Local Government Finance

HC Deb 03 April 1996 vol 275 cc458-79 7.46 pm

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

I beg to move,

That the Special Grant Report (No. 17) (House of Commons Paper No. 299), which was laid before this House on 18th March, be approved.

Madam Deputy Speaker (Dame Janet Fookes)

I understand that with this, it will be convenient to discuss the following motion: That the Special Grant Report (Wales) 1996 (House of Commons Paper No. 297), which was laid before this House on 18th March, be approved.

Mr. Bowis

The first order sets out two grants for English local authorities. The first is the special transitional grant to local authorities in England for 1996–97 for expenditure on community care services. The second is the capital limits for residential accommodation charges grant for England. The second order sets out the allocation of the special grant to local authorities in Wales for the changes to the capital limits for residential accommodation charges.

Special Grant Report No. 17 sets out the amount of special transitional grant—STG—for each English local authority for 1996–97. The total amount of the grant is £418 million. The special transitional grants for each of the years 1993–94, 1994–95 and 1995–96 have now been included in the standard spending assessment for personal social services. The total funding that we are giving in 1996–97 to English local authorities for their new responsibilities under the community care reforms is therefore £2.256 billion—a very substantial sum indeed. This is planned to rise still further, by another £325 million, next year.

Even that is not the total provision that the Government are making for community care. The total provision for community care in England for 1996–97 is £5.6 billion, and the total funding for all social services is £7.4 billion. Total resources for community care have increased by 10 per cent. in cash terms this year on last and by 99 per cent. in real terms since 1990–91. That shows the substantial commitment that we have made to providing resources to enable local authorities to meet the needs of their local communities. Of course, it remains up to local authorities to decide how much of their general funding they actually spend on community care.

Apart from the overriding condition that the resources be spent on community care, the only condition that we attach to the special transitional grant is that 85 per cent. of it should be used to purchase services from the independent sector, and that that is in addition to the amounts that authorities have been required to spend in the independent sector in previous years.

The independent sector condition has proved to be an effective measure, giving stability to the market at a time of change, providing existing residents with security and opening up choice to the user. Local authorities should not close down options by creating false divides using restrictive accountancy practices to dictate phoney choice instead of offering real choice to the individual. In its report, the Audit Commission said that accounting separately for the STG and other community care resources can lead to distortions, and that where authorities apply maximum cost limits to packages of care … local authority services are sometimes … treated as a 'free good' … this practice distorts priorities". The Audit Commission recommended that Resources need to be managed in an integrated way and merged into a single commissioning budget. We are providing large sums of money to local authorities for community care.

Mr. Alan Milburn (Darlington)

Will the hon. Gentleman give way?

Mr. Bowis

Yes, as it will give me time to find my place.

Mr. Milburn

I am glad to be helpful, as ever. Can the Minister confirm that he still intends to end the ring fencing of STG moneys? This would be the last year of the ring fence. Also, how will he guarantee that community care funding goes where it is needed in future years, particularly given the environment that most local authorities operate in?

Mr. Bowis

I can tell the hon. Gentleman that this is the fourth year of the four years that we said would have the transitional grant, which was ring-fenced. Although I have given an indication of the resources that will be available for that in future years, it will be up to local authorities to use the money wisely and ensure that it is spent as it should be, which is for community care and other personal social services.

The determining factors in the expenditure of the money must be quality of service and value for money matched to the individual's needs and choices. When it comes to value for money, local authorities often need to bring down their costs. They need to consider carefully the justification for spending more on directly provided services than an equivalent service provided by the independent sector. The difference in costs when multiplied by the number of users presents some authorities with the opportunity of considerable savings in their present budgets, and they could be used to improve and extend the community care services they offer their local communities.

This year, the distribution of the special transitional grant is again based on the standard spending assessment formulae. That is the most equitable method of distribution, as it is based on an assessment of the relative needs of each local authority.

I now deal with special grants for the changes to capital limits used in the assessment of charges for residential care. Charging for residential care has been in place since a Labour Government introduced the National Assistance Act 1948. As my right hon. and learned Friend the Chancellor of the Exchequer announced in his 1995 Budget statement, the capital limits used in the assessment of charges are being increased this month from £3,000 to £10,000 and from £8,000 to £16,000. The same rate of assumed weekly income will apply to capital between £10,000 and £16,000. The new limits take effect from 8 April this year.

The increases have been warmly welcomed by all concerned. They are excellent news for elderly and other vulnerable people who make a contribution out of their capital for care. The increases are to be funded through special grants for 1996–97 only because there was insufficient time left during this financial year following the Chancellor's announcement for them to be funded through the usual means of the SSAs for local authorities.

I am grateful to the local authority associations for the help and advice they gave us and the information that they provided us with in working out how the increases should be financed. There are considerable difficulties in forecasting the future costs of such a change, as it involves an unknown number of people. There will inevitably be different views of the cost. Having taken into account the information gathered by the associations, it was clear that the Government's initial cost estimates for the effects on social services authorities were a little low, so we decided that £64.487 million for England and £3.882 million for Wales was right.

Mr. Milburn

Having thanked the local authority associations, will the hon. Gentleman confirm that their estimate of the costs of the increase in the capital disregard is not £64 million but £141 million?

Mr. Bowis

I am certainly happy to confirm that they put in a higher figure, just as the figure that we had initially been working on was lower. We considered the various factors that they presented. We felt that some were speculative. Others were what we deemed to be items that we could take into account. We listened and considered and came up with the increased figure, which is fair and will be judged as such.

We decided to distribute the grant to English social service departments using the SSA for residential services for elderly people. For Wales, the local authority associations agreed that the SSA distribution formula for elderly personal social services would be an equitable basis for the distribution of the special grant for 1996–97. Again, it was for one year only. The distribution of the resources for future years will be made using the corresponding indicators in the SSA distribution formula.

The Government have clearly shown their commitment to community care and made substantial resources available. These special grant reports provide for the distribution of additional funds to local authorities totalling more than£482 million for 1996–97 for England and £3.8 million for Wales. They are fair settlements. We now rely on the local authorities concerned to produce fair results for the people who are to benefit from them. I commend them to the House.

