That is a great relief to me. I will come to the narrow-ish point in the amendments shortly but I want to put them in context.
One of the reasons why advice is absolutely crucial in the deferred payments scheme is that this is one of the least understood and least explored facets of the Bill. I will come on to one or two aspects of that. In a way, it makes it hard to make the case for the importance of advice, because so many things on which advice will be needed have not yet seen the light of day. In Committee I referred to some of the unresolved issues that have been raised by Partnership, the Equity Release Council and others. They will emerge, and this will make it clearer why advice is needed.
I will first put the issue in the following context, to show how unexplored it is. If the noble Earl, Lord Howe, will forgive me, I will correct something that he said in Committee. He said that 40,000 people each year have to sell their house to pay for care. I think that the noble Earl mis-spoke and that he meant to say, “up to 40,000”. That is the explanation that has
come to me of what he said. I make no complaint; it is hard when one’s words are examined in such terrible detail.
I have spent a surprising—perhaps wasted—amount of my time trying to trace the figure that 40,000 people each year are forced to sell their home to pay for care. I have been doing it ever since I sat on the royal commission 15 years ago. When we were sitting on the royal commission, we eventually found a very dodgy piece of research, now more than 20 years old, which kind of concluded that the number might be about 40,000. Of course, what happened was not that the piece of research was examined and found to be accurate but that the figure got into the Daily Mail cuttings library, so that every time that paper campaigned against people having to sell their house to pay for care—I praise it for this—the figure was repeated, until it became accepted throughout the world as the number involved.
Having spent all these years studying the subject, I am very tempted to go into greater detail, but I do not think that the House would thank me for it. However, I refer any noble Lord who might be interested to the Full Fact website. It is a fact-checking organisation, of which I am a director, which goes into the matter in minute but very clear detail, and points out that the Government’s claim is based on exploratory research that is almost 20 years out of date.
More importantly, the 40,000 figure is used as if it were the number of people who are forced to sell their house. “Forced” is a funny word in this context. For most people who go into a home, selling their house is the sensible thing to do to fund the cost of care. You do not want to leave the house empty; that benefits nobody. It does not provide housing for anybody; the house starts to crumble and is worth less to you and your family, so you had best sell it and get something that is more suitable. However, the deferred payment scheme is so important because there are people for whom that is not true. For example, some people want their families to live in their house and therefore cannot get cash for it. That is why we have a deferred payment scheme. “Forced” suggests that this is something dreadful in all cases, when in fact it is dreadful in some cases. It is absolutely right, as I said before, that we have such a scheme for some cases but not for all cases.
I now come to another severe complication, and I am afraid that I will have to resort to the vernacular in order to make clear to the House what has happened. The original scheme put forward by Dilnot has had its balls cut off by the Government in the consultation document. That is not too strong a way of putting it, and I will explain why. Yes, every council will offer a scheme, but there is now a huge restriction that will mean that very few people will take advantage of the deferred payment scheme. It would not in any case have been 40,000, but now I think that it will be nearly nil. Why is that? The consultation paper makes it clear, in paragraph 150 on page 44, that you are eligible for a deferred payment loan only if your other assets in total come to less than £23,250. If you have more than that, you have to spend down until you have £23,250 left in the bank or wherever it is, and then you can consider a deferred payment scheme. However,
most people who have reasonably valuable houses, who are the people most likely to want to adopt this measure, will have far more than £23,250 worth of other assets. Most of them will not feel the least bit happy if they have to spend down until they have only £23,250 left in the bank before they can get any help from the deferred payment scheme. That hardly pays for a daily delivery of the Racing Post for the rest of their lives, their nightly gin and tonic or more important things such as the literature they want to read or all the things that make their life fuller. For those people, a deferred payment scheme is simply not available.
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You have to think about the timing of this measure. In theory, people could let their money run down to the £23,250 sum and then apply for a deferred payment scheme, but what is going to happen to the house in the mean time? They must either let it or leave it empty. Something has to happen with it. Usually, people make decisions about funding when they go into a care home. That is the moment when a deferred payment scheme has to come into effect if it is to be effective. However, the answer given to most people with funds of £23,250 will be, “You might want to do this but you can’t because the Government say that you can’t”.
I am a veteran of the long struggles that have taken place on this issue, with the politicians saying that we need a deferred payment scheme because it is wrong that people should be forced to sell their houses and officials saying that it will be expensive and a nuisance, and blocking it. I do not know whether that is what happened in this case but, as I say, this is now a castrated deferred payment system with a brutal limitation imposed by the consultation document, which was nowhere heralded or mentioned when the scheme was drawn up. That is very sad. Indeed, it is more than very sad; it will cause fury because people have read in their newspapers that a deferred payment scheme means they will not have to sell their house. However, they will then find that they will have to do so because of this arbitrary change by the Government. The result will be fury.
I support the Bill strongly but one of my concerns about it is that I fear that in various ways it falls short of the billing it has been given. That is certainly true of the cap, which will be reached only at the rate of local authority payments. The issue we are discussing is another case in point. People will believe that the Government have dealt with this problem but they have not. That was an error and I hope that the Government will think again about this.
One thing that might help a little when people reach the stage when they need to think about deferred payments and that sort of thing is if they are directed to proper advice so that someone who is on their side—their financial adviser—can explain to them why they are not eligible, if an explanation can be given, or perhaps suggest alternatives to the deferred payment scheme. For example, if you take out a deferred payment scheme, an alternative would be to let your house and use the money you receive in rent to pay for your care. A financial adviser will point to that. That
alternative has various advantages and disadvantages: for example, you avoid paying interest on the money but you have to pay tax on the income. I will not go into all the complications but it is crucial that people get the right advice.
To return to my previous point, I tried out this discovery of the £23,250 limit, which I made courtesy of an adviser only last week, on three Members of this House who are most knowledgeable about the subject of care, and not one of them knew about it, which must mean that it is pretty obscure.
To try to dispose of a red herring that gets thrown in the way of this subject, I am not saying in the amendment that people should be forced to take financial advice. You cannot force people to do so. If it is forced advice, they will not take it seriously and it will not work. However, the council can point people in the direction of financial advice—not to an individual financial adviser because councils do not know which of them offers good advice—but to somebody who is appropriately qualified to give people the advice they need. The consultation paper pays lip service to this in paragraphs 171 to 174. However, we need more than lips; we need teeth if people are to get the advice they need to navigate around this very complicated aspect of the Bill.