Examination of Witnesses (Question Numbers
640-659)
MR ANDREW
HARROP, MR
STEPHEN BURKE
AND MR
ANDREW CHIDGEY
26 NOVEMBER 2009
Q640 Jim Dowd: That would create
differences from one area to another. You used the term postcode
lottery in an entirely pejorative sense, to imply it as a bad
thing, full stop.
Mr Burke: The two key things are
that wherever you live, you would know what you would be entitled
to, regardless of your local authority; and secondly, it is crucial
that people—this is particularly true for younger disabled
adults, if you move, you should be able to go to somewhere else
and get the same kind of level of support that you are currently
entitled to. That is what people say to us the whole time, that
they expect that consistency to be available. It does not mean
that the actual delivery of service will be exactly the same in
Kensington and Chelsea compared to Keswick in Cumbria.
Q641 Jim Dowd: I am still not clear
from what you are saying, other than the fact you want the world
to be perfect, which is highly unlikely, what are you actually
saying? Which is the preferred model, the uniform provision or
local commissioning?
Mr Burke: No, I think the National
Care Service is the preferred model. That does not necessarily
mean a kind of Stalinist uniformity across the whole country though,
it is about making clear what people are entitled to wherever
they live, and the kind of support that they should be able to
access, whether it is about information and advice, as a starting
point, but it is also about having a single assessment process
which applies across the whole country. We have that at the moment,
for instance, with the NHS continuing healthcare, it is still
not 100% perfect because there are still local interpretations,
but at least it is a move forward from where we were before, where
we had every PCT doing their own thing.
Q642 Jim Dowd: Which of the funding
options in the Green Paper do you favour, if any?
Mr Burke: We have favoured either
the comprehensive option or the taxation option, which has been
ruled out by—
Q643 Jim Dowd: This is based on essentially—
Mr Burke: The comprehensive option,
I would argue, and taxation are two sides of the same coin; it
is a question of how the comprehensive option could be fairly
funded. We have certainly made a proposal which would be a lot
fairer than the kind of media headlines which are suggesting that
everyone pay £20,000 at the age of 65 regardless of their
circumstances.
Q644 Jim Dowd: Mr Harrop, you say
that the comprehensive option would represent less value for money
for many people, so clearly you do not favour that.
Mr Harrop: No, we are quite concerned
about the comprehensive option, and it is tied up with the discussion
we have had about Attendance Allowance being used to pay for it.
Take someone who is of middle or high income who might be expected
to pay the £20,000 or so payment to get their entitlement
to free care; they would also lose Attendance Allowance, which
over the life of a claim also adds up to around £20,000,
if you claim for around six years, which is the average. So you
have foregone £40,000, potentially. In exchange for that,
you would get free care. But today, you can buy an immediate needs
annuity from the market—not many people do, but insurers
will provide it—and that costs around £80,000 for the
full costs of a care home for life. The current proposals are
only covering care and not accommodation, which is about half
the costs. I am in danger of overcomplicating, but basically,
if you need care tomorrow and just want to pay for your care costs
and not your accommodation, it would cost you £40,000 at
the point of need. This is compared to the £40,000 you may
potentially forego in the future not even knowing whether you
are going to need a care home—because this is, of course,
based on risk; some people will need it and some people will not.
So it just looks like a bad deal. Does that make sense? Sorry,
it is a complicated answer.
Q645 Jim Dowd: In part, yes, it does,
but I am not clear why the immediate needs annuity insurance that
you referred to just then would be more predictable than the comprehensive
approach?
Mr Harrop: It is not. Immediate
needs annuities are products on the market at the moment; if you
are disabled and going into a care home, you have the choice of
buying one of these annuities. £80,000 is an awful lot of
money, so most people do not. But it is a way of insuring against
the long tail of care costs, in case your care home costs you
over your life more than that amount of money.
Q646 Jim Dowd: It costs £80,000
over what period, or upfront?
Mr Harrop: Upfront for life. So
you sell your home typically; you pay £80,000 and you put
the rest in the bank and you give it to your children; that is
how they work. It is a minority choice, very few people do that,
but it is already available. I am saying that I am not sure many
people, looking at the option of the comprehensive model, would
actually conclude, if they knew about immediate needs annuities,
that the offer from the Government was a better bet.
