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Ms Linda Perham (Ilford, North): I am grateful for the opportunity to debate the Department of Health's draft guidance, "Fairer Charging Policies for Home Care and other non-residential Social Services", which was issued with a consultation paper in January 2001. I am also pleased to have secured the debate just before the consultation period ends on 30 March. The guidance is for local authorities on non-residential community care charges, such as those for home care and day services. It is due to be finalised in May and fully implemented by April 2002.

I pay tribute to the Coalition on Charging, the Leonard Cheshire Foundation and the Carers National Association, which are working with me on the issue, and to the excellent work that they carry out for people with disabilities and their carers. I have been pleased to support the Leonard Cheshire Foundation since my year as mayor of Redbridge in 1994-95, and have had the privilege of working with its head of policy, John Knight, since my election to the House.

Members of my local carers group, the Redbridge Carers Support Service, raised concerns about charges for home care when I spoke at their annual general meeting on 9 November--the same day that my right hon. Friend the Secretary of State for Social Security announced the £191 million package of extra help for carers, which was warmly welcomed. They raised the issue again during a visit to their headquarters in Ilford on 1 March by the Under-Secretary, my hon. Friend the Member for City of York (Mr. Bayley), on 1 March. Charging for services is a matter of great concern to carers, and the Carers National Association believes that the draft guidance does not pay enough attention to the impact of charging on them. That is a particularly sensitive subject because, from April, the Carers and Disabled Children Act 2000 will for the first time allow local authorities to provide services to carers, while giving them the power to charge for those services.

The Government's intention to provide a fairer means of charging for non-residential services should be welcomed. It includes the commitment to reduce the worst hardship caused by charging to the least well-off people, by proposing a minimum level below which service users' incomes cannot fall; the creation of a buffer zone of 25 per cent. to protect that minimum income; the reminder that councils retain the discretion not to charge; the view that charging without taking into account a service user's means is unacceptable; the requirement that local authorities must take into account the ability to pay; and the principle that the value of a person's home may not be taken into account when assessing ability to pay.

Although the guidance will bring some real improvements, there remain areas of concern. People on income support will not automatically be exempt from charging. The draft guidance states that nobody should fall below the level of income support, which means that the most vulnerable in our society will still be hit. Income support is a breadline benefit, payable to people who would otherwise fall below the poverty line, which remains the case even where a person receives other income or benefits. Someone who is on income support

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and being charged for care cannot wait a year before the charges stop. They must be stopped now. Those who are currently facing hardship because of personal care charges cannot wait until April 2002 for charges to be abolished.

Exempting people in receipt of income support is also consistent with charging systems for other comparable health and social services such as prescriptions, dental treatment and eye tests. In any case, it will be inefficient to charge those on income support, as the amount that councils have to spend in assessing that group of people, compared with the meagre sum raised, will mean little or no overall income. In the final guidance, the Government should ensure that no one on income support is charged.

Many organisations are calling for personal care services as defined by the royal commission to be available free of charge. That now looks set to happen in Scotland and is a major concern of the Coalition on Charging, a consortium of 200 national and local organisations representing disabled and older people.

The Health and Social Care Bill clearly states that those receiving care from a registered nurse will not have to pay personal care charges in any setting. That is welcome, but many older or disabled people receive a similar service from a social care worker but would have to pay charges. There is real anxiety that what is laid out in the guidance could act as a disincentive to work. The draft guidance states:

It is clear that the majority of earnings will not be retained if the majority, 55 per cent., of a person's earned income is deemed available to pay for charges. Many disabled people already face barriers in their everyday lives. Those in work also contribute to the cost of non-residential social services, as well as other services essential to society, via income tax, council tax and national insurance. On top of that, up to 55 per cent. of earned income being taken away to pay charges is unacceptable to service users who work. They are being taxed four times, which is clearly unjust. If a maximum figure of earnings is to be contemplated, it needs to be much lower to tackle the issue successfully and to ensure that charging does not discourage disabled people from finding work.

The guidance suggests that partners' income can be taken into account, but that could compromise a disabled person's independence and cause tensions within a household or relationship. Section 17 of the Health and Social Services and Social Security Adjudications Act 1983 states that a service user can be charged, but not other parties. There is anxiety that the guidance does not make things clearer, and it could be a problem for local authorities and service users.

Many partners of disabled people already make many financial commitments to support their partner. They also save the local authority money by the informal support that they give. It is unfair that they are then caught in a double whammy of having to pay their partner's formal care costs.