8.5 pm

Mr. Alan Milburn (Darlington)

I thank the Minister for outlining in a fairly succinct way the Government's views on the special transitional grant and community care funding. I am disappointed that this debate has taken place at the fag end of the parliamentary Session. Some might say that that shows that the Government have something to hide. Indeed, as I proceed through my speech, I shall try to highlight the fact that the community care system is coming under more pressure and that the very people it is supposed to support are beginning to be denied care.

At the outset, I should say that there are two issues on which there is agreement. First, community care is right in principle. The overwhelming majority of disabled and elderly people want to live as normal a life as possible in their own homes and contribute to the community.

Secondly, all hon. Members will concur that we owe an enormous debt of gratitude to those who organise and provide care in the community—not just local authorities, but private sector organisations and voluntary organisations, social workers, district nurses, home care assistants and staff who work in residential and nursing home establishments. They provide invaluable services, often in difficult circumstances. Their work is underpinned by those who provide care for free—the army of unpaid carers, often women, who are the foundation on which the whole community care edifice is built.

There is no disagreement in principle with the thrust of community care—quite the opposite. There is unequivocal Opposition support for the community care principle. Our profound disagreements concern the way in which the Government have implemented community care. In our view, they have produced a chaotic, perverse and unfair system that denies choice, limits quality and wastes public money.

The special grant report does nothing to correct those deficiencies. In some respects, it merely makes matters worse. In his canter through the facts, the Minister repeated the mantra that is all too often the common parlance of Health Ministers when they are in trouble—everything is fine because we are banging a lot more money into the system.

Indeed, on a cursory examination of the figures in the report, the Minister seems to have fact on his side. On the face of it, there are lots of new resources and a substantial increase in funding, but the Minister omitted to mention two further factors that rather undermine his case. First, the social security transfer and independent living elements of the STG moneys do not represent new cash; the money was already in the system. The only difference now is that it is cash-limited.

Secondly, the £418 million of STG highlighted in the report is a large element—indeed, the bulk element—of the £481 million that the Government suggest overall social services spending should increase by in the current financial year. In reality, total standard spending on social services this year is less than actual social services spending last year£that is before any account is taken of inflation, of pay rises and of additional responsibilities that local authorities will have to bear, including those resulting from the most welcome Carers (Recognition and Services) Act 1995, which came into being on Monday 1 April.

The local authority associations' latest survey of social services departments has found that 48 out of 68 local authorities are having to make net reductions in budgets totalling approximately £116 million. In case the Minister thinks that that is purely vested interest, I point him towards other evidence. Independent analysts, such as Laing and Buisson, have said that the budget settlement for 1996–97 will not be sufficient to cover inflation and increased demand as a result of demographic change and additional local authority responsibilities, and that they are predicting severe bed blocking in the national health service as a consequence.

Mr. Bowis

The Government have increased the resources for that area by 10 per cent. in cash terms this year and we have increased resources from £3.6 billion to £7.4 billion in six years. I ask the Opposition spokesman: how much more money would the Labour party put in right now?

Mr. Milburn

I shall correct the Minister on one point: over the past three or four years, the personal social services SSA has fallen by around 5 per cent. in real terms, as he knows. As for additional investment, during my speech, the Minister will hear ways in which the Labour party proposes radical reform of community care provision to get better value for money—that is the pressing priority. Money alone will not solve the fundamental fault lines that now characterise community care provision.

Far from there being lots of additional new cash available for community care services, at best there is a standstill budget in this financial year and at worst there is a lower budget than last year. However, as the Minister will know, demand for services has not stood still—quite the reverse: demand is rising sharply. The Government should not be reticent about that fact. Indeed, it could be argued that one of the real successes of the community care reforms has been the stimulation of demand for services from people who need them. That is very welcome.

Last year, a report by the Association of Directors of Social Services showed referrals increasing by 14 per cent. per annum and assessments generally rising by 11 per cent. per annum. Against a background of rising demand, local authorities are continuing to uphold community care policy, but to provide a service to those most in need, they are reluctantly turning to rationing and charging for services.

The Audit Commission has found that most authorities are increasing home care services, but I understand that a forthcoming report from the London Research Centre will find that packages of care are increasingly concentrated on those with the highest level of dependency. If local authorities cannot afford to support people with relatively low levels of need in their own homes, they may deteriorate quickly and enter residential care prematurely. We all agree that one of the central thrusts of community care policy has been prevention—ensuring that, as far as possible, people retain independence and do not become dependent—for the sake of the people involved and that of the taxpayer.

There are also major flaws in the way charging policies are implemented. Financial constraints are leading more local authorities to charge more for local services, but there are almost as many charging systems as there are local authorities. This was one of the conclusions of the National Consumer Council report that was released a year or so ago. The National Consumer Council, the Audit Commission, local authority associations, many providers and patient organisations now argue that there is a need for much greater national clarity to govern local charging policies—and we endorse that view.

We also take the view that other reforms are needed. During last year's debate, the Minister claimed to have removed any perverse incentives towards placing people in residential care. Such a claim now seems to have been somewhat premature. The Audit Commission said recently that it is almost always substantially cheaper for local authorities, in the current financial environment, to place people in residential care, even when there is no difference between the gross cost of residential care and care at home. When residents qualify for the residential allowance in independent sector homes, there is an even bigger cost advantage in using residential care.

Local authorities are working hard to maintain people in the community, in spite of that anomaly. Last month, the Audit Commission concluded that it was to many authorities' credit that they were increasing home care in line with the Government's policy, even though it was cheaper for them to make more use of residential care under the rather perverse financial arrangements that underpin the report that we are discussing. There is a clear danger that the successes of community care will gradually be reversed unless the perverse financial incentives are addressed as a matter of urgency.

The threat of more institutionalisation is due in no small part to the impact of the NHS reforms on community care services, which the Government introduced. Competition between hospitals, pressure to increase patient throughput and NHS performance measures have all contributed towards the more rapid discharge of patients into the community. It is a classic case of one hand not knowing what the other hand is doing. It is understandable, if not forgivable, when two separate Departments are involved in the decision-making process, but it is incomprehensible when one Department—the Department of Health—is responsible for the mismanagement.