Q647 Jim Dowd: Would you hazard that
that may be because of the recent social phenomenon of more and
more people, that they expect an inheritance these days in a way
that previous generations never have?
Mr Harrop: I think part of the
debate is about what is an appropriate use of housing assets,
and should people expect to pass this on in its entirety to their
children and grandchildren, or spend it on themselves in their
own lifetimes. I think there is a perfectly good argument to have
that more of that housing money should be spent on yourself. The
problem is that the current proposal to tap a big lump sum at
65 feels administratively and politically very difficult. I would
much rather see less obtrusive ways of taxing or making charges
on assets in general, including perhaps inheritance tax; but that
is a very politically difficult area. In general, are there ways
we can tax assets better, rather than just a highly visible one-off
charge at 65? I think the politics of this proposal are very difficult.
Mr Burke: I agree with Andrew
about 65, which is why we propose this notion of a care duty,
which is 2.5% on people's estates, obviously that would reflect
their assets and wealth and so on at death. It has a number of
merits, because obviously it is linked—we have collection
mechanisms anyway, obviously it links mainly what is end of life
care to death, it would keep pace with the growing aging population
and so on, and the critical thing is it would enable people to
protect most of their inheritance, but it would still ensure that
people's contribution did actually reflect the value of their
estate. I think one of the other key things is it has to be hypothecated,
so actually, 2.5% on estates would generate enough income to meet
the kind of care funding shortfall that currently exists, and
if it was hypothecated, I think people would wear it, as a fairer
way of paying for care than currently exists.
Q648 Jim Dowd: 2.5% across the board,
on all estates?
Mr Burke: You could start at a
certain level, so the first £25,000 perhaps of estates would
not be covered, then you pay 2.5% thereafter.
Q649 Jim Dowd: So it is just the
generality of taxpayers who are paying this, rather than specific
receivers of services?
Mr Burke: Yes.
Mr Harrop: I think the key thing
is pooling risks. Thinking about people outside the means tested
system today, all the research we have done has shown that people
do not like the lottery where you either pay nothing for care
or a great deal. Moving towards a system where everyone pays a
bit seems to be popular in principle, but the devil is in the
detail of what is an acceptable charging mechanism.
Mr Chidgey: I think there is a
mistaken view sometimes, there is a polarisation here between
people who think that the state should pay everything and people
who think that everyone should pay for everything themselves,
when actually, most people that we talk to, even those who have
had to endure quite high care bills, say they think it is fair
for people to make a contribution towards the costs of care, but
they want some clear guarantee that they are going to get good
quality. Back to your question about inheritance, I think there
has been a big change in attitudes for society as a whole, if
I can put it that way, because I think if you think back 10 or
15 years ago, when there were still a lot of discussions about
how do we sort this out, I think there was very much more a view
that this was a middle class issue, about being people worried
about very well-off people passing on inheritance to their families.
Now, of course, some people still take the view that that is what
this debate is about, but actually, with the levels of home ownership
that we are now seeing across all social groups, this is a problem
that is facing families of all sorts of means. So where I wanted
to respond was in relation to which model is preferred, and the
view that we have taken for the Alzheimer's Society is that at
the current time, we do not support any of the models that are
being proposed, because the debate itself has been set up as trying
to secure a long-term settlement on the future of the care and
support system.
Q650 Jim Dowd: So your model is?
Mr Chidgey: Our model is that
we want the Government to describe in some detail what people
are going to get in terms of guarantees, will there be available
good respite care, will people be able to get—
Q651 Jim Dowd: I was asking what
your funding model is, if you say none of the ones on offer are
any good.
Mr Chidgey: Well, the assumptions
that are built in, we think, are about a care system that will
not deliver good quality of life for people, so it is really neither
here nor there with what the funding model is. If there were guarantees
that there would be better funding available, and better quality
of care available, then I think we could have a sensible discussion
about which model. I mean, people in principle, when we talk to
them, when we said to them, well, if you had a system where you
could be guaranteed better quality of care, which would you like,
people with dementia and carers tended to opt for the comprehensive
model, but it was still only 25-30% of people, and even then,
when you came back to the overall question, they would say, "No,
I do not support any of these approaches, because we are still
not guaranteed a better quality of life than we currently have".
