HC Deb 10 June 1996 vol 279 cc37-51

'.—(1) The Secretary of State shall issue guidance which has the effect of establishing national criteria as to the account to be taken by an authority of the financial circumstances of an applicant for a payment under section 1 or section 4 above.

(2) An authority making a payment under section 1 or section 4 above shall have regard to any guidance issued under subsection (1) above.'.—[Mr. Milburn.]

Brought up, and read the First time.

Mr. Milburn

I beg to move, That the clause be read a Second time.

Madam Deputy Speaker (Dame Janet Fookes)

With this, it will be convenient to discuss also the following: New clause 7—Review of impact of different charging policies`The Secretary of State shall institute a review of the impact on the level of direct payments under section 1(1) and section 4(1) of this Act of differing local authority charging policies in respect of the provision of community care services, and shall report his findings to Parliament within three years of the date of the commencement of the review.'. Government amendments Nos. 13 to 15.

Amendment No. 3, in clause 1, page 1, line 12, at end insert— '(1A) Regulations under this section shall provide for the level of any payment under subsection (1) above to be calculated in such a way as to include all such costs as are reasonable to allow the person to fulfil his statutory obligations as an employer and to ensure adequate contingency arrangements in case of absence through sickness or other cause.'. Government amendment No. 16.

Amendment No. 1, in clause 1, page 1, line 15, leave out from 'authority' to end of line 16 and insert `shall, in determining how much to pay a person under that subsection, not require him to contribute more to the cost of securing community care services than it appears to the authority that it is reasonably practicable for him to contribute.'. Government amendments Nos. 17 to 19.

Amendment No. 4, in clause 4, page 3, line 10, at end insert— '(1A) Regulations under this section shall provide for the level of any payment under subsection (1) above to be calculated in such a way as to include all such costs as are reasonable to allow the person to fulfil his statutory obligations as an employer and to ensure adequate contingency arrangements in case of absence through sickness or other cause.'. Government amendment No. 20.

Amendment No. 6, in clause 4, page 3, line 13, leave out from 'authority' to end of line 15 and insert `shall, in determining how much to pay a person under that subsection, not require him to contribute more to the cost of securing community care services than it appears to the authority that it is reasonably practicable for him to contribute.'.

Mr. Milburn

The new clauses and amendments deal with a key principle which I think we all agree should underpin direct payments to disabled people: the principle of fairness. New clause 6 would establish a national framework for the charging and assessment procedures to which local authorities should have regard when making direct payments. Both service users and local authorities have become increasingly concerned about the extreme variations in the way in which authorities currently charge for direct services. The different charging systems mean that there are different yardsticks to determine how direct payments are made, the financial contributions that will be expected against those direct payments and the level at which such payments will be set for the individual disabled person.

Each local authority currently has discretion to charge for non-residential services under the Health and Social Services and Social Security Adjudications Act 1983. Broadly speaking, it is up to each authority to decide whether to charge and how much to charge, and, indeed, how to make the financial assessments that will determine the level of charging. Authorities therefore have considerable discretion when it comes to charging for such services.

In sharp contrast, local authorities are required to charge for the residential and nursing home care for which they contract. Laws and regulations heavily circumscribe what they can do, making it absolutely clear when—and, to a large extent, what—they should charge for such services. There is a marked difference between the national framework that the Government have rightly established for residential community care services, and the current free-for-all that is non-residential care provision. Clearly, the comparator in the Bill is non-residential care services, and that is the sector that has been booming over the past few years.

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That charging is very controversial for many disabled people, and for the organisations that represent them. There is concern that disabled people should not have to pay for services, or make a financial contribution to direct payments. Organisations such as the British Council of Organisations of Disabled People point out that the services that disabled people receive from local authorities—and, therefore, the equivalent direct payments that they will receive when the Bill becomes law—come about as a result of their disability. Those services and direct payments are essential to their means of living.

I am sure that hon. Members on both sides of the House will sympathise with the concern expressed by disabled people about charging for services. No hon. Member wants disabled people to be disadvantaged in relation to other members of society, and the last thing that any of us wants is for them to have to pay a double tax simply because of their disability. There is anxiety about charging, and therefore about the financial contribution that will be equivalent to the contributions made towards a service if that is what someone chooses.

As I said in Committee, we live in a far from ideal world. Charging goes on, and more local authorities are charging more for more services. Indeed, authorities are empowered to charge, and do so increasingly. New clause 6 does not compel them to do so; it merely seeks to regulate how they charge if they choose to do so. Above all, it seeks to bring fairness to charging procedures.