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Organisations representing disabled and older people and carers believe that, if charging continues, partners should not have to pay charges, and I seek an assurance that that will be the case. Although it is good that the value of a person's home is not taken into account when assessing the ability to pay charges, the current savings level is too low. Levels have been set at the same limit as for people living in residential accommodation. That is causing great concern to service users, as people living in their own home need extra savings to pay for the maintenance that home ownership necessitates, and they also use extra support and equipment.

The draft guidance shows that savings over £10,000 could be taken into account when charging. Service users with savings of over £18,500 could be expected to pay the full charge for a service--a limit that would leave little money to cover the costs involved if someone had a progressive condition, for example, and had to find money for a chair lift, or if a home needed repairs after flooding.

Disability-related benefits such as disability living allowance are intended to pay for the extra daily costs faced by disabled people. Those costs are well documented and are frequently substantial, ranging from paying for extra heating to paying for communication aids or adjustments to a car. When the benefits were introduced, they were not intended to pay for services provided by local authorities and the amounts involved clearly reflect that. They are not sufficient to fund or subsidise care or extra living costs.

There is a contradiction between the Government's strong record on improving civil rights for disabled people since they were elected in 1997, through such measures as the establishment of the Disability Rights Commission, and the effect that charging has on the everyday lives of disabled people. The Government's recent proposal to scrap the small employer threshold so that no small employer can discriminate against disabled people is welcome, but that positive development has less meaning if, because of the extra charges that a disabled person needs to pay to get to work in the first place, he or she is better off staying on benefits and not working.

The guidance could lead to improvements in local authorities' charging policies but I urge the Minister to consider seriously my concerns, which may be summarised as the continuation of charging for personal care if administered by a social worker but not a nurse; the disincentive to work created by the plan to take up 55 per cent. of a service user's income to pay for personal care charges; and the unfairness of charging partners for an elderly or disabled person's care. As a matter of urgency, a commitment to ensure that charging for people in receipt of income support stops immediately, rather than in April of next year, would also be warmly welcomed.

The main reason for the guidance appears to be the current variation in charging between different councils--problems that, as the consultation paper states, were identified in the "Modernising Social Services" White Paper, the report of the royal commission on long-term care, and "Charging with

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Care", which was published by the Audit Commission in May 2000. However, I fear that too many charging variations will continue under the guidance.

Together with the Coalition on Charging, I believe that councils will be left with too much discretion in several key areas, such as in taking into account disability-related benefits, partners' income or capital, savings, and setting a maximum charge. Local authorities should be obliged to undertake effective consultation on charges and to take the views of service users and carers fully into account. Carers would like assurances that the Government intend to ensure that a more detailed appreciation of charging issues for carers is represented in the guidance.

I hope that the final guidance will realise the Government's genuine intention of introducing fairer charges for home care and other non-residential services. I welcome the consultation that has taken place with interested parties on the draft guidance. I am sure that the Minister welcomes the opportunity of addressing my concerns and those of the individuals and organisations who took part in the consultation.

1.13 pm

The Minister of State, Department of Health (Mr. John Hutton) : I congratulate my hon. Friend the Member for Ilford, North (Ms Perham) on securing the opportunity to consider the Department's consultation paper and draft guidance on charging policies for non-residential social services.

In July last year, we took new powers to issue statutory guidance under section 7 of the Local Authority Social Services Act 1970, in relation to discretionary charges for home care. Until that time, we had no powers in that area. We identified the extent of variations in charging policies between councils as an issue needing to be tackled in our "Modernising Social Services" White Paper in December 1998. The full extent of the variations--and I must acknowledge that in some cases the charging policies are hard to defend--has been exposed in the Audit Commission's recent report, "Charging with Care", published in May last year.

My hon. Friend mentioned the royal commission's report on the funding of long-term care, published in January 1999, which recommended that personal care should be provided free wherever it was undertaken. As she knows, we had to decide how best to improve long-term care. We thought it right to spend most money on improving the general quality and range of services provided for older people. That will help individuals to regain as much independence as possible. It will support them in their own homes and enable services to be tailored to their needs, not those of the organisations providing them.

To make personal care free to everyone in every setting would cost about £1 billion a year, but that huge investment would do nothing to improve front-line services. Not one extra person would be offered help to remain independent in his or her own home. It was a hard choice, but we chose to invest most resources in changing fundamentally how our care system supports older people.

We chose to invest in the development of a new range of services to promote the independence and improve the quality of care of older people. An important part of

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the investment will be used to provide a new range of intermediate care services to prevent hospital admission and to offer effective rehabilitation, both enabling prompt discharge from hospital and preventing premature admission to long-term care.