For all the talk of a primary care-led NHS, it is a change in the make-up of the acute health sector that is responsible for driving change in the community sector. It is also becoming increasingly clear that community care services are being overwhelmed with increased responsibilities. Recently, Age Concern reported that elderly people are being forced into residential care due to excessive waits for occupational therapy assessments.

The impact of these policy failures on local authorities is also severe. They have been forced to absorb additional costs shunted on to them by the NHS, for which no financial allowance has been made. In particular, NHS disinvestment from continuing care responsibilities has produced a redefinition of responsibilities between health and social services. The Alzheimer's Disease Society—among many organisations—has voiced concern about the impact of these changes on vulnerable people.

During the 1980s, back-door privatisation was taking place right under the public's nose. There was an unplanned explosion in private residential care, which was encouraged by Government policy, and then it was crudely restrained as benefit bills spiralled out of control. Costs to the taxpayer rocketed from £10 million to over £2,000 million. Those who now have to sell their homes as a consequence of the brakes being slammed on—an estimated 40,000 people a year—are rightly angry because they had fondly believed that the taxes they paid covered care from the cradle to the grave. They now find themselves in a grotesque game of pass the buck as cash-strapped health authorities and local authorities shunt responsibility back and forth.

Worse still, by passing responsibility to individual health authorities to decide which continuing care services should be available to elderly people, the Government have created a lottery in community care provision. Only a few weeks ago, even the Department was forced to rap the knuckles of health authorities that had produced inappropriate continuing care eligibility criteria.

The picture is clear. It is obvious that the care that a person receives and the price that he pays for it depend on where he lives. We, the Opposition, say that that sort of national lottery should have no part to play in the NHS or in any civilised system of community care.

The report does nothing to correct fundamental deficiencies in the system of providing and funding community care. The Government have produced a system that is chaotic, perverse and fundamentally unfair. The system cannot cope with increased demand because it is riddled with fault lines. Pouring in more money alone will not sort out the mess. The pressing priority is for a far-reaching reform of how the system operates in practice. That requires a new approach. We believe that four reforms are needed.

Mr. Gary Streeter (Plymouth, Sutton)

Labour reforms?

Mr. Milburn

Four Labour reforms are needed, as the Government Whip says from a sedentary position.

First, there is a need to offer more choice for community care service users. The stark lack of choice in the community care market, polarised between fairly low levels of domiciliary provision and fairly high levels of expensive residential provision, often means that intermediate forms of care are unavailable to those who can best benefit from them.

The current gaps in provision deny choice to the individual who needs care, and load unnecessary additional costs on the taxpayer. A range of services is needed, including home-based care, respite care, convalescent care and residential care. We want the Government to remove perverse financial incentives towards more institutional forms of care. Institutionalisation is the very reverse of what community care is supposed to be all about.

In that context, it is disappointing that, through the report, the Minister has decided to retain the requirement that local authorities must spend the bulk of their STG budgets in the independent sector. Surely the requirement for them to do so has long since gone. By and large, there is a well-developed mixed economy of care that is thriving in most parts of the country.

Secondly, there is a need to end the lottery in the provision of community care services. The Government could begin by introducing, after consultation with users, carers, providers and statutory bodies, a national framework for local charging policies. We, the Opposition, support the call that has been made by the Select Committee on Health for a nationally set framework that specifies eligibility criteria for long-term care so as to define what the health service, a national service, should provide. We support that approach. Do the Government support it?

We think that the Select Committee's call for a national long-term care charter so that people may know what they can expect from health, housing and social services is absolutely right. We support that; do the Government?

Thirdly, there is a need to improve standards in community care services. Standards will rise, however, only if there are appropriate safeguards. We, the Opposition, recognise the benefits that can flow from a mixed economy of social care that involves public and independent providers. We are in favour of diversity. We are in favour also of consistency. Our concern is to ensure that there is a level playing field of high standards in all forms of care in the private sector, in the public sector, in residential provision and in domiciliary provision. I hope that the Minister's response to the moving forward of the consultation process will concur with the Opposition's.

Fourthly, there is a need to end the waste of time and money that now bedevils the planning and supply of community care services. That means finding ways of overcoming differences in values and structures between local government and the NHS that can frustrate joint working. When local authorities and health authorities tussle over responsibilities and resources, it is the elderly person and the disabled person who loses out. We want new, nationally agreed mechanisms—if necessary, enforced—to speed co-operation among the three principal organisations that are charged with the planning and delivery of community care services; health, housing and social services.

The four-point plan that I have outlined would broaden choice, raise standards and provide better value for money. Instead, the Government seem content to pour money into a black hole. Our reforms would be the basis on which to provide long-term care for the elderly in future.

We are proposing a radical shift in the way community care services are planned and delivered. The current system is unfair, restrictive and inefficient. Our proposed changes to community care policies would provide more choice, higher standards and better value for money. Our proposals will help to bring order where there is now chaos, fairness where there is now injustice and consistency where there is now a lottery. Above all, they would bring security to people in old age, where there is now glaring insecurity.

8.25 pm

Mr. Ieuan Wyn Jones (Ynys Mon)

I am pleased to have the opportunity to make a short contribution to the debate. I shall speak to the Special Grant Report (Wales). Before doing so, however, I take up the Minister's opening statement.

In general terms, the Minister claimed that the Government had introduced a substantial cash increase over a number of years. The Minister may recall that when we were debating the principle of community care in the late 1980s, especially in response to Sir Roy Griffiths's report, he suggested that if community care were introduced a proportion of those who claimed to be inappropriately placed in residential homes and nursing homes might wish to be cared for in their own homes.

The policy was introduced on the basis that a proportion of those claiming to be inappropriately placed would be cared for in their own homes. We now find that the number of people making that choice is much greater than anyone anticipated. The proportion of those who are choosing to stay at home as against going into residential nursing homes is substantially greater than hitherto, and I accept that it is greater than anyone on either side of the House expected. The cost of providing care at home is greater than providing care in a residential home. Local authorities in Wales are saying that the Government have not gone far enough to meet the demand for care at home. Some local authorities in Wales are saying that the financial shortfall this year is quite substantial.