The absence of the sort of national framework that new clause 6 would establish is at least in part responsible for the enormous variations in the amounts that councils are currently raising in care charges. An analysis undertaken for me by the House of Commons Library, for example, shows that the cash raised by local authorities from community care charges overall rose by 27 per cent. in just one year. In 1992–93, English and Welsh authorities raised some £481 million in charges for services such as home helps and meals on wheels; by 1993–94—the latest year for which we had figures—charges had risen to £609 million. Nearly two thirds of councils in the two countries had increased the amount of their social services spending that was raised through charges.

There are wide variations in the amount of cash that is clawed back by local authorities charging for services. In Waltham Forest, the lowest in the country, only 1.4 per cent. of gross current social services spending is recouped through fees and charges, but in Buckinghamshire, the highest in the country, it is 18.4 per cent. The problem is that pressures on community care budgets undoubtedly force more local authorities to charge more for more services.

A second problem is that, by creating incentives to charge but refusing to offer clear guidelines to local authorities on charging policies, the Government have invented a charter for confusion. The result of not having a national framework for non-residential care services is not only that more local authorities charge more for a greater number of services but that different local authorities operate markedly different means of charging. Local authorities make different assessments of the value of disabled people's assets and incomes—even their benefits—when calculating what financial contributions they should make towards a service. If they make different calculations for direct services, they will also make different calculations when assessing the direct payments that they make under the Bill.

A number of organisations—not just disability organisations—have expressed great concern about the lottery that we currently have in charging provision, and local authority associations, for example, have spent many months trying to establish new protocols that they can issue to their member authorities on what is and what is not appropriate for local charging regimes. Of course disability organisations are concerned about the operation of those regimes, but, in the past few months, equally as reputable an organisation as the Audit Commission has highlighted the fact that people on income support in one authority may be charged more for care than people in receipt of a much higher income in another authority, simply because of the latitude that local authorities have in determining their charging procedures. Clearly, disability organisations are concerned that people's benefits are often used to pay charges and that their disability-related living expenses are not always fully taken into account when their ability to pay is assessed.

Amendment No. 3, for England and Wales, and amendment No. 4, for Scotland, would address the specific disability related cost concerns. They would ensure that when a local authority makes a direct payment it should properly take account of a disabled person's expenditure as an employer. There are lessons to be learnt from the experience of the independent living fund and from existing indirect payment schemes operated by local authorities. Once again, the British Council of Organisations of Disabled People has highlighted how a failure properly to assess employer costs has led in some instances to poor employment practices and to more strain on the disabled employer.

Similarly, just last year, the National Consumer Council highlighted the fact that different local authorities charge in markedly different ways in different parts of the country. It also found that widely different criteria were used to assess people's ability to pay. I mentioned in Committee that the Disability Alliance has indicated that forthcoming research shows that disabled people can be asked to pay double or even treble the charges that are paid by people who live in other areas but who receive broadly similar services.

New clause 7 would impose a duty on the Secretary of State to become a key player in assessing the impact of local authority charging procedures. It asks him to report to Parliament on how those procedures affect the operation of the direct payments approach. However helpful such retrospective action might be, a proactive initiative is what is most needed. Leaving it to the discretion of local authorities to decide how disabled people's financial status is taken into account when setting the level of direct payments runs counter to the principle of fairness that we all, surely, want the Bill to promote. People in one part of the country will be assessed in a markedly different way from people in other parts of the country if the Bill, as drafted, is passed; in other words, disabled people in neighbouring authorities will receive markedly different direct payments because of the way in which local authorities assess for financial contributions.

I take the view that disabled people and the care that they receive, the contribution that they are asked to make, and indeed the price that they pay for their care, should not depend on where they live. I do not believe that any hon. Member wishes a new national lottery in community care provision to be created. We already have that for direct service provision. We should seek to avoid that for direct payments.

New clause 6 seeks to move the Government towards a national charging framework so that disabled people across the country are treated equally and fairly.

Mr. Bowis

Will the hon. Gentleman clarify whether he is seeking a common charging framework or policy across the country? He referred to the range of charging, from Waltham Forest to Buckinghamshire. Under a Labour Government, would he reduce the level of charging in Buckinghamshire to that in Waltham Forest or would he raise the level of charging in Waltham Forest to that in Buckinghamshire? Where would he set the charge? If he does not leave it to the discretion of the local authority, he will have to set it.