Under the NHS plan of July 2000, by 2004 there will be 5,000 extra intermediate care and 1,700 supported intermediate care places, benefiting 150,000 more older people each year; more rapid response teams and other avoidable admission prevention schemes, benefiting about 70,000 more people each year; 50,000 more people will be enabled to live at home through additional home care and other support; and further carers' respite services will be extended to benefit a further 75,000 carers and those for whom they care.

That investment will allow us to employ more nurses, doctors and therapists, but we clearly cannot spend the same money twice, as my hon. Friend would acknowledge. It is a hard choice, but we have made the right one for our country. It is vital to achieve our ambition of having joined-up services that promote independence, choice and quality, and other non-residential services such as day care.

The extent of variations in local charging policies, which we and the Audit Commission have identified, risks inhibiting our ambitions for developing the care of people at home. Too often, local charging policies have not been related to the need to promote independence and have been exclusively budget driven, crudely designed, and insensitive to individuals' circumstances. If home care is to play its full part in helping people to live independent lives in the future--which the Government want to encourage--charging policies that are manifestly unfair and deter people from accessing care need to be tackled.

The design of charging policies is important. It would have been an important matter, even if the royal commission's recommendation to make all personal care free of charge had been implemented in full. Non-residential social services include services such as home help and community equipment, which can be vital to maintaining independence, and the royal commission recommended that such services, where they do not involve personal care, should still be subject to an assessment of ability to pay charges. We would still need to address the fairness of charging for services.

I must emphasise that the draft guidance is precisely that. It was issued with a consultation paper, seeking responses to several questions. While we have done our best to overcome the difficulties of designing good charging policies, we may not have all the answers and we welcome all responses to the consultation, including those of well-informed service users, voluntary groups and, indeed, my hon. Friend's contribution today.

Local councils will rightly retain real responsibilities and some discretion in charging policies in future. For example, it will still be open to councils not to charge and they must decide what proportion of costs to recover through charging arrangements. The draft guidance sets out essential requirements to ensure fairness in assessing ability to pay charges, and consistency with the Government's overall social care and economic objectives. The draft guidance will be issued as statutory guidance to which councils must have regard in setting their charging policies. As

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councils retain substantial responsibilities, it is vital that they give proper priority to the key processes, which include consultation, communication with users and reviews of their policies. The draft guidance includes advice on all those issues, which in my view obliges councils to undertake effective consultation. I am certainly at one with my hon. Friend on the importance of that.

I am pleased that my hon. Friend welcomed a number of the main principles in the draft guidance, which include the requirement that charges should not reduce a user's net income below basic levels of income support; the view that charging all users at a flat rate, without taking account of their resources, is unacceptable; and the requirement that councils must take into account the ability to pay. I should add that it is already a legal requirement for charges to be reasonable, so that is not new.

My hon. Friend accepts that the draft guidance will mean real improvements, but she has, quite legitimately, raised concerns, to which I want to respond positively. We have proposed that councils should bring the final guidance into force during the financial year 2001-02 and no later than 1 April next year. She says that people on income support will continue to experience hardship if councils charge users on basic levels of income support and take no action until April 2002. I have some sympathy with that point, which we shall need to consider carefully. Others have made the same point in response to the consultation exercise. If I inject a note of caution, I do so only because achieving the objectives that we both want to achieve is a complex matter. We need to take into account the ability of local councils to deliver changes to their charging policies within a reasonable time.

My hon. Friend says that other charging systems such as those for prescriptions and dentistry exempt recipients of income support. That is not all that those systems do; they also protect, at income support levels, the incomes of people who are disqualified from receiving income support, such as low earners and students. To do that, they require a specific and quite complex means test under the NHS low-income scheme. We have set out our intention to provide similar protection for people liable to pay home care charges, but it will not be a simple matter for councils to achieve that quickly.

There is also an important interaction for people receiving both income support and disability benefits such as disability living allowance or attendance allowance with the way in which home care charging systems treat disability benefits. If councils take disability benefits into account as income without assessing the reasonableness of doing so, that may reduce a user's net income below income support levels. That means that it is not a straightforward matter to divorce the treatment of people receiving income support from other issues. As I have said, however, we will consider the issue carefully as we respond to the consultation.

