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Lord Carter: I must start with an apology to the noble Baroness, Lady Darcy (de Knayth), and, indeed, the Committee for speaking too quickly. I really must speak more slowly.

In these amendments we are seeking to establish the difference between regulations and guidance. That point was quickly and well put by my noble friend Lady Hollis. If the regulations state that you cannot employ a close relative but if in exceptional circumstances a close relative is the only person who can provide that service,

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does the local authority have the discretion to ignore the regulations and make a direct payment? I refer to cases where the close relative who is the only person who can supply the service lives in the same household as the disabled person. We have given examples relating to ethnic groups, rural areas and cases involving HIV and AIDS. Does a local authority have discretion, through guidance, in effect to ignore the regulations?

Baroness Cumberlege: We need to remind ourselves of the three basic principles underlying the Bill. The first is flexibility. It is important that local authorities should be given enough flexibility to exercise their duties and to be fair to all concerned. The second principle is simplicity and the third is trust. If we can keep to those three tenets, we cannot go far wrong. Flexibility is the most important with regard to the point made by the noble Lord.

The noble Lord asked whether local authorities can ignore regulations. The answer is no.

Lord Carter: That makes the point that the exceptions cannot overcome the regulations. Therefore, if the close relative is the only person who can provide the service, the regulations stop the local authority exercising its discretion. I think that that is what the Minister is saying.

Baroness Cumberlege: I suspect that this issue will be hotly debated when we go out to consultation on the regulations or the guidance document.

Baroness Hollis of Heigham: The Minister has got herself into the position of saying that a close relative is excluded under the regulations but may be employed under the guidance and that the difference between the two is whether the relative lives in the same household. Will not that mean that that person is pressed to move out of the house, thus moving out of the category of regulations and into the category of guidance, whereupon the local authority may then operate discretion? That is batty. Clearly we need to sort this out.

Lord Swinfen: Before the noble Baroness sits down, I am sure that she will agree with me that that would be impractical in some rural areas because there would not be anywhere else close enough for the relative to live and still be able to provide the care that was needed.

Lord Carter: I think that we have had enough and that the Minister is now aware of the difficulty. I am sure that this matter will need further discussion. Perhaps I may give the Committee a final example that has been passed to me. Where someone is getting a payment from the ILF, he or she may employ a close relative. If in future the local authority's contribution is made in cash, the disabled person will not be able to pay the relative with that money, although he or she already uses ILF money to pay the relative and it may well make sense to employ that person. That means that there is no choice. This is the difficulty that we are in.

Baroness Seear: I can envisage getting even more confused. If a close relative cannot be employed while

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living in the same house, what happens if the house is divided into two flats and the close relative moves into the upstairs flat? Can that person then be employed?

Baroness Cumberlege: I am sure that we can all think of some interesting schemes in this context, but I still think that a balance needs to be drawn. Although a relative may want to give the care that the dependent person needs, the dependent person might not want that relative to provide that care. What is often at issue is that one cannot sack one's closest relative. The disabled person has to be in control. What is important is how we strike the right balance.

Lord Carter: I think that we have discussed this enough and that the Minister is aware that the matter needs further discussion. Indeed, that is the point of Committee stage. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 to 19 not moved.]

Baroness Hollis of Heigham moved Amendment No. 20:

Page 1, line 23, at end insert--
("( ) Where a payment made under subsection (1) above covers part of the cost of services for a purchaser, the authority may provide directly the remainder of the required services.").

The noble Baroness said: I wondered whether we were going to rediscuss Amendment No. 18 and whether we might make the same speeches and receive the same replies.

However, turning to Amendment No. 20, we discussed earlier on Amendments Nos. 4 and 5 the fact that many clients will need a mix of direct payments and services. This amendment would permit a client receiving direct payments to buy services not only from private providers, such as agencies or by employing an individual person, but also from local authorities. I realise that in the consultative document the Government said that that may mean extra bureaucracy and that we do not want to pay a person money only to have them re-employ the same person who would have provided the service in the first place. However, perhaps I may try to shift the Minister from her original response.

It is clear that many services--probably most--ranging from cleaning services to taxi services will be purchased from the private sector, but there will be other services which might be quite specialised for which there will not be much in the way of a local market and it may be that the local authority will provide the best value for money for the client, especially in the light of Amendment No. 19 on the VAT requirement under which purchasing a service from the local authority will obviate the need for VAT. Clearly, many disabilities involve similar care needs, but particular disabilities may have quite specialist care needs--I refer, for example, to blindness and to the fluctuating care needs that are due to, say, multiple sclerosis--when it might be appropriate to purchase care from the local authority through direct payment rather than from a private provider, particularly in a vast rural area where there may not be a well established private market.

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It would seem foolish artificially to limit where a disabled person can place his contract. Over and beyond that, there will certainly be occasions when privately purchased services will falter or fail and emergency situations in which a carer is ill, a service collapses or an agency fails to deliver. In that situation, a client must be able to turn to the local authority and expect to purchase those services from it in the interim.

In circumstances in which a client wishes to purchase services from the local authority because they are specialist services, because they may be a statutorial area, because there may not be alternative agencies from which he can choose to purchase, or because he may believe that the local authority offers better value for money, or circumstances in which he may need to turn to the local authority for emergency cover, we believe it important that that option should be available and not artificially restricted. I beg to move.

Lord Jenkin of Roding: I do not wish to trample over the VAT ground again. However, the suggestion that the client may buy his services from the local authority because the local authority will not charge VAT may be misconceived. At present local authorities cannot sell their services and therefore they are not in the trading area in this field of their activities. If they were free to sell their services and they came above the threshold I cannot conceive that Her Majesty's Customs & Excise would prevent their being liable for VAT. As a local authority almost certainly would be above the threshold, the argument would tilt the other way.

It is interesting to note that the paper we have received from the Association of Directors of Social Services states:

    "From an ADSS perspective",

and those are interesting words because they point to the direction in which these admirable people are looking,

    "it is important that a 'level playing field' be created for an individual in receipt of direct payments to be free to purchase services not only from the independent agencies and individuals but also from local authorities."

It is not a matter of a level playing field but a matter of sheer common sense that if a local authority is capable of providing the services and the individual wants them from the local authority the existing arrangements can perfectly well continue. To interpose a nexus of a payment one way and then a payment the other way--the noble Baroness is shaking her head but she will have an opportunity to prove me wrong in a moment--would be unnecessarily cumbersome and bureaucratic, as the consultation paper states.

Surely the purpose of this exercise is to enable people to go outside and make their own choice. To imagine that somehow it is greatly widening the choice if they can say after an admirable local authority social worker has provided them with services, "Ah, now I have got the money I am now going to pay the local authority for the same admirable person to come in", seems to be rather ridiculous.

It would be a major change in the law to allow local authorities to enter the market to provide these services in competition with the agencies, charities, firms and so forth. What the Bill envisages is immensely sensible. Of

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course, the client can have a mixture; he can have a direct payment for some of his services and can have the local authority providing the balance. That is made perfectly clear in the consultation paper. It seems to me to be the sensible way of doing it.

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