Mr. Milburn

The Minister has the wrong end of the stick. The idea is not to specify a set level of charging across all parts of the country; it is to determine the way in which assessments are made. As I shall explain later, we envisage a method whereby, through consultation, we reach consensus on the framework with disability organisations, with people concerned with elderly care and, indeed, with older people themselves as well as providers. The point is that people in my part of the world, in County Durham, should not be assessed differently from people in Dorset. They might live in different parts of England, but their needs will not vary markedly.

Because of the latitude in charging methods, however, the Bill should enable the Government to consider ending the restrictions on choice for community care service users and direct payment recipients. The new clause seeks to persuade the Minister that his Department should issue clear guidelines to local authorities on the charging and assessment of people's financial circumstances in regard to direct payments, after proper consultation with disability organisations, local authority organisations, consumer organisations and others. I believe that there is already a basis for consensus.

Mr. Thurnham

Will the hon. Gentleman explain his concept of fairness? It does not seem to me to be fair to have a uniform system imposed on everybody by some central diktat. People should be allowed to decide locally what they think is fair and, if they think that local decisions are unfair, to make strong representations to get them changed locally to what they think would be fairer.

Mr. Milburn

Would the pressure on central Government or local government have brought about changes to policy in the way in which the hon. Gentleman and I would like? The world is not always as straightforward as that, is it? Therefore, the idea behind the national framework is to lend power to the concerns of local people, disabled people, in local settings.

I shall tell the hon. Gentleman just what fairness means—it is where disability-related benefits are assessed fairly and equitably in different parts of the country. That does not happen at the moment; instead it is a lottery that bears down on individual disabled people. We are trying to deal with that through the national framework contained in new clause 6.

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Dame Elaine Kellett-Bowman (Lancaster)

I am as puzzled as my hon. Friends. Local authorities have begged to be given this service to operate. The Labour party usually wants to give more powers to local authorities, but, instead, the new clause will emasculate them.

Mr. Milburn

I am not sure whether the hon. Lady is arguing for or against emasculation. Clearly, the current latitude allowed to local authorities to decide charging procedures is not fair. Fairness—the famous level playing field about which the Minister spoke in our previous debate—is the common concern that we all want established in the Bill. This element of charging is missing from the Minister's level playing field. We hope, through our arguments, to persuade him to accept it and to embody the principle of fairness in the Bill, which is fair in other ways.

New clause 6 would enshrine in the Bill the principle of a national framework that would cover not only residential but non-residential care services. That approach is advocated by local authority associations. The hon. Member for Lancaster (Dame E. Kellett-Bowman) jumped to the defence of local authorities, but she would do well to take note of the Association of Metropolitan Authorities and the Association of County Councils, which back the idea of a national framework. They are also looking for assistance, advice and clarity.

Many disability organizations—for example, Disability Alliance—also favour that approach, which would enshrine the principle of fairness in the Bill. Surely it is unfair that some people are treated differently from others simply because of where they happen to live and the policy adopted by individual local authorities in their areas. A national framework, as advocated in new clause 6, would end that unfairness, but it would still leave it to the local authority to decide whether to charge.

I repeat that this is not about imposing on local authorities any obligation to charge or a target level for charges, as the Minister called it. It is merely a means to ensure that, if they want to charge, like is compared with like and people in different parts of the country are treated equitably.

That principle of fairness also underpins amendment No. 1, relating to England and Wales, and amendment No. 6, relating to Scotland. They would ensure that the financial assessments that are made by a local authority in determining the charge for a community care service also apply to the determination of the equivalent direct payment. Once again, the objective is to compare like with like. If a service is free, the equivalent direct payment should be free. A disabled person should not be required to make a financial contribution towards a direct payment if he or she is not making a financial contribution towards the equivalent service.

Similarly, if the service is means tested, we accept that a disabled person should make a contribution towards the direct payment. Once again, it is the famous level playing field being established between services provided and direct payments. The priority must be to establish a level playing field within a local authority so that there is neither advantage nor disadvantage in receiving a direct payment or the equivalent service. None of us wants there to be any form of perverse financial incentives either as impediments or as obstacles to receiving direct payments or any financial incentives for receiving them.

