costs and a lot of people with lesser
care needs could be left a lot worse off. How reasonable do you
think these objections are?
Mr Humphries: There are issues
here about policy and there are issues here about perception and
I suspect it is the latter category which is the one we have to
address very substantially indeed. We have argued consistently
that there is a case for looking at absorbing Attendance Allowance
within a care budget provided that there are some very strict
guarantees around that in terms of protecting existing payments
and making sure that we do not replicate the Scottish experience
where the Attendance Allowance money did appear to have been lost
to the social care funding system. The problem at the moment,
because the detail is not there, is that people see this as a
potential loss of something that is valuable and important to
them and that is entirely understandable. If you are getting a
regular payment into your bank account every week from the taxpayer,
you are not going gladly to give that up on the back of some promise
about a bright new future for care funding. People, quite rightly,
will want some assurances and clearer explanations about what
the money will be used for and how it will enhance the future
service rather than it just being a reduction, something that
is taken away. Some more detailed work needs to be done on this.
Q292 Dr Naysmith: There is a view
then that there is a risk that the whole of this social care reform
that we are talking about now could be derailed entirely by this
reaction against reforming the Attendance Allowance. Presumably
that is related to what has happened in Scotland as well. Do you
think that is a problem?
Mr Humphries: I very much hope
that will not be the case. It seems to me that if we want to have
a radical debate about how we pay for care in the future, then
it is difficult to say that this is sacrosanct and we cannot look
at that. There is clear evidence that a large chunk of that £3.5
billion, whatever it is, Attendance Allowance expenditure is going
towards care needs. People also complain that funding for different
streams of funding and care are fragmented. Bringing AA into a
personal care budget stream does offer an opportunity to simplify
that.
Q293 Dr Naysmith: So you are not
saying the Government should avoid this minefield altogether?
Mr Humphries: No. There is a lot
of money here.
Q294 Dr Naysmith: What sort of reassurances
and cast-iron guarantees should the Government give?
Mr Humphries: I think there need
to be some detailed proposals in the White Paper stage about how
the funding streams for a proposed national care service would
be made up, where the money would come from and, in particular,
how you would avoid the inevitable fears that people are going
to have that where you move from an entitlement based approach,
which is what you have with Attendance Allowance, once you put
that money into what is in effect the cash limited local authority
budget, that in fact it will make a reduction in years to come.
Q295 Dr Naysmith: So we certainly
need a guarantee about that.
Mr Humphries: Yes and that is
the crunch issue which the architects of the new funding system
have to address so that people will be satisfied on that score.
Mr Hirsch: I agree that you should
not make this thing sacrosanct. People always will object when
something which is known and they are receiving already is being
threatened and that is understandable. There are three differences
which would need to be addressed and the Government are talking
about a system which gives care and support. I would have thought
that the ambition was to create something which does a lot of
what the Attendance Allowance already does. There are three aspects
to that which need to be addressed if you are going to reassure
people. One is an entitlement but it is an entitlement regardless
of what else is going on in your home and in your life. So you
receive Attendance Allowance whether or not you happen to have
somebody who is going to do it for free living with you, whereas
the local authority support that people are getting does look
at your situation in that sense. It has become more an entitlement-based
system. The second thing is about choice of how you spend money.
You can spend Attendance Allowance exactly as you please and you
can spend it on things like heating or taxis or gardening or care.
We are moving towards greater choice in the main care system.
If you could move a bit further and show that there was flexibility
to use it, which if not complete freedom was at least helping
people to spend it on those things on which they are spending
Attendance Allowance now, that would be a reassurance. The third
thing which is greatly neglected is the issue about assessment
and what kinds of needs you are really supporting. At the moment,
with rather strict, narrow eligibility criteria, the care system
is not supporting these lower levels of need. It seems to me that
a corollary of bringing Attendance Allowance in is that you do
have to lower those criteria and be willing to start funding people
who do not have quite such a severe set of difficulties. The problem
is that the illustrative costings that are being used in the Green
Paper are really based on what is being spent now within the care
system. They say it would cost £30,000 roughly over somebody's
life to fund their likely care from age 65. I think it is likely
to be more than that if you bring in these extra needs. So certainly
the suspicion that what the Government are doing is to try to
have a cost neutral thing by bringing it in just does not seem
to be sustainable.
Q296 Dr Naysmith: What is the difference?
The Government have ruled out Disability Living Allowance and
said it will not be affected. What is the difference between Disability
Living Allowance and Attendance Allowance?
Mr Hirsch: Obviously it is partly
to do with the age. They are focusing on a system which is providing
for people over 65 which, unless you have a continuation of DLA,
may mean Attendance Allowance for that.
Q297 Dr Naysmith: Similar sorts of
arguments apply to DLA, do they not, if you can give the cast-iron
guarantee that nobody is going to lose out and that sort of thing?
Mr Hirsch: Yes.
Mr Humphries: Yes.
Q298 Dr Naysmith: It does seem a
little bit strange that one has been protected and the other one
has not.
Mr Humphries: There is slightly
stronger evidence of the correlation between what people use their
DLA on in relation to need and the extra income costs of disability,
whereas with Attendance Allowance it is much more oriented towards
care costs rather than living costs arising from disability. That
is the crucial difference between them.
Q299 Chairman: In this session we
have gone across all the tensions that there have been about the
funding of long-term care for many, many years now. We had a Royal
Commission in 1999. We have had two reports from Derek Wanless
plus other reports that you have been involved in as witnesses
yourselves. Are we any nearer solving this and getting a resolution
to this problem?
Mr Hirsch: We are nearer in the
sense that there is official recognition that there is a problem
to be solved.
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