The Minister said that local authorities should be seeking ways in which to become more cost-effective, by becoming enablers rather than providers. However, it is difficult for local authorities to do that, especially in extremely rural areas such as the one that I represent—the former county of Gwynedd, which is now the two counties of new Gwynedd and Ynys Mon—because there is no private sector to develop. It is therefore difficult for local authorities to consider moving along that line. There is a highly developed voluntary sector, but not an independent sector.

Local authorities in areas of Wales such as the one that I represent therefore do not have a choice, even if they agree with the Government's ideology and accept that that represents the direction in which they should be going. These are important considerations in the context of the debate.

I endorse the comments of the hon. Member for Darlington (Mr. Milburn) about local authorities in England. Similarly, local authorities in Wales believe that the Government have underestimated the amount that authorities require to meet some of the changes introduced by the Chancellor of the Exchequer's Budget—changes that we all welcome, although they do not go so far as some would have liked. The Government had to make up the funding shortfall for local authorities this year in order to meet those changed circumstances.

I have asked three local authorities in Wales—Ceredigion, Gwynedd and Ynys Mon—about their feelings regarding the provisions made under the order that we are discussing today. As set out in the Government's order, Ceredigion receives about £100,000, Gwynedd receives £191,000 and Ynys Mon receives £96,000. The local authorities tell me that the shortfall for the three counties totals £164,500—in addition to the cut that each local authority says that it will have to make in its general budget, including cuts in community care. I then asked the local authorities to tell me the reasons for that shortfall and the way in which the sums were calculated.

I am told that the Welsh Office estimates were based on figures arrived at after consulting the old counties and using a historical formula. The figures were also based on the current number of people in residential and nursing homes. The local authorities believe that it is also important to take into account those for whom the option of residential or nursing home care is now more attractive as a result of the Budget changes. The local authorities face the added burden of having to assess people for contributions who were previously outside the system. Therefore, there will be additional expenditure.

Local authorities will also have to consider employing more staff or part-time staff to meet the extra workload that the new system involves. The local authorities estimate that there will be more applicants to assess and that the system for assessing short-stay and long-stay patients will differ. As I understand it—perhaps the Minister will clarify this when he winds up the debateshort—stay patients will not benefit from the new Budget announcement, as their contributions will be based on the old system. However, long-term patients will benefit from the new capital threshold. In short, the local authorities that I have consulted believe that the Government have underestimated the demand and the need for extra staff to deal with the assessment procedures.

The local authorities estimate that the Government have not provided sufficient additional finance this year. If the local authorities' estimates are correct, will the Government do a reassessment during the year to see whether additional funding may be made available? While welcoming the assessment that has been provided through the special grant, I ask the Minister to assess the situation throughout the year and, if the local authorities prove correct, to meet their concerns.

8.33 pm

Ms Ann Coffey (Stockport)

I should like to take this opportunity to complain about the small amount of grant that Stockport has received as compensation for the loss of income due to the changes in capital disregard.

The elderly residential standard spending assessment being used for the distribution of the specific grant comprises a number of indicators. These include, first, the number of elderly people living alone; secondly, the number of elderly on income support; thirdly, the number of residents in residential homes. The formula benefits those authorities with greater numbers of people on income support who are less likely to own their own homes. The SSA is reduced for local authorities with greater income as a result of residents having capital assets following the sale of property or receiving occupational pensions.

The situation is further complicated by the fact that the all-ages social index is used when calculating the overall SSA. It reflects, among other factors, the proportion of persons living in accommodation that is not self-contained; the proportion of persons without exclusive use of a bath or an inside toilet; and the proportion of elderly persons living in privately rented or housing association accommodation. Thus, if a council has a successful housing policy and also has more elderly people who are owner-occupiers, it will receive less central Government assistance. That is not a point of dispute in itself, but the value that each factor is given when calculating the revenue support grant is indeed a point of dispute.

The Department of Health has commissioned research regarding SSAs in two areas—children and the elderly—and both projects are due to report in June. I believe that that research is important. Before the introduction of the poll tax, the central Government contribution to Stockport, as elsewhere, was about one third of the council's total revenue expenditure on services. Since then, the situation has been reversed. Councils are also capped, which makes the new research very important in identifying indicators that will more sensitively match grant to need.

I return to my complaint about the distribution of the £64.487 million specific grant. As I have said, the SSA is reduced for those authorities which have more elderly people with capital assets—that is, home owners. Yet those authorities will lose income as a result of the capital disregard changes. Stockport calculated that it would need £822,000 to compensate for loss of income—£600,000 to compensate for loss of income from existing residents, and £222,000 to compensate for existing residents and patients whose capital decline brings them into new eligibility criteria and for new residents and patients admitted to care in 1996–97.

Stockport was given a grant of £331,000, which is half what it needs to meet the known loss of income from existing residents. The Government cannot have it both ways: if the SSA is reduced to reflect expected income from charges in residential and nursing homes, it is not unreasonable to expect those authorities with higher incomes to be compensated at a higher level as a result of the increase in the disregard, as they are likely to lose the most income.

From Stockport's point of view, it is ridiculous that the distribution mechanism for the specific grant is not based on actual loss of income as it was supposed to compensate authorities for loss of income. In a letter to the director of social services, Bob Lewis, on 20 March, the Department of Health said: the Association's survey of authorities' estimated costs was indeed very helpful to us, particularly in relation to the information about residents already known to the authorities". It was so helpful that it persuaded the Minister to provide more specific grant overall, but it was not helpful in providing a grant which reflected Stockport's estimated, or even actual, costs.

I understand that the Minister argues that, as it is a one-off payment, applying a different distribution mechanism would risk significant changes to authorities' shares of the funding between the two years. Stockport is grateful for any offer of stability from the Government, but we would have preferred that stability to take account of fairness as well. It is not a fair distribution, particularly as Stockport is a capped authority. The social services division already faces cuts of up to £3 million, which must inevitably affect its ability to deliver support services to elderly and disabled people living at home—that is to say, community care.

The £500,000 shortfall must come from somewhere. The authority already has comprehensive charging policies for support services provided to people living at home. The £500,000 can be made up only at the cost of community care, which is delivered to people at home.