Dame Elaine Kellett-Bowman

How on earth can we nationally decide what is reasonably practicable? What is reasonably practicable for one local authority could be impracticable for another. That is not remotely national; it is purely subjective for the local authority concerned.

Mr. Milburn

If the hon. Lady will bear with me, I shall try to allay her concerns, especially about national criteria.

Our debates in Committee were about maximising choice and ensuring that disabled people were free to choose whether they wanted to receive a service or an equivalent direct payment. There does not appear to be any disagreement about fairness, level playing fields or equality of provision. The problem is that the Bill does not apply those principles.

A local authority's power to charge for services is contained in section 17 of the Health and Social Services and Social Security Adjudications Act 1983, which states that when a local authority is satisfied that a person's means are insufficient for it to be reasonably practicable for him to pay for the service he should not be required to pay more than what is reasonably practicable for him to pay. In other words, any charging policy for service provision uses the test of what is reasonably practicable. The phrase "reasonably practicable" is not contained in the Bill, which instead says that an authority should have regard to the person's financial circumstances. That appears to involve a harsher and a much more stringent test than that contained in the Act.

The original draft of the Bill seemed to involve a means test at all stages, whether or not the equivalent service was free. That may or may not have been the Minister's intention; I do not think that it was. Nevertheless, that would have been the outcome of the Bill. In Committee, the Minister kindly agreed to take away our amendments for careful consideration. I welcomed his positive response then and I welcome it now. The results of his consideration are Government amendment No. 16, the consequential amendments Nos. 13 to 15 and their Scottish variant, amendments Nos. 17 to 20.

Those amendments more clearly reflect the provision in the 1983 Act. As they no longer imply a means test, I welcome them—but with one extremely important caveat. The Government's amendments make explicit a proposal that is not contained in our amendments—that direct payments be made net, not gross, of charges. I shall return to that matter later when we debate amendments Nos. 9 and 10. For the time being, I merely state that such an approach actively discriminates against the direct payment recipient in favour of the direct service user. Again, I am sure that that is not what the Minister intended. It runs counter to the principles of fairness and the famous level playing field between users and direct payment recipients. Therefore, I urge the Minister to consider withdrawing his amendments in favour of Labour's amendments.

We want direct payment recipients and direct service users to be treated equally and fairly. We want no impediments or incentives to prevent disabled people from making a genuine choice in the form of their care. We want all disabled people to be treated fairly—whatever form of care they choose and wherever they live. I hope that the House will agree to give them that choice by passing new clause 6 and the new clauses and amendments that are grouped with it.

Mr. Alfred Morris (Manchester, Wythenshawe)

I want briefly to discuss amendments Nos. 1 and 3 and new clause 6 in this group. I am happy to do so, more especially after that impressive speech by my hon. Friend the Member for Darlington (Mr. Milburn).

Amendment No. 1 would make means tests for direct payments identical to those for services, while new clause 6 seeks to make all means tests that are imposed more or less consistent throughout the country. To allow different means tests to be applied would enable local authorities to sway the decision of an entitled disabled person, either towards its services or towards a direct payment, depending on their own preferences or political proclivities. That would be wrong and unfair.

I believe that fairness will be achieved only if, in addition to the section 7 guidance that the Government have promised, the wording in the Bill covering the assessment of the contribution in the case of a direct payment is identical to the wording used in the assessment of a contribution towards local authority services in section 17 of the Health and Social Services and Social Security Adjudications Act 1983 ("reasonably practicable for him to pay".) In Committee in another place, the Minister gave assurances that neither service users nor direct payment recipients would be treated more favourably than the other on the question of the financial contribution that each is expected to make towards the cost of their care. She spoke, as did my hon. Friend the Member for Darlington, of a level playing field and of no perverse financial incentives. She then went on to refer to section 7 guidance on this important issue. That is in House of Lords Hansard, 15 January 1996, at columns 402 and 403.

Such assurances are heartening, but they fall a little short of requiring the same means tests for services as for direct payments. To achieve a truly level playing field, the two means tests have to be at least similar, if not identical. The amendment uses the words "reasonably practicable" in describing the assessment of needs for direct payments. Those are the identical words used in section 17 of the Health and Social Services and Social Security Adjudications Act in relation to services. I can see no valid objection to using the same words for the two means tests.

The changes now proposed to the Bill seem to me to be a reasonably practicable way of achieving what everyone—including the Government—professes to want.

