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Baroness Jay of Paddington: My Lords, I thank the Minister for giving way. Does what he has just said, in response to my remarks and those of the noble Baroness, Lady Robson, indicate that the Government will reject the recommendation of the Select Committee on Health of another place which called for that?

Lord Mackay of Ardbrecknish: My Lords, I believe that the noble Baroness knows that we do not normally say how we are going to respond to the select committee before we have done so. I am not going to be drawn down that road. I am trying to outline, in as fairly an open and straightforward way as I normally try to do, my response to the points made by the two noble

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Baronesses. I hope that she will not ask me to go too much further. That is our thinking at the moment, but we have to look at the whole report from the select committee before we give our considered view.

We are committed to making sure that this guidance is put into practice. I believe that that is demonstrated by the fact that implementation is one of the six key priorities for the NHS in 1996-97. The NHS Executive is making sure that the requirements of the guidance are fully met, and will be carrying out further monitoring from April next year as eligibility criteria for continuing healthcare services are put into operation.

The work the Department of Health is doing to implement the guidance on continuing health care is one strand of our action to deal with the problems associated with long-term care, which were raised by every noble Lord and all the noble Baronesses who have spoken in this debate.

I turn now to the position of people who need long-term care in a residential setting, but who do not need the specialist care the NHS provides. There have been concerns expressed by and on behalf of individuals who felt that the rules on charging for such care have operated unfairly. The Government have listened sympathetically to those views. One such concern was expressed by many of your Lordships during the passage of the Pensions Bill. That was that local authorities were not using their discretionary powers to ensure that spouses of people who entered residential care could receive part of an occupational pension paid to the resident. As a result, earlier this year we announced that from April 1996 local authorities will be able to take into account only one-half of a married resident's occupational pension, so that the remainder may be used to support a spouse still living at home. That, I believe, overcomes the fears put to me rather graphically in your Lordships' House--I believe by the noble Baroness, Lady Hollis of Heigham, with a turn of phrase for which she is noted--that for a spouse left at home it would be better if the husband had died leaving her with her 50 per cent. widow's pension rather than go into a home and have it all taken away. I hope that we have responded positively to that.

As your Lordships know, we have now decided to increase the current lower and upper capital limits in the local authority charging system for residential care and nursing homes and for income support payable to people in homes. Currently, as your Lordships know, the lower limit is £3,000 and any capital up to that level is ignored. The current upper limit is £8,000 and anyone in residential care who has capital above that level will not receive any help with costs. Between £3,000 and £8,000 there is a sliding scale of tariff income taken into account.

My right honourable friend the Chancellor said in his Budget speech that the current limits are far too low and that we want to help people who have saved and worked all their lives. The lower limit will be more than trebled from £3,000 to £10,000 and the upper limit doubled from £8,000 to £16,000. These changes will take place by next April. I am pleased that we have been able to provide this extra help for people in residential care and

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nursing homes. It is a much more generous treatment of capital than other aspects of the income support system and is good news for the elderly and other vulnerable people who have had to make significant contributions out of very limited capital for care home charges. I do not want to go into the arguments in favour of having these distinctions and some degree of charging. I believe that, as I said at the beginning of my speech, governments since 1948 have accepted this dividing line. Indeed, the Borrie Report, commissioned by the party opposite, accepted it, which suggests that it is something which has fairly wide acceptance.

This is a difficult issue, but I do not think that people who are reasonably well off can look to other people who are not well off to help them, through their taxes, to pay for residential care simply in order to protect their money and to allow them to pass it on. That is not an easy thing to say, but it is one of the hard issues that those of us who have to make difficult political decisions simply have to face. We decided to make those changes and the changes announced earlier this year to the treatment of occupational pensions after listening to the real concerns of elderly people. I very much hope that what we have done will be as widely welcomed outside the House as it has been welcomed in the House this afternoon.

We hear a lot about the potential impact--some would say the "threat", although I do not agree with that--of the increasing number of older people in our society. As my noble friend Lord Dean said when introducing the debate, it is true that over the next 20 years there is projected to be a 20 per cent. increase in the number of people aged 75 and over, and a 44 per cent. increase in the number over 85. That is where we find the big recruitment group for residential care. However, we should be careful not to assume that older age necessarily brings dependency and disability. Many people remain fit and active into their eighties and nineties or even beyond and this trend seems likely to continue in the light of progress in medical and pharmaceutical science, preventive measures and health education. The Department of Health is looking carefully at the results of research into healthy active life expectancy--the extent to which extra years of life are, or can be, free of disability. An expert group has been set up to consider this important question.

The Government are doing everything possible to promote good health. I refer, for example, to the Health of the Nation. We are trying to find ways to persuade people to change their lifestyles in order to reduce the incidence of strokes, heart disease, cancers, mental illness and accidents, all of which are relevant to the good health of older people. However, as the noble Lord, Lord Butterfield, said, the biology of the human being is such that disabling conditions increase with age. Despite all the cleverness of medical science, long-term care will be needed for the foreseeable future for a significant number of elderly people.

I have mentioned the imminent changes to the rules for treatment of income from occupational pensions and the substantial increases to the capital limits for people who enter residential care. That is aimed at the short

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term, but we need to go beyond and look at the long-term position. I have already spoken about the challenge of demographic changes.

I should like to round off my contribution--

Noble Lords: Hear, hear!

Lord Mackay of Ardbrecknish: Thank you very much--by looking into the future a little. The Chancellor announced in another place a range of proposals to encourage people to make provision for long-term care. The first is to exempt from tax the benefits from a range of insurance policies which provide for long-term care. This is, of course, on top of the recent decision to exempt from VAT certain forms of care provided in someone's own home. I was delighted with the welcome that those moves received from those of your Lordships who mentioned them today.

Secondly, in consultation with the financial services industry, we will be studying the experience of partnership schemes in the United States. My honourable friend, Oliver Heald, the Parliamentary Under-Secretary, recently returned from a fact finding mission to look at schemes in New York and Connecticut. The essence of the schemes is that individuals who plan ahead to meet a proportion of long-term care costs themselves are able to retain some of their assets above the £16,000 capital threshold. My noble friend Lord Chelmsford suggested such a scheme, without mentioning Connecticut.

Thirdly, in consultation with pensions representative bodies we shall be looking at the possibility of changing the tax rules to extend to members of occupational pension schemes the