I am absolutely fed up with asking the local authority to consider requests from my constituents for something as simple as a shower, for example. People who cannot get into the bath unaided need a shower, which can make a dramatic difference to their quality of life. They cannot get a shower, because the authority does not have the money for that level of community care provision. That is an absolute disgrace, and the situation will be made much worse by the fact that Stockport has been robbed of £500,000 by the Minister. In future, I shall send all requests from my constituents for showers to the Minister: let him explain why they cannot have them. The authority does not have the money because of the unfairness of the way in which the specific grant has been distributed.

I hope that the Minister will listen to my plea: if later in the year he considers a supplementary grant, Stockport should be top of the list. May we have our £500,000 back?

8.40 pm

Mr. Gareth Wardell (Gower)

I shall confine my comments to the Special Grant Report (Wales) 1996. I shall not make any comments on England, which will give one Minister at least a well deserved respite. I shall examine the implications of annex B of the report. On 13 April 1993, the National Assistance (Assessment of Resources) Order 1992 came into force, and it impinges on the report. On 23 February 1995 Welsh Office circular 95/7, headed "NHS Responsibilities for Meeting Continuing Health Care Needs", was put out. The connection between that and the report before us today is that the report builds on a basic principle that the Government are still intent on pursuing—that of means testing.

The Chancellor fiddled with the means testing requirement in the Budget. He thought that he was improving the position so that—rightly, in my view, if one accepts the principle of means testing—people who had a certain amount of capital were able to retain that capital at a higher level than hitherto. None the less, the principle that people who have paid national insurance contributions through their lifetime to ensure that they would not have to dip into their savings in old age is still Government policy and is still contained in the report.

The 1992 order brought nursing homes into the remit of the National Assistance Act 1948. The residential home sector was already covered by that Act, but the private nursing home sector was brought into the same category. The 1995 Welsh Office circular amended the 1991 Welsh Office circular. I remind Ministers, not that they need reminding, of the charade and masquerade—I do not like using those words too often—and the difficulty that the Government put professionals into by that circular.

I am the Chairman of the Select Committee on Welsh Affairs and we considered this topic in 1992. On 5 February 1995 I asked a senior officer of the Gwynedd social services department, Mr. Williams, whether the Welsh Office was making the job of professionals impossible through the means testing system, and he agreed. In column 159 of the minutes of evidence, he said: I quite agree with the sentiments you are expressing. What we have to look at is the pressures on those people in those circumstances, and they are quite appalling. Sometimes it is a kind of social conspiracy, almost, involving a number of people, quite unconsciously, to achieve certain tidy outcomes, which is residential nursing home care. A tidy outcome is residential nursing home care.

The clear point was that there were two types of people being discharged from hospital to private nursing homes, and that is relevant to the report that we are discussing today. There were the people who knew their rights and who refused to be means tested under the 1991 Welsh Office circular: they said that they would stay unless they were forced to leave. Then there were the others—the majority—who did not have that circular to hand in their hospital beds and who were discharged to a private nursing home under the guise that they had to be means-tested.

Some people knew their rights—they knew that the health authority would have to pay for them to be in a private nursing home if they were discharged—but most people were told a different story by the professionals, who were under enormous pressure in the acute sector to discharge people under an almost false pretence that the law was on the side of the professionals. That is what is behind Mr. Williams' point.

Mr. Rhodri Morgan (Cardiff, West)

Has my hon. Friend seen the latest statistics—I believe that they date from December 1994, certainly no later than that—which show that only 45 people in private nursing homes in Wales are paid for by the health authorities? That is about 0.3 per cent. of people in nursing homes in Wales.

Mr. Wardell

I am grateful to my hon. Friend, and I am aware of those statistics.

The reluctance of many health authorities in Wales to pay for anyone to be in a private nursing home is shown up clearly in those statistics. I am glad that the Government have addressed that issue. In other words, they eventually—four years later—decided that the situation was not acceptable. They were content to leave that situation for that length of time. They were quick enough to rush legislation through the House yesterday, but they were not prepared to do the same for elderly and vulnerable people. However, I am glad that the Government eventually—slowly, but surely—saw the light.

I am pleased that the change has come about, but the report rests on an important circular, to which I have already referred. It was issued in 1995 by the Welsh Office and amended the circular of 1991. My personal view is that government by circular is not very satisfactory. I am uncomfortable with the way in which circulars are churned out by Government Departments. Nevertheless, the circular on which the report rests is about the discharge of people from hospitals. I hope that the Minister will be able to reassure me about the current practice in relation to paragraph 25 of that circular.

The report before us today assumes that money will be made available to enable implementation of that paragraph of the circular, which contains four pieces of information that hospitals should make available to patients before discharge. The Welsh Office relies on a manual on hospital discharge practice issued in December 1994, which is the latest in a series of hospital discharge workbooks.

What does the Minister intend to do about information that is clearly not being provided under the terms of the circular? It is the responsibility of the Secretary of State to ensure that the structure and operation of the health service is satisfactory. When it is not, what will be done? I shall not read all four of the relevant paragraphs, but perhaps the Minister can deal with them comprehensively. I am sure that he has the circular in front of him, or soon will have.

It states: hospitals should provide simple written information about how hospital discharge procedures will operate and what will happen if patients need continuing care". When I visited a hospital recently, I could have caused a major upheaval because I went from bed to bed asking patients who were about to be discharged whether they had received that information. I had the circular in my pocket. The hospital staff looked at me rather charily, wondering what I was doing.

What has the Minister been doing to check that patients who are being discharged are given the relevant information? My guess is that not many patients receive it. I make the same point as in relation to the discharge of means-tested patients between 1991 and 1995: what is the use of a finance order which changes the method of means testing patients who are being discharged if the circular on which the order is based does not do what it should?

The Parliamentary Under-Secretary of State for Wales (Mr. Rod Richards)

To save the hon. Gentleman time, if he will write to me about the particular hospital that he visited, which did not seem to be complying with any instructions or guidance from my Department, I shall be more than happy to look into the matter.

Mr. Wardell

I should be more interested if the Minister would write and tell me—or tell the House now—what powers he has to ensure adherence to the guidance. What can he do?

The order may extend and continue, rather than address, the anomaly that, if a person who is to be discharged from hospital to a private nursing home returns to his or her own home, the capital value of that individual's property would not be taken into account at £16,000 or any other level by the local authority in assessing the charges to be levied against that person. I am worried that the Government may seek to correct that anomaly by including the capital value in that calculation, which I would not want them to do.