Amendment No. 3 would ensure that the full costs of securing a service are taken into account by local authorities in calculating direct payments. Leaving aside the question of the contribution from the recipient, the payment should cover the real full cost of securing the agreed service. In the case of an agency providing the service, it should allow the agency's staff to enjoy terms of employment similar to those offered to local authority staff. If it is used by the recipient directly to employ a helper, the payment should allow the recipient to fulfil all her or his duties as a good employer.

In assessing how much a service provided by a local authority costs, the authority should ensure that the real total cost of providing the service is calculated. That should include all overheads and supervisory and administrative staff costs. The comparison between direct payments and in-house costs relating to individual clients must not allow a local authority to introduce direct payments as a means of reducing the quality and cheapening the cost of providing essential services.

Turning to an associated issue, I welcome the proposal in the Government's consultation paper, at paragraph 20, that a local authority will allow an individual to supplement whatever she or he receives as a direct payment from her or his own resources. In all such cases, however, the local authority must somehow be prevented from reassessing what the individual can afford and demanding an increased contribution. Again, that is an important issue, to which I very much hope the Government will make a helpful and positive response today.

5.15 pm
Mr. John Heppell (Nottingham, East)

I congratulate my hon. Friend the Member for Darlington (Mr. Milburn) on providing such a full explanation about new clauses 6, 7, and 1 and Government clause 16. However, that also presents a problem. Because he gave such an excellent and comprehensive explanation, there is very little left to say. Moreover, the points that he missed were picked up by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). So I am somewhat left at a loss, and, no doubt, Conservative Members would like me to sit down. But I should like to say a couple of things.

It is important that we have the necessary framework in place to ensure that people are not discriminated against on a geographical basis and that there is equity. New clause 6 is important in that respect. As for the review, I should have thought that Conservative Members would always think that it is sensible to review progress, to report back and to fine tune. That seems to be sensible to me.

I suspect that, later today, we will debate the Government's concerns about eligibility. I think that they, wrongly, have a vision of opening the floodgates and people rushing in to take up direct payments. I believe that the opposite will be true and that, in some areas, the services will have to be promoted if people are to take advantage of them.

One thing that can affect eligibility—I do not think that the Minister has taken it into account—is charging. If charging is excessive, people will not take up direct payments. If we get the charging wrong, we will put restrictions on disabled people who wish to take up this new, excellent facility offered by the Government.

The "Disabled in Britain" survey, which was conducted by Scope in 1994, quite correctly made the point that 72 per cent. of disabled people want more independence and that 59 per cent. of disabled people would like more control over their everyday lives. So the issues are choice, independence and control. However, those goals do not seem to accord with what people have said about what they might have to put up with because of the charging policy and its effect on direct payments. One person said: Relying on other people is the most frustrating part of my life, not being able to do what I want, when I want". That frustration would end with a proper direct payment scheme.

Another person said: Once I was left in bed for over 40 hours, and on two occasions they should have got me up at 9 am but came at noon. That could end with a proper direct payments scheme.

Another person said: Home helps and night sitters who get me out of bed suddenly, without notice, don't turn up, and I have to ring people and get them out of bed to help. Social Services 'out of hours' emergency phones are not manned. We have all heard the horror stories about people who, sometimes through no fault of the local authority, are told, "Well, you may want to get up at 7 o'clock or 8 o'clock in the morning, but you cannot get up till 10 o'clock in the morning because that is the earliest that we can send someone to get you up. You may want to go to bed at 9 o'clock or 10 o'clock at night, but unfortunately you have to go to bed at 5 o'clock or 6 o'clock at night because that is the way the local authority service is geared." By excessive charging, we could rule out many people who want to make use of that facility.

I now turn to a survey on charging for community care services which was reported in a briefing to the all-party disablement group on 27 February. It is important that we recognise what disabled people think about present charging policies. The study was called, "The Cost of Care—the impact of charging policy on the lives of disabled people." It was commissioned by Disability Alliance and Social and Community Planning Research, and it was funded by the Joseph Rowntree Foundation. The disabled people interviewed had a high level of dependency on care provided and most had little scope to reduce or withdraw from services. People are captives in terms of the amount of care they have to have, so we must be careful that we do not overcharge them. Market forces do not apply.

One of those interviewed said: I can't do without that service, no matter what happens. You know, when push comes to shove I've got to go to the toilet. That is why the service is needed. If the charges are raised for such a service, there is no way that someone can say, "Well, that charge is too high and I'm going to drop out of it."