My hon. Friend made an important point about incentives to work. I want to make it clear that our policy is to encourage those who want to take up employment, including disabled people, to do so. Charging policies should avoid creating disincentives to work. That remains our fundamental objective. Our

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intention in the draft guidance was to propose that councils treat earnings more generously than other income to ensure that there are incentives for disabled people to work. We have made it clear in the draft guidance that councils already treating earnings more generously than the maximum proposed in the consultation may continue to do so. There is no reason why disabled people now in employment should lose out as a result of the draft guidance. It discusses ways in which the overall approach will help to minimise work disincentives. It proposes as a guiding principle that those in work should retain the majority of any benefit from entering work or from their increased earnings.

As my hon. Friend said, the draft guidance proposes that no more than a maximum of 55 per cent. of earnings should be included in any calculation of total income. That is not the same as saying that 55 per cent. of income is available to pay charges. That percentage will be offset against premiums at income support levels, including disability premiums, with the addition of housing costs and disability-related expenditure incurred by the service user. Much less than 55 per cent. of earnings will therefore be assessed as a maximum charge, other than for very high earners.

We have had many representations about that element of the draft guidance. I hope that my hon. Friend will be encouraged by our willingness to reconsider whether it achieves the removal of disincentives to work. If there are convincing arguments that it does not, it will be reconsidered. I can assure her that we shall not issue any final guidance that makes it harder for disabled people to enter work. That would be entirely counter to our wider objectives and will not happen. We have already proposed that earnings should be treated more generously than other income, and we will re-examine that to ensure that the maximum proposed achieves the objective that we desire.

The draft guidance reiterates the current legal position, which has previously been set out in advice from the Department, on the treatment of partners' income and savings. That is a complex issue, and I want to assess whether we can clarify the guidance further as a result of the consultation. I fully accept my hon. Friend's points about the sacrifices that many carers already make to care for their partners. The draft guidance will help such carers to some extent: for example, we know that some councils currently take account of the user's income only, but assume that it is all available for charging, even though it supports both the user and the partner. We have made it clear that that is not acceptable. In some situations, it might be fairer to the user and partner to assess their income and expenditure as a couple: for example, where a benefit is assessed and paid at the flat rate for a couple. It can be invidious to assess that as income for the user only. That can happen now, and we are clear that it is not acceptable. On the other hand, it is arguable that a couple with joint savings, or one of whom has large savings, may fairly be assessed as a couple. We will carefully review the comments that we receive about that and try to achieve greater clarity.

The proposed savings levels are similar to those that are in force in approximately three quarters of councils. The other quarter have less generous limits, sometimes

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as low as £3,000, with full charges applying above that level. We will take account of the point that people living at home might need greater savings than those in residential care. That is absolutely right. However, I should mention that the draft guidance does not require users with savings above the upper limit to pay the full charge--the full cost--for a service. Councils may choose to subsidise charge payers at that level as an incentive to independent living in the community. Councils may also apply higher savings limits and set an overriding maximum charge to be paid by any service user. The draft guidance would require councils to consider setting such an overriding maximum. That would be a significant step forward.

My hon. Friend suggested that the draft guidance would leave too much discretion to councils in a number of key areas, including the treatment of disability benefits. The draft guidance proposes that disability benefits may be taken into account as income only if councils also specifically assess a user's disability-related expenditure. That, too, would be an important step forward. While I understand her point, I believe that that is a clear requirement. A number of local councils have criticised the guidance not for leaving them too much discretion but for being too prescriptive. It requires a more sensitive test of ability to pay a charge, when a council wants to take benefits such as disability living allowance and attendance allowance into account. That approach would ensure that charges do not reduce a user's net income below basic levels of income support, and would allow disability-related expenditure at levels higher than the benefit concerned to be taken into account. Many users with high care needs would not pay a charge, or would pay a much lower charge.

We do not believe, as a matter of principle, that disability benefits should be entirely excluded from consideration as income. That would be wrong, for example, where a council provides a care package that meets all or most of a disabled person's care needs. The approach that we have proposed would achieve greater fairness and more sensitive assessment of a user's financial circumstances, and would increasingly be combined with better advice to ensure that unclaimed benefits, such as attendance allowance, are claimed, thus increasing the user's income and quality of life. I am sure that we will receive many comments about the treatment of disability benefits, but I have tried to set out the aims behind our proposal.

My hon. Friend cogently made the point that the draft guidance should take more specific account of the needs of carers. That is precisely the kind of comment that we want to hear during the consultation. We are willing to consider more specific guidance on the cumulative impact of charging a disabled person and a carer in the same family. I understand that following a recent meeting with the Department, the Carers National Association will make such points in a written response to the consultation, and I look forward to receiving them.

My hon. Friend has done her constituents a substantial service in raising these matters. We have an open mind on the subject and will seriously consider the many representations that we have received, not least hers.

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