HL Deb 20 May 2002 vol 635 cc513-5

2.50 p.m.

Lord Morris of Manchester

asked Her Majesty's Government:

Whether they have received any representations on the effects of the proposal to increase national insurance contributions for charities that assist the National Health Service in providing home care services for severely disabled and elderly people.

Lord McIntosh of Haringey

My Lords, the Government have received a number of representations from such charitable organisations. Charities play a valuable role in providing home care funded by local authorities. We believe that that role will continue to develop in the light of the substantial increases in funding for personal social services from 2003–04.

Lord Morris of Manchester

My Lords, I am grateful to my noble friend. Is he aware that, for charities like the admirable Enham Trust, providing, as they do, 24-hour care, supported accommodation and home care for chronically sick and severely disabled people, the rise in national insurance contributions will mean higher costs and cuts in staff and will lead to more so-called "bed-blocking" in NHS hospitals? Is that not hurtful to highly vulnerable people and plainly self-defeating?

Lord McIntosh of Haringey

My Lords, I am grateful to my noble friend for making me aware of the concerns of the Enham Trust. Of course, we are very sympathetic to those concerns, but I believe that their problems must be set in context. The increase in national insurance contributions is only 0.7 per cent of payroll nationally. Unfortunately, of the 200,000 or so staff who are involved in home care, 60 per cent work fewer than 30 hours a week. Therefore, I am sorry to say, many of them are likely to earn less than £89 per week, which is the primary threshold for national insurance contributions. Thus they will not pay any more.

Lord Skelmersdale

My Lords, rather than doing as the noble Lord has just suggested and giving a credit to charities against their national insurance bill, would not charities far prefer to be relieved of the burden of VAT and would not the Government be far better off providing that relief?

Lord McIntosh of Haringey

My Lords, I believed that the noble Lord was going to ask for special treatment in relation to national insurance contributions. I understood that to be the thrust of the Question; indeed, it was the thrust of the Question. As the noble Lord, Lord Skelmersdale, knows very well, the issue of value added tax is governed by the annex to the sixth directive. We do not have the same control over these matters.

Baroness Barker

My Lords, I declare an interest as an employee of Age Concern. Given that all providers of home care—statutory, independent or private—are equally subject to provisions of employment and taxation law, does the Minister agree that the key factor is that contracts should be awarded by commissioning officers on a fully costed basis? Will the Department of Health be taking that issue into account?

Lord McIntosh of Haringey

My Lords, I believe that this matter goes together with the whole issue of charging. I do not believe that one can separate the contracts from the charging regime. As the noble Baroness, Lady Barker, well knows, under the Care Standards Act guidance must be issued on home care charging. The consultation period has only just concluded and we shall respond to it publicly very soon. But that, in turn, will of course have an influence on the contracts awarded to home care providers.

The Earl of Northesk

My Lords, can the Minister give the House an idea of how much the increase in national insurance contributions will cost the charities concerned? He says that it may be only 0.7 per cent of payroll costs. I have heard estimates of as much as £50 million.

Lord McIntosh of Haringey

My Lords, that is quite implausible. The figure for the whole health and social work sector in this country will be £270 million. That sum covers many times the number of staff involved in home care. Only 200,000 staff are involved in home care, including all the administrative staff. I do not know what the figure is. There is no way of knowing what it is, but it is not that quoted by the noble Earl, Lord Northesk.