There was strong evidence that people were receiving fewer services than they needed and were reluctant to ask for more. One reason was that they thought that the local authority did not have enough resources and the second was that they were worried about charges. We need to ensure that we get the charges right so that we do not put people in that position in future.

Service users found the charging process confusing and uncertain. The quality of information that people received about charging systems was variable, with some users having no recollection of any written information. People were unclear about why charges were introduced and about how their individual charges had been calculated. That is the important point. As set out in new clause 6, we need a framework that will allow people to see how their charges have been allocated.

There are difficulties for disabled people with charging. If one looks in isolation at a service that a disabled person receives and if one assesses his or her income, one might think that he or she could easily afford that service. But people may require several services. They may have not only a home help, but meals on wheels; they may attend a day centre or receive a number of different services. If charging is done on the basis of individual services, people with disabilities may be overcharged and some of the money that they receive as a result of their disability, which needs to be spent because of their disability, may be taken into account when their income is assessed. I hope that the Minister will bear those points in mind and that he will look favourably on new clauses 6 and 7.

Mr. Barry Field (Isle of Wight)

I apologise to you, Madam Deputy Speaker, and to the House for not having been present in the Chamber throughout the debate, although I have been following it on the monitor.

The hon. Member for Nottingham, East (Mr. Heppell) mentioned market forces. One of the problems, as my hon. Friend the Minister knows well because he has been attentive in listening to the case put by the Isle of Wight on a number of occasions on these difficult issues, is that in a small community that is severed by sea from the mainland, the oversupply of just a few beds causes a problem in terms of market forces, just as having too few beds would, although that has not been the case in recent years. Despite our best efforts, although the Isle of Wight has a very high standard of care in both the public and private sectors, it is often impossible to get relatives to send clients to the island for care because visiting them by ferry would be an extra difficulty. It is rather difficult to operate market forces in this area.

Much has been said about regional variations. As my hon. Friend the Minister knows—I have told him this almost ad nauseam—the island has exceptional statistics. We have one of the highest populations in the United Kingdom who have elderly and disabled needs and who live independently. One of the curious things in the formula is the question of home ownership. As property prices generally on the island are fairly low in comparison with those in the surrounding mainland area and as there has always been a high level of home ownership—one of the highest in the UK, if not the highest—the formula conspires against the Isle of Wight. Of course, we think that everything conspires against the Isle of Wight.

I thank my hon. Friend the Minister for having arranged the independent review, to which he referred earlier. That has been widely welcomed by the private sector and I hope that it will come to some conclusions. I also hope that it will produce results which will smooth the whole process.

The hon. Member for Nottingham, East spoke about disabled clients' needs. I have raised the matter with my hon. Friend the Minister and it is of concern to a number of private home operators. There is a view—I do not say that it is anything more than that because I do not want to re-energise a debate of which we have had rather a lot on these vexed issues—that the local authority tends to accept for its own homes those who have long-term disabilities and long-term requirements. They have a client list of those who are likely to require longer-term arrangements than those who are placed with the private sector. I do not say that that is definitely so, but I draw my hon. Friend's attention to it. I hope that in due course, the independent review will look at that.

I take this opportunity to apologise to my hon. Friend. When I came to see him with a deputation, Isle of Wight council said that the situation involving Islecare, the council's arm's-length company—it is subsidised by the council—which runs homes, had been resolved. I now find that not to be the case although I very much hope that it will be in the next few weeks. I take this opportunity to put on the record my apology for having misled my hon. Friend, although not deliberately.

Mr. Alan Howarth

The hon. Gentleman will be able to tell the House whether it is still the case in the Isle of Wight, as it was reported to be in 1995, that if one of his constituents receiving care in his own home from the Isle of Wight social services department had savings of more than £16,000, he would be required to pay a rate of £7 an hour for home care. Does the hon. Gentleman agree that if that formula were applied in assessing the contribution that should be made for direct payment, it would entirely wipe out the direct payment? I imagine that he would not find that a pleasant prospect to contemplate for his constituents. If he is unable to tell me whether I am right in my surmise, perhaps the Minister will tell me when he replies to the debate.

Mr. Field

I am reluctant to be tempted down that route by the hon. Gentleman. What he will not know, and what has not been reported in the national press, is that there has been a lively debate on the implementation and the interpretation of the legislation concerning my constituents between the Isle of Wight council and the health authority. Quite a bit of correspondence has flowed back and forth between my hon. Friend the Minister and his legal advisers and me about precisely how the legislation is to be interpreted.