Mr Harrop: I would like to support
what Andrew has said, if I may? The critical issue that is missing
from this Green Paper is the analysis of the problems of the current
system, all those issues we talked about at the beginning—about
it not being available to enough people and the amount spent per
service user being insufficient—all that is rolled forward
into the Green Paper's proposals. The Green Paper is mainly about
extending the current offer to higher income groups, rather than
deciding: are there enough services available, is the amount of
resource in that total envelope sufficient? We say it is not.
Where is that money going to come from? Is it going to come from
the individual? is it going to come from general taxation? is
it going to come from a hypothecated charge? But until you decide
what is the overall financial envelope that is needed for care,
you cannot really decide what funding mechanism is best.
Q652 Jim Dowd: All Government money
comes from the individual, it is just a question of how.
Mr Harrop: In one way or another,
indeed.
Jim Dowd: I am not trying to make up
for lost time, Chairman, so I will leave it there, I think.
Chairman: I am going to remind both witnesses
and questioners that we are just over halfway through a session
that should finish in about 13 minutes, so I would like sharper
questioning and sharper answers if you do not mind, although obviously
I do not want anything not to be covered.
Q653 Dr Naysmith: I think this one
should be rather more quickly dealt with, because I think Mr Harrop
dealt with it just a few minutes ago, but just to make absolutely
certain, the Green Paper says that board and lodging costs, sometimes
called hotel costs, in residential care should still be met by
individuals, supported by a means tested safety net, of course,
rather than being funded as part of a social care package. You
sort of disagreed with that, or do you agree with it?
Mr Harrop: To be honest, it depends
how much resources are available from the public purse. People
do not choose to go into care homes, it is not like going to a
hotel, and their accommodation costs are far greater than in their
own home. I think in principle, people would quite like to pool
that risk of having to pay those hotel costs. But frankly, it
is rather lower down the list of priorities than some of the other
calls on public spending, so it is back to the question of how
much money is available, and where is it going to come from?
Q654 Dr Naysmith: So you would rather
not answer the question then really, is what you are saying? The
choice exists at the moment.
Mr Harrop: Our research suggests
that people with middle to high incomes would rather have most
of the costs of care, including accommodation, where the risk
is pooled, so that you pay across society, rather than pay individually.
But that would be expensive; we would need to get the political
consent to set up a new system which achieved that.
Mr Burke: It is also quite difficult
to separate care costs from all the accommodation or hotel costs,
however you want to describe them. I believe that Donald Hirsch
referred to having a kind of standard accommodation charge, which
may be a fairer way, and certainly a more transparent way of doing
it, rather than each individual calculation being done for every
person.
Q655 Dr Naysmith: That was going
to be my follow-up question. Do you agree with that?
Mr Burke: I think that would be
a much easier way of doing it, if you are going to go down that
route, but we do need to remember, of course, that accommodation
costs will vary depending on people's conditions and so on.
Q656 Dr Naysmith: But you think that
having this levy on residents would be a better way of doing it,
and not trying to separate the two?
Mr Burke: Yes.
Mr Chidgey: All I was going to
add is that I think you need to think about what costs of accommodation
comprise. I think people think it is perfectly fair to expect
people to pay for things like food, electricity, things that you
would normally have to pay for in your own home.
Q657 Dr Naysmith: That normally you
would pay if you were at home.
Mr Chidgey: Yes, but the fact
that you may have bought or been renting a home, depending on
what it is, and now you are having to go into a care home because
of your medical condition, is the rental charge and so on a fair
thing to be asking people to pay?
Q658 Dr Naysmith: Sometimes you can
ask for things like bigger rooms or single rooms, and that sort
of thing would make it more complicated, would it not?
Mr Chidgey: Yes, it would.
Dr Naysmith: That was a good example.
Q659 Chairman: That was very good.
I am going to disrupt it now by saying to Stephen: you talked
about how the condition, in a sense, of an individual will mean
the accommodation costs could be different; what about geography?
Would accommodation costs be different in the middle of London
as opposed to the middle of Northumberland?
Mr Burke: Yes, that is the other
side of it.
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