My third point—I shall not continue the debate until 10 o'clock, although I do not often have the opportunity—

Madam Deputy Speaker

Order. That will not be possible.

Mr. Morgan

That was my fault.

Mr. Wardell

I was informed by a Front-Bench Member that the debate could continue until 10 o'clock, Madam Deputy Speaker, so I am glad that you have made that point.

Mr. Jeremy Corbyn (Islington, North)

The debate can continue until 9.26 pm.

Mr. Wardell

Yes, and I must remember that we have yet to hear the winding-up speeches.

We see in the current system a division of boundaries, whereby private nursing home patients fall into two categories—and those who are not subject to means testing, which the order continues, may be in the same room as those who are. A line is drawn according to whether an individual is to be a social care or a medical care case. I shall not debate the subject of incontinence pads because the Minister must be fed up with the problem of who pays for them.

The hospital doctor and the multi-disciplinary team considering the patient who is to be discharged will have to decide his or her future. Whatever their decision, if no long-term beds are available in the hospital service, the individual who is paid for by the health authority will be placed in a private nursing home. Some patients pay for themselves, whatever the capital limits, and some do not. The order builds on that divisive situation.

Although I am pleased in one sense that the Government have at last ended the anomaly introduced by the 1991 Welsh Office circular, even though it has taken them four years to learn the folly of their ways, I remain concerned that, despite the new capital limits, we are left with a means-tested system which does not make universal provision but is divisive and leads to some patients in the same institution being means-tested while others are not.

I thank you, Madam Deputy Speaker, for your indulgence.

8.56 pm

Mr. Rhodri Morgan (Cardiff, West)

This is almost the last debate of this part of the current Session, and I suppose that Oscar Wilde might have said that nothing recedes like the recess for those of us who are left here this Wednesday night.

The change in the capital disregards that created the need for the order are part of the Government's two-pronged approach to ease the problem facing people with reasonable means who—because they scrimped and saved to purchase their homes, buy shares or acquire pension entitlements—fail the means test. The Prime Minister has made a big fuss in speeches over the past year or two, and as recently as last Friday, of using a phrase about wealth cascading down through the generations.

The problem is that wealth has not been cascading down the generations. This measure and others that we expect later this year are an attempt to make the Prime Minister's idealised version of the country which he is running appear to come true. I understand that about 40,000 people a year who have failed a means test for community care eventually have to sell their houses. One of the favourite phrases of the last Prime Minister was "a property-owning democracy". For many elderly people, this is a property-disowning democracy for those who require a long spell of care.

The Government have set about trying to remedy the problem created by their changes to the structure of the NHS and local authority social services provision. The problem for them is that their rhetoric has gone one way and their policy actions another, causing many people to sell their houses so as to stay in nursing homes and old people's homes. I hope that the Minister will shortly be able to confirm my figure of 40,000 houses a year having to be sold to enable people to have long-term care, and will tell us by how much he expects the figure to fall as a result of the change to the capital disregard.

My figures do not come from the Government—

Mr. Streeter

Ah!

Mr. Morgan

The Government Whip need not get so excited. I make no apology for taking my figures from Laing and Buisson, commonly regarded as the bible on all matters relating to long-term care. The figure was given in recent evidence to the Health Select Committee, but if it is wrong I am happy to be corrected. The important thing is to find out how many fewer houses will have to be sold to allow for nursing home care as a result of this measure.

I wonder whether the Government will be able to put some more flesh on the speech made by the Prime Minister on Friday, to cover the other aspect of the Government's two-pronged approach. The Government want to introduce a partnership insurance scheme under which they will pay for long-term care after the first three years provided that people buy insurance for those first three years. Will that have a direct impact on the fear that old people have that they may not in the end be able to pass on their houses to relatives because they will have to trade their houses in for long-term care?

This debate also enables us to touch on other significant changes going on simultaneously. The change we are discussing tonight will take effect from Easter Monday, but on 1 April three other changes in related areas took effect. I hope that you will agree, Madam Deputy Speaker, that I would be in order if I mentioned them.

The first change concerns the new statutory right of a carer to have his or her needs assessed by local authorities. Thus local authorities will become instrumental in determining whether people need to go into old people's homes; if they decide that they do, the means-testing operation will be triggered. That in turn will depend on whether a carer at home can last out without becoming ill from strain and stress. That again depends on whether enough respite care is available—usually from a son, daughter or spouse. This change may also have a bearing on the number of people affected by the order.

The second change dating from 1 April concerns the new health authorities and local authorities in England and Wales. In Wales until 1 April, county council social service departments and health authorities had more or less identical boundaries, so there was a natural tendency to co-operate and work together. Pembrokeshire was the one exception, but that did not cause much difficulty, because it remained a subdivision of a social services authority.

During the coming year, the Minister will need to ensure that the former tendency towards co-operative working arrangements between health authorities and social service departments—in respect of hospital discharge, for instance—is not dissipated. Instead of eight or nine health authorities and social service authorities in Wales, there will now be five and 22 respectively. The Minister will need to monitor the situation over the next 12 months to be sure that the system does not start falling apart.

My hon. Friend the Member for Gower (Mr. Wardell) raised another important issue relating to the changes which were made recently, and which are still being digested. They are significant to the order. The orders for England and Wales refer to the fact that they are based on the provisions that have been around since 1948 under which one can means-test anyone who goes to a nursing home or old people's home.

The point raised by my hon. Friend is significant because, until a few months ago, one did not have to go into a nursing home or an old people's home. If a person wanted to remain in a long-stay bed in the geriatric ward of his local hospital, he could insist on doing so. A person may believe that that choice will cost him a fortune and that he may have to sell his house to fund it, but he would be perfectly within his rights to insist on a bed.

That voluntary principle has now gone. The change does not equal continuity with the previous provisions. What was voluntary is now compulsory. If a health authority says that someone must go into a nursing home or an old people's home, it has the force of law behind it. Until the ombudsman's case—

Mr. Bowis

indicated dissent.

Mr. Morgan

I sorry that I have to cross swords with the Minister, but he is wrong. Should he check before the Under-Secretary of State for Wales replies to the debate, he will find that my argument is not ill founded.

Mr. Gareth Wardell

The crucial point behind the remarks of my hon. Friend is that, if it was decided under the old system that existed until a few months ago that an elderly person needed to be discharged to a private nursing home, that person would now be asked whether he would prefer to be means-tested or not. If he said that he preferred not to be means-tested, the health authority would face the dilemma of either having to keep that person in a bed or paying for him to go to a nursing home.

Mr. Bowis

indicated dissent.

Mr. Morgan

My hon. Friend is right, and I am pleased that he has clarified the matter for the Under-Secretary of State for Health, although I note that the hon. Gentleman is still shaking his head. I hope that the advice offered by the Welsh Office Minister will clarify the matter for the Minister responsible for England. I can only express a certain amount of gratitude for the fact that he is not responsible for Wales.

A level playing field must be established between domiciliary and residential care. That is at the heart of the debate. The orders for England and Wales apply only to people going into nursing homes or old people's homes. They do not apply, and do not increase the capital disregard for those who come out of hospital, or who have never been in hospital, who require domiciliary care. The orders do not have any effect on that care, except perhaps by moral suasion or implication, without any force of law.

The statute that we will pass just has an impact on people going into old people's homes and residential care homes. That poses a real problem for the Government, because true community care must involve the domiciliary care package. I would go further, because I believe that it must give preference to domiciliary care to be true community care.

The Government have always had the problem of not being sure whether nursing care homes, some of which often consist of 50 beds or perhaps 100 beds, or old people's homes are equivalent to community care. What is the difference between a cottage hospital, which is not considered to offer community care, and a large nursing home with 50 or 100 beds? The latter is considered to be equivalent to community care—search me why—and the other is considered as NHS institutional care. That distinction is rubbish.

The actual community care that we should provide is domiciliary care, yet the order does not refer to it. The least we could ask for is a level playing field. One may want to increase the capital disregards so that people do not have to sell their houses, or get rid of the savings that they might otherwise be able to pass on to their children, to fund long-term care in a nursing home or in an old people's home, but why on earth should not the same rules apply, with the same force of statute to raise the capital disregards, to domiciliary care packages? Let us at least have a level playing field. In my opinion we should go beyond that; domiciliary care should come first, because it represents true community care.

I hope that the Minister will address that problem. Perhaps he will give the Government's up-to-date thinking at this crucial stage, when they are devoting so much effort, as late as Friday, into trying to explain how wealth will still cascade down the generations in a way that is compatible with their thinking on community care. We want to know their thinking on such care.

Does it include domiciliary care in one's own home? Just as important as passing on one's home to a child or grandchild is the right to stay in that home until it is medically unavoidable that one has to have institutional care in, for example, an old people's home or a nursing home. We heard nothing about that from the Minister. He simply throws around the phrase "community care" but does not say why the measures that we are discussing avoid domiciliary care, which is where the interface exists between the NHS and social service departments.

There has been a major withdrawal by the NHS from long-term care provision and even from care in the community. District nurses no longer carry out such a wide range of functions as they used to. There is now an absurd distinction between social bathing, usually carried out by home carers, and medical bathing, which has to be done by district nurses. I am told that, at least for men, the distinction is based on whether the bathing includes bathing below the waist. If it does, it must be done by a district nurse.

A constituent of mine has severe leg ulcers. If they are suppurating, the dressings are changed by the district nurse; if they are merely quiescent, they are changed by the home carer. That would have been absurd five years ago, but the NHS no longer provides what used to be considered the proper caring component of the NHS district nursing function.

Why do the Government consider it wise for the NHS to withdraw from that sphere and leave it to the local authority when, at the same time, they are doing absolutely nothing to change the capital disregards for local authorities when they—the local authorities—come to decide whether they should be means-testing the person involved?

My hon. Friend the Member for Stockport (Ms Coffey) was right to say that there is no rhyme or reason in the Government's explanation of how they have calculated the amounts to be given to English and Welsh authorities. It is a wholly improper procedure. The purpose of the statute is to compensate local authorities for the income that they will lose because of their inability to means-test people with an income of less than £8,000 or less than £16,000.

The measure is meant to compensate them, but it will not, because the calculation is made on the original needs basis, which has nothing to do with the compensation requirement. Some authorities will gain and some will lose, but the outcome bears no relation to the intention behind the measures. Just as people were supposed to be checking what public expenditure was used for, these measures may finish up before the Public Accounts Committee as legislative absurdities. I hope that the Minister will deal with that point.

The point made by the hon. Member for Ynys MÔn (Mr. Jones) was also well taken. In some areas there are many private nursing homes, but in others there are not. That is a big problem. I have already referred to the important point made by my hon. Friend the Member for Gower.

On the same day the Government laid the English and Welsh orders, the Treasury Select Committee had asked the Government whether it was true that the Government had not properly estimated the additional expenses faced by local authorities. It had been estimated that the cost of changing the capital disregard would be £60 million. The Committee said that it thought that the Government had underestimated the amount. The Treasury wrote back to the Committee in January, saying that there was no problem and that local authority social service departments would be able to act as "gatekeepers". The Committee replied that it did not think that that was the case and asked the Government to check with local authorities and talk to social workers.

The ultimate humiliation for a Government who sometimes pride themselves on being careful with public expenditure occurred on 18 March when—[Interruption.] Before the Under-Secretary of State for Wales cheers, perhaps he had better listen to what the Treasury said to the Treasury Select Committee, on the same day that the orders were laid, and on this very subject.

Paragraph 51 of the Government's response to the Treasury Committee's report on this year's Budget states: The Government has now consulted with the local authorities and has listened to their views on the net increase in costs they face as a result of the increase in the disregard levels. In light of further evaluation of the information provided by the local authorities, the Government has decided, subject to Parliamentary approval, to make an increased provision available to local authorities. This provision will be charged to the Reserve, and will not therefore add to the planned total of public expenditure in 1996–97.

What we are doing tonight is not the full story. At a later date the Government will have to come back with a different figure, and apologise to the House for having got their figures wrong in the first place. Why did they get their figures wrong in the first place? Because, as always, they did not ask the people who would be affected. They did not ask the local authorities what figure they would face as a result of the change in the capital disregard.

The Government have had to apologise to the Treasury Select Committee. I hope that, as a representative of a Government who clearly cannot count because they do not consult, the Minister will now apologise to the House.

9.15 pm

The Parliamentary Under-Secretary of State for Wales (Mr. Rod Richards)

When I faced the hon. Member for Cardiff, West (Mr. Morgan) across the Dispatch Box yesterday in connection with a different matter, I hoped that I would not have to see him again before Easter. Sadly, however, that was not to be.

As usual, Opposition Members have found little positive to say, but the plain fact is that our community care reforms are working. It was clear from the speech of the hon. Member for Darlington (Mr. Milburn) that he does not appreciate that the policy must be planned over 10 years before its full fruition: we are not even a third of the way through that process. More people are being cared for in their own homes or in homely residential care in their local communities, and they have more choice about how they receive the care that they need. That is what people want, and that is what our policies are delivering for them.

Let me deal with some of the serious points raised by Opposition Members. The hon. Member for Ynys MÔn (Mr. Jones) said that the capital limit special grant in Wales was underfunded, and that he had spoken to some county councils in Wales. We also asked councils to give us their estimates of the costs that they would face, and they came up with a figure of roughly £3 million. In fact, we are providing £3.88 million, which is more than they asked for.

Before the hon. Gentleman suggests that our method of calculation underestimated future demand for places, let me tell him that we considered not only the current number of people in care but the potential increase for most people who would now find it a more attractive option, because they would not have to contribute. I hope that that sets his mind at rest.

The hon. Gentleman asked about additional mid-year funding. We shall look at the outcome at the end of this year, and if there are lessons to be learned, we shall consider the funds that we shall provide in 1997–98.

The hon. Member for Stockport (Ms Coffey)—who seems to have lost interest in the debate for the moment—was rather critical of the formula on the basis of which her authority claimed to have been disadvantaged. As she will know, Stockport is a member of the Association of Metropolitan Authorities, and the formula that was used was recommended by the association. She will not need me to tell her that it is controlled by her party. I suggest with respect, therefore, that she write to her representatives on the authority and complain as bitterly to them as she did to the Government earlier.

With regard to resources for her authority, between 1990–91 and 1996–97, total personal social service resources for Stockport have increased by 58 per cent. in real terms. In the past year, total resources for community care have increased by 10 per cent.—the same as elsewhere in England, so her authority has not been disadvantaged.

The hon. Member for Gower (Mr. Wardell) was, as usual, meticulous in his approach. He told us the touching story of his visiting hospitals to ask patients questions, but the first question that he should have asked—and I am sure I know what the answer would have been, almost universally—was whether they wanted to leave hospital. The vast majority of people in hospital want to go home or just to get out. If he knows of anyone who would prefer to be in hospital than to go home, I should like to know who it is and what the circumstances are.

The hon. Gentleman talked about people staying in hospital indefinitely—these mythical people who might choose to stay there. He must know that no one has ever had the right to stay in hospital indefinitely. He will have read and understood the 1995 guidance on national health service responsibilities for long-term care. It is not a change in policy, as he implied.

We have confirmed and clarified the health service's responsibilities for meeting the needs of people with continuing health care needs, whether in hospital, in the community or in other settings. From 1 April, health authorities have been required to publish policies and eligibility criteria, which make clear their commitment and the basis on which decisions in individual cases are taken.

Mr. Gareth Wardell

Will the Minister give way?

Mr. Richards

With respect, I have only a few minutes left and I want to cover many more points.

The hon. Gentleman asked me sincerely what I would do if hospitals did not provide the information that they should be providing. Clearly, my officials and I will consider and monitor that closely. He asked about the difference in assessing short-stay and long-stay residents. Local authorities can use the same financial assessment and capital limits for both, but anyone who stays less than eight weeks does not have to be assessed. The local authority can set what one might describe as a reasonable charge.

The Department of Social Security will be using two sets of limits. People who go into residential care for only short periods will not be reassessed for income support based on the higher capital limits. It would be disruptive to reassess them for income support at such frequent intervals. The hon. Gentleman raised some more points, on which I will write to him, but I must deal with other points.

The hon. Member for Cardiff, West raised the issue of 40,000 houses sold per year. I do not know where he got that figure from. I am not aware that it is a Government figure. I should like to know where he got it from to find out whether we can attach any credence it.

The hon. Member for Darlington did not, of course, raise the issue of funding, although he came up with a four-point plan and talked about planning, revaluation and changes after only three years. I know that, by diktat of the Leader of the Opposition, he is not allowed to do that, but the British people are entitled to know what budgetary or financial resource changes would be implied were there to be a Labour Government.

We are committed to ensuring choice in community care. Choice underpins our reforms. We do not mean choice at any price. Public funds are limited and choice must be balanced against cost. But we do mean people having a real say in where they receive the care that they need. The direction on choice was introduced specifically to give people that say. Local authorities need to take that carefully into account when they plan their use of their community care budgets.

If any individual is not satisfied with his or her care arrangements, he or she has, of course, the right to take that up through the complaints procedure. We have made it clear to authorities that we expect them to have complaints procedures which people know about and which are easy to use.

Community care is all about individuals. It is about making sure that individuals receive the care and support that they need. But it is also about making sure that people who need community care and their carers are involved more widely in helping to shape the services provided to their communities.

Mr. Morgan

Will the Minister give way?

Mr. Richards

No, I shall not give way to the hon. Gentleman.

I am very pleased that we have been able to provide the extra help with regard to capital disregard for people in residential and nursing homes. We know that it has been widely welcomed. We have two aims—to help people who have worked hard and saved prudently, and to avoid putting too heavy a burden on taxpayers. The new limits strike the right balance.

The resources—

It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question, pursuant to Order [29 March].

Question agreed to.

Resolved, That the Special Grant Report (No. 17) (House of Commons Paper No. 299), which was laid before this House on 18th March, be approved.

MADAM DEPUTY SPEAKER then put the remaining Question required to be put at that hour.

Resolved, That the Special Grant Report (Wales) 1996 (House of Commons Paper No. 297), which was laid before this House on 18th March, be approved.—[Mr. Ottaway.]