As my hon. Friend the Minister will know, we found ourselves in a rather strange situation: the health authority had a different charging rate for similar care to that operated by the Isle of Wight council. In fact, it was markedly cheaper. Since the article in the press, we have a new director of social services, Bob Culshaw, and an absolute assurance by the chairman of social services and the health authority that there will be no more nonsensical duplication of effort and empire building involving public money.

The debate concerns about 130,000 people on the Isle of Wight, of whom just under 102,000 are on the electoral register. It could not be more nonsensical than to have two separate empires competing to provide the same sort of care and service for the same clients. I am pleased to say that, with much council and health authority co-operation and much help from the Minister, we are beginning to see an end to that duplication and much more joint working and effort, which is the only way in which such legislation will ever work.

5.30 pm
Mr. Bowis

I am grateful to my hon. Friend the Member for Isle of Wight (Mr. Field) for eloquently and, to a certain extent, ingeniously bringing to the House's notice some of the Isle of Wight's problems and the solutions that are being found. Although, of course, the Bill does not cover the provision of beds, other than those used for respite care, his points about inspection and comparability are well made. I have certainly listened to his points, as I have to those raised by the right hon. Member for Manchester, Wythenshawe (Mr. Morris) and the hon Members for Nottingham, East (Mr. Heppell) and for Darlington (Mr. Milburn).

Mr. Alan Howarth

Before the Minister leaves the subject of the Isle of Wight, will he say whether there could be any circumstances in which the contribution could exceed the amount of a direct payment? If so, does he intend that local authorities should use a power to abate the requirement? Otherwise, someone theoretically receiving direct payments would be denied both the service and the direct payment.

Mr. Bowis

Under the Bill, with its regulations and guidance, the contribution could not be more than the cost of the service. That would be absurd, as has been made clear in everything that we have said. Charges have to be reasonable, as they do right across the board—irrespective of direct payments. I would want evidence of any such case to be brought to my attention to see how such an anomaly—if that is what it is—had come about.

Amendments Nos. 13 to 20, to which the hon. Member for Darlington referred, fulfil the commitment that I made in Committee. We were conscious that some people felt that the wording of the Bill might be interpreted as implying that local authorities, under their charging policies, should treat people who receive direct payments differently from the way that they would treat people who receive services direct. We were satisfied that the Bill would not have that effect, but I think the added clarity that the amendments provide will be helpful, and I am pleased to draw the amendments to the attention of the House. They amend the wording to match more closely the wording in existing legislation on charging, as has been said.

There is no difference between my view and that of the hon. Member for Darlington. If he looks carefully at the amendments that he has tabled, linked with clause 1(1) and 1(2), he will see that there is clearly a net operation and that there is no difference between the effect of either his amendments or ours. As he said, we will return to the net issue in a later debate.

The local authority is not required to means test. If the authority proposes a financial contribution, and the person receiving direct payments satisfies it that he cannot reasonably afford that amount, it must reduce the amount that that person is expected to contribute to a level that it considers he can afford, if anything. That puts it in line with the law in relation to charging for non-residential services. Both the current law and the Bill leave local authorities discretion over whether—and, if so, how, and how much to charge—to set a flat rate or a scale of charges.

New clause 6 provides for the introduction of national criteria for charging, which we discussed at some length in Committee. As I said then and must say again, it is not appropriate to try to address that much wider issue in this Bill. We kept returning to our favourite phrase "a level playing field" in Committee, and I return to it again. To introduce national criteria for direct-payments recipients, but not for people who receive services, would create a two-tier system. That would seriously undermine the level playing field that we are trying to create as a result of our amendments, for which Opposition Members have been pressing.

Mr. Milburn

I should like to clarify the Minister's thinking. Is he saying that his opposition to new clause 6 is a matter of practicality or of principle?

Mr. Bowis

I am saying that opposition to it involves a certain amount of practicality. The practicalities concern not just direct payments but issues that my hon. Friends have raised about how one could establish a national criteria and a national charging scheme. I think that it would be unworkable and unwelcome.

I turn to new clause 7. We are already committed to reviewing how direct payments work and to reporting our findings to Parliament within three years of them becoming available. That review will look at how the Act is working. It would not be appropriate for it to examine how different local authorities are exercising their discretion on charging. Differences in local authority charging policies are a much wider issue than direct payments and are monitored in other ways. Local authorities are, of course, accountable to their local electorates and the district auditor for their charging policies. We shall expect local authorities to act under the requirements of the Act and the guidance that we intend to issue. There is no need for an additional review of the impact of different charging policies on direct payments.

