HC Deb 09 March 1999 vol 327 cc270-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

10.2 pm

Mrs. Virginia Bottomley (South-West Surrey)

I appreciate the opportunity to raise in the House a matter that is not only of great concern in my constituency but a cause of profound disquiet across the charitable sector. Today, in the Budget statement, the Chancellor said that he wanted us to be a giving society and that this should be a giving year. My concern is that many of those involved in the provision of long-term care feel more like giving up than going on, because of the Government's refusal to take seriously, and act on, their concerns.

The Minister may have heard the BBC "Today" programme in January, when Stewart Etherington of the National Council of Voluntary Organisations said that two out of three voluntary organisations providing care were subsidising the local authority and more and more of them were having to spend their scarce money in investing in legal fees to obtain their entitlement. The Minister may also be aware of the letter from the Prime Minister to Mr. Norman Thody of the Disabilities Trust. Mr. Thody had complained, with the all-party disablement group, about the intolerable position in which so many providers of care find themselves. The Prime Minister's letter stated: I am concerned that you feel the Government is overlooking the contribution of the voluntary sector. We place great importance on the input of voluntary and community organisations to the social, cultural, economic and political life of the nation. We also value their role in helping Government to achieve its objectives. Interestingly, the letter continued: You may also be interested to see a leaflet issued in October by the Charity Commission, 'Charities and Contracts—CC37'. The leaflet gives practical guidance to trustees and staff thinking of entering into contracts with public bodies to provide services on behalf of those public bodies in return for payment. That document makes it clear that it is not the job of the charitable sector to subsidise the state and the delivery of services under the National Assistance Act 1948. It states: We recognise that there will be gaps in some services, because the public bodies required to provide the services at public expense are unwilling or unable to pay for them. We strongly advise charities not to enter into contracts to deliver a service that a public body is required to provide unless the public body pays the economic cost. A charity may offer, as part of the contract, to raise the standard of a service above the standard required of, and paid for by, the public body. But we advise that a charity does not commit itself in a contract to 'fill the gap' in a service which is not funded up to the standard which the public body is required to provide. That is precisely the situation at Meath, and at other voluntary homes across the country, such as the Cheshire homes in my constituency. The Meath home is a magnificent organisation. It was founded more than 100 years ago by Mary Jane, Countess of Meath. It is the house in which General James Oglethorpe lived. As well as being one of my predecessors as Member of Parliament in 1722, he went, in his spare time, to the United States, where he founded Georgia, before he returned to his parliamentary duties.

The Meath home was always enlightened in its traditions. In 1892, when the home was dedicated by Her Royal Highness the Duchess of Albany, the amount of care and rehabilitation for people suffering from epilepsy was moderate. The home was enlightened, but developments in medical science and in styles of care have ensured that it has kept pace. It is highly regarded and extremely popular.

The Countess of Meath's approach was also enlightened. She reported as to the character of the institution, which she said would be worked on the lines of the Home, and not of a hospital". It was her wish that it should be a Home of Comfort, all being made as bright and cheerful as possible. Time has moved on. There are 64 residents who have epilepsy and associated disabilities. There are day care and community-based activities for people from the local community and the region with similar disabilities. Up to 23 local authorities have placed residents there. It is the only residential home of its type south of the Thames. It caters for individuals with a wide range of disabilities, and it offers clients a home for as long as they wish. Each client has an individual care package which is regularly reviewed.

The home has been highly commended by the registration officer as A first class home for the residents in every respect. Grateful letters are received regularly from parents and others. I could not speak too highly of the Meath home, whether as the local Member of Parliament or—I must declare this interest—as a patron of the home.

I have observed a deteriorating situation in recent years, however. The Registered Homes Act 1984 was enacted at the time when I became a Member of Parliament. It drove standards up and it required more and more of residential institutions. The Community Care (Residential Accommodation) Act 1992 changed the relationship once again, however, with substantial sums of money being transferred to local authorities.

I do not intend to labour long and hard about the deplorable settlement that Surrey social services has received this year. The Meath home's argument is not essentially with Surrey, which has been as reasonable and co-operative as it can be. Suffice it to say that the national average increase in personal social services is 5.8 per cent. this year. Half the local authorities received more than 7 per cent.

The Under-Secretary of State for Health will know from colleagues in the north, whom he meets regularly, that they are grateful for their settlements. However, Surrey received 2.36 per cent., although it requires at least 7.5 per cent, to stand still. Surrey is an area with a high cost of living, and there are great charges for staff and others. The working time directive and various other measures have compounded the difficulties at Meath.

It is not Surrey that Meath home is having to take to the small claims division of the High Court, however. The problems with Birmingham, Haringey, Enfield and a great number of the other authorities which have residents at the Meath home are quite appalling. The time, effort and frustration spent on securing payment for residents who are being given a value-for-money, quality home for life is unacceptable. I ask the Minister to intervene.

I shall go over some of the background issues, because it is a reflection of the desperation felt in the voluntary sector that so many voluntary bodies are now taking legal advice on what steps to take next. Several cases that have reached the courts make clear the obligations and rights involved, even though going to court is never a step that anyone would choose to take, because of the invidious nature of doing so.

Under section 21 of the National Assistance Act 1948, a local authority is required to provide residential accommodation for the elderly or disabled adults in their area who require it. There are two recent cases that are relevant. In 1997, the House of Lords decision in the case of Barry stated, that in assessing the needs of a person for services to be provided under the Chronically Sick and Disabled Persons Act 1970, the local authority could take into account its own financial resources.

In the Court of Appeal decision in the case of Sefton, which was made shortly after the Barry decision, Lord Woolf said that he did not see the resources argument as playing a significant role in deciding whether a person required residential accommodation. He emphasised that, once a local authority has concluded that the person concerned requires residential accommodation not otherwise available to him, the accommodation must be provided and the local authority cannot plead lack of resources in argument for failing to do so.

The similarity under both Acts and both decisions is that, once the assessment has been made, the accommodation or services must be provided, irrespective of the local authority's resources. It follows that, if the local authority cannot provide them itself, it must pay someone else to do so; and it cannot limit the payment by arguments based on its lack of resources.

In 1994, the High Court decision in the case of Avon was to the effect that the local authority must also take into account the psychological needs and wishes of the person, even if the local authority has to pay much more than it wants to for more expensive accommodation. That may make it extremely difficult for a local authority to shift residents when they have become established in a home.

There is no desire to have those issues subject to endless judicial review, but I have to warn the Minister that, unless there is assistance, action and intervention from the centre, that is the route down which all the voluntary homes will have to go.

Several other recent legislative measures are relevant. Although it does not come into force until March 2000, the Competition Act 1998 prohibits conduct on the part of one of more undertakings that amounts to an abuse of a dominant position in the market, and there are severe penalties for breaching the prohibition. Conduct may be an abuse if it consists of indirectly or directly imposing unfair purchase or selling prices, or other unfair trading conditions.

The Late Payment of Commercial Debts (Interest) Act 1998 imposes a fierce 16 per cent. interest charge on the late payment of debts by large businesses, including local authorities, to providers that are small businesses. That may not be immediately relevant to the Meath home, which has 80 employees, rather than 50 or fewer, but the Act does reflect how seriously all those involved are having to take the current problems.

My understanding of contracts is that the court will generally enforce a contract in accordance with its terms unless it is unlawful. Where the contract says nothing about the price to be charged, or there is no written contract, the court is likely to assess the fees on what is fair and reasonable. It will not pay attention to extraneous factors such as the parties' financial circumstances. In other words, we are moving close to judicial review territory, which is not an outcome to which either the Minister or those involved in care would turn lightly.

I have several practical suggestions which I hope the Minister will follow up. Although the matter is not one that solely concerns a home for people with epilepsy, there are specific issues relating to epilepsy. I am delighted to see my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) in the Chamber; she has a particular interest in Chalfont, and I was delighted to visit the centre there when I was Secretary of State for Health. The centres at St. Piers, Lingfield and at St. Elizabeth in Hertfordshire and in Liverpool would give an account similar to that of the Meath home. The members of the all-party group on epilepsy group are extremely vexed and hope to accompany representatives of the Joint Epilepsy Council to visit the Minister, so that he is made aware of the complexity of the issues relating to long-term care for people with epilepsy.

However, there are more general and widespread issues concerning the delivery of voluntary care. My requests to the Minister are as follows. First and foremost, a standard, simplified form of contract should be adopted which would reduce the current appalling bureaucratic waste of time and money. A huge amount of staff time and energy is spent chasing 23 different local authorities, each of which has its own contract. It is time to offer central guidance and good practice. Frankly, I had hoped to achieve that aim when I was with the Department. The assurance always was that local authorities would simplify the matter themselves, but they have not and they will not, and they need a central steer.

Secondly, authorities must be stopped from using their dominant position in the market in breach of the Competition Act, which is driving many homes out of business, by requiring all contracts to provide that the authority will pay a proper price under contract for the services that its clients receive rather than imposing a price arbitrarily. The contracts must contain a mechanism for independent mediation or arbitration in the event of a dispute over fees or other issues. It is appalling that homes must threaten to reject a resident. The Meath home has never done that, but other homes have reached that stage before local authorities have taken their concerns seriously.

Thirdly, the Government must stop authorities flouting the court decisions in the Sefton and Avon cases by claiming that lack of finance precludes them from paying a proper and reasonable price for those in residential care under section 21.

Fourthly, the Government must indemnify trustees of unincorporated and other charities against personal liability for redundancies or losses arising from failure of authorities to pay a proper price for services.

Fifthly, the Government must extend the scope of the Late Payment of Commercial Debts (Interest) Act so that it covers not just small businesses but all voluntary and private providers that have contracts with local authorities.

Sixthly, the Government must ensure that local authorities receive central Government funding to enable them to meet their statutory obligations to the disabled and others under the National Assistance Act 1948. I will not labour the Surrey point again here, but I am delighted to see the Opposition health and social services spokesman, my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), in the Chamber. He, too, represents a Surrey constituency, and shares in my predicament.

Seventhly, the Government must ensure that adoption of the compact on relations between the Government and the voluntary and community sector, which was launched last November, is made to work effectively at local level.

This is a matter of profound concern. Our traditions of charity and philanthropy in this country are second to none. The trustees, chairman John Jeffrey and chief executive Eleanor Lochner at the Meath home are outstanding, philanthropic, responsible and enlightened people. The Government's refusal to act is putting an appalling strain on all concerned. A decision cannot await the royal commission on long-term funding, which evidently the Government have kicked into touch. I have given the Minister seven practical suggestions and I hope that he will deliver on them.

10.18pm

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton)

I congratulate the right hon. Member for South-West Surrey (Mrs. Bottomley) on her success in obtaining this Adjournment debate. I welcome the chance that she has given me to set out the Government's position on the issues that she has raised. I join her in paying tribute to the dedication and professionalism of the staff at Meath house, and I certainly look forward to a future meeting with her and the delegation on epilepsy to which she referred.

The social services department in Surrey has been negotiating with Meath home trustees since autumn 1998 to put the financial arrangements between the social services department and Meath home on a sounder, more permanent footing. Negotiations are constructive, but they have been tough on both sides. I understand that the social services department sees the home as rightly ambitious about the service developments upon which it wishes to embark. However, the social services department in Surrey believes that it has a responsibility to strike a fair balance between funding the home and obtaining best value for Surrey residents. Some progress has been made. The social services department has indicated that it is prepared to make a special arrangement whereby Meath home is guaranteed a retail prices index increase in fees, year on year.

However, towards the end of February, Meath home wrote to the social services department with a proposal for new increases in residents' fees ranging from 2.3 to 85 per cent., with an average increase of 30 per cent. per resident for the coming financial year. If the social services department agreed to those increases, the cost to the local authority would amount to over £112,000 a year.

The social services department is not against the idea of paying fees according to the disability of residents at the home, but it will, quite properly, want to negotiate concerning the costings put forward by Meath home trustees.

Notwithstanding the recent additional complications in the contractual arrangement between Surrey and Meath home, the social services department is continuing to negotiate. I have the assurance of the director of social services in Surrey that he hopes that the position for 1999–2000 will be resolved in the near future. I am sure that the right hon. Member for South-West Surrey will understand that those negotiations must be left to the parties concerned, but I certainly hope that they will be resolved very shortly in a way that is satisfactory to both parties and, of course, to the residents of Meath home.

Mrs. Bottomley

As I made clear in my remarks, less than a third of the residents come from Surrey. The most acute problems are not with Surrey but with the many other local authorities that send residents to the home and then refuse to increase the fees or even pay the bills.

Mr. Hutton

I know that the right hon. Lady made those points, and I shall turn to the contractual arrangements with other local authorities in a moment. She has not left me much time to respond as fully as I would like, but I shall do my best.

I turn quickly to some of the other issues on which the right hon. Lady remarked. On 2 December, my right hon. Friend the Deputy Prime Minister announced the provisional local government finance settlement for next year. He told the House that the Government's support for local authorities would increase by 5.5 per cent. next year— more than double the rate of inflation. On 4 February, having listened to representations from many local authorities about the settlement, he announced the Government's intention to add £30 million to the provisional settlement. He also guaranteed that every social services authority would receive an increase in Government support of at least 1.5 per cent. next year. That is, without doubt, the best financial settlement for local government since the introduction of council tax in 1993.

As for funding for social services, within the total amount for local government, the Government have provided for a 6.3 per cent. increase for social services departments. For the first time, we have guaranteed that national resources for social services will be increasing in real terms for each of the following two years, enabling social services departments to plan ahead knowing that there will be increased funding. In fact, social services will receive almost £3 billion more in total over the next three years—an average of 3 per cent. more than inflation in each of those years.

We have also honoured our election manifesto pledge to make the distribution system fairer by introducing changes to the standard spending assessment formulae to ensure that the resources provided nationally are allocated in accordance with need. Some of those changes did not benefit Surrey, but I am happy to take this opportunity to convince the right hon. Lady of the wisdom of making the changes.

We changed three of the four SSA formulae for social services this year. I shall deal with each change in turn, explaining why it was made and how Surrey was affected.

First, we completely changed the formula used to allocate resources for children's social services. The old formula for calculating the SSA for children's services was based on evidence from almost a decade ago and was heavily criticised. It was out of step with current policy and my Department has spent three years on research to improve the formula. That work was started by the previous Administration, of which the right hon. Lady was a prominent member. The Local Government Association has been closely involved throughout, and many authorities have commented on the proposals in that time.

There are no lingering doubts about the factors in the allocation formula. All the major objections have been dealt with, and we believed that this was the moment to introduce the new formula. Surrey will gain somewhat from its use.

We also made two changes to the SSA formula used to allocate resources for residential care for older people. I know that the right hon. Lady was concerned about that. First, we decided to include in the formula a factor that reflects the number of people aged over 65 who are in receipt of disability living allowance. That has proved to be an uncontroversial change.

The second change was to exclude from the calculation the number of people living in institutions. We made that change for a number of very good reasons. First, the research that led to the formula was based on the characteristics of people living in the community. As the research did not consider people living in institutions, it follows that they should also be excluded when the formula is applied.

Moreover, if the SSA calculation reflects the total number of people in institutional care in an area, it will be giving the wrong amount of financial credit to each authority. That is because some of the people publicly supported in care in Surrey are not Surrey's financial responsibility. Some will be paying in full for their own care and will not represent a call on Surrey's resources. Others will be in care in Surrey, but will have been placed by another authority, such as a London borough, perhaps—the right hon. Lady referred to some such people—and will therefore be the financial responsibility of that other authority. As I understand it, that applies to some of the residents at Meath house.

Thirdly, and very importantly, people have said to us that it is not fair to take account of the numbers in care when allocating resources, because that number is open to local authority influence so should not appear in an objective allocation formula. What signals would it send for the Government to use a formula which, in effect, gives credit for putting people in residential care, yet gives no credit for keeping people out of residential care, especially since it is one of the Government's main priorities—it was outlined in the recent social services White Paper—to promote independence?

It is manifestly wrong for the SSA formula to give a perverse incentive to local authorities to place people in residential homes, rather than caring for them in the community, promoting independence and self-sufficiency. Making this change worked against Surrey, but I hope that the right hon. Lady can understand why we chose to make these changes and the powerful logic behind them.

The right hon. Lady may feel that the Government are being unfair to Surrey, but let us look at some statistics. On children's services, Surrey has less than half the number of children in families on income support compared to the national average.

Mrs. Bottomley

I made it clear that I did not want to discuss Surrey's funding, I sent the hon. Gentleman the seven questions that I hoped that he would address, and the place is called Meath home, not Meath house.

Mr. Hutton

With great respect, I have been referring to Meath home throughout my remarks. The right hon. Lady referred specifically to the deplorable settlement in Surrey, and I am contesting the basis on which she made those remarks. She chose to raise that issue, so I am afraid that she will have to accept that I intend to respond to that part of her speech. We have made a number of changes to the SSA formula, and I have given the reasons why we did so. I feel confident that they are fully justified and have led to a fairer distribution system.

I ought to correct the impression given by the right hon. Lady that we have somehow reduced spending on social services in Surrey. Nothing could be further from the truth. In general, resources for local government spending in Surrey will increase by 4.6 per cent. next year. Spending on personal social services will increase by 2.4 per cent. Total social services expenditure in the county was £141.427 million last year. Next year, that will rise to £144,625,000. Those are the facts.

The right hon. Lady also expressed her concerns about the way in which local authorities purchase residential care in the independent sector, and called for more direct Government control over the rates at which such care can be contracted. The Government's position on this issue was spelled out clearly in the White Paper "Modernising Social Services", in which we identified four key elements of good commissioning practice.

Local authorities should use a variety of contract types to deliver positive outcomes for users and security for good providers. We encourage authorities to issue block contracts to providers of innovative services for which there is a need. Block contracts can give security to providers by guaranteeing certain levels of income each year. I agree with the right hon. Lady that contract prices should not be set mechanistically, but should pay proper regard to providers' costs and planned outcomes for users.

Such encouragement, with our proposals for best value and a new performance assessment framework for social services, will help local authorities to deliver services to a clear standard—covering both cost and quality—by the most effective, economic and efficient means possible. Best value must be secured in all social services, whether provided in-house or contracted out to the private sector. We do not take an ideological approach to this issue. We have no preconceived ideas about whether the public or private sector should be the preferred providers. Those decisions should ultimately be based on judgments about best value and optimum outcomes for local users. Local authorities must be able, in the final resort, to demonstrate that their arrangements are delivering that.

The right hon. Lady expressed some concern that she was not able, during her period in office, directly to intervene in, and regulate, those matters. It is only fan-that, I point out to her that the system that she is drawing to the attention of the House, about which she is complaining, is the one that she bequeathed to this country. It is a bit rich that the right hon. Lady is complaining about the system of which she was the prime architect. We announced in the White Paper our proposals to improve the commission process. We believe that that is a significant step forward—a step that the right hon. Lady was unable to take.

The right hon. Lady drew attention to several important issues, and I have been unable, in the time that I have, to respond fully to all her arguments and points. I shall correspond with her about some of the other points that she raised.

All hon. Members share a common concern to protect vulnerable people and especially to ensure that our local social services are able to provide the effective care and support that is necessary for that purpose. I believe that the action that the Government have taken—including the additional resources for local government and our plans to modernise social services—will help local authorities such as Surrey county council to do just that.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes to Eleven o'clock.