On amendments Nos. 3 and 4, and as I have already explained, the level of a direct payment must be sufficient to enable the recipient to secure the services that the payments are intended to cover—this may help the hon. Member for Stratford-on-Avon (Mr. Howarth)—and must enable them to do so legally. Payments must not be so small that people can afford the services they need only by breaking the law and not complying with legal responsibilities such as paying tax, and so on. If a local authority deliberately offers inadequate direct payments, it would not, in effect, be offering direct payments at all. It would not be a proper exercise of the authority's powers and could be challenged.

As I have said, the Government intend to issue section 7 guidance saying that the direct payment should be sufficient for the individual to purchase the relevant service—taking into account, of course, any financial contribution that the authority judges that the individual can afford to make towards the cost of care. The guidance will say that the level of payment should be set taking account of the fact that it may involve legal responsibilities, such as paying VAT, or national insurance. Local authorities must also have regard to value for money—this addresses some of the arguments in Committee—and may not be prepared to fund specific costs if the service can be secured more cost-effectively in another way.

Local authorities will need to discuss with people what contingency arrangements should be made using direct payments, and they will need to bear in mind the cost of those arrangements in setting the level of direct payments. If a contingency arises for which someone does not have cover, resulting in that person's needs not being met, under clause 2, the local authority's responsibilities towards that person will be the same as if no direct payment had been made. People will not be left without the care that they need.

The safeguards are adequate and it would not be appropriate to go further. Subject to the Bill's requirements, local authorities must determine the level of direct payments. Just as authorities decide on the nature and level of a community care service someone receives, so they have to decide on the level of the direct payment, the basis of its calculation and what it is meant to cover. Not everyone who receives direct payment will wish to become an employer, although many will. Others will contract with an agency, or secure services in some other way. To give local authorities a legal duty to include an allowance for a specific item that would not necessarily be relevant would not be sensible and would fundamentally undermine local authorities' discretion in their dealings with individuals—which, after all, is at the heart of community care legislation. I ask the hon. Member for Darlington to think again on the new clause. In doing so, I hope that he will join me in supporting the Government amendments that were tabled in response to Labour's earlier amendments. I hope that we can have a meeting of minds on that, at least.

Mr. Milburn

I am grateful to the Minister for his response. It seems that that well-bandied around phrase "level playing field" has different meanings in different parts of the House. I am grateful to him in particular for tabling a new amendment that clarifies some of the concerns that disability organisations have raised with all members of the Committee about an inclination towards a means-tested system. That much is clear, and we will return to the issue of net and gross charges in a later debate.

From what the Minister has said about his concerns about a national framework for charging, it seems there is some agreement about the difficulties in implementing such a framework. I noted with interest, however, that the Minister seemed to indicate that, in principle, he was not opposed to the concept.

Mr. Bowis

indicated dissent.

Mr. Milburn

The Minister is on the record as saying that.

Mr. Bowis

I am grateful to the hon. Gentleman for allowing me to put on the record that that is not the case. I stress that there were good practical reasons why I thought that such a scheme was not only inoperable, but would be undesirable and unwelcome. Because of that sensible set of practicalities, I formed a principle upon which I am opposed to the scheme.

Mr. Milburn

I just about followed the Minister's logic. Who does he have in mind when he says that the scheme would be "unwelcome"? Disability organisations welcome the idea of a framework that brings some clarity. Local authorities—which must administer the direct payments and the community care charging framework in general—welcome the idea of a national framework, as do the local authority associations. When he says that it is unwelcome, he means that it is unwelcome in the minds of Ministers. That is all well and good, but he cannot claim to speak for the nation on this matter.

I am concerned because the principles of fairness and equality are central to the thrust of the Bill. Those principles have been articulated in the phrase "a level playing field", but I am concerned that the Minister wants to have his cake and eat it. He wants to be able to say that there is equality between direct service recipients and direct payment recipients while leaving it up to the local authority to interpret that equality.

The new clause and the amendments aim to bring clarity to that position. They do not aim to impose anything upon local authorities, but intend to operate a fair and equal framework that can apply in all parts of the country. I am disappointed by the Minister's response, but since we need to make progress on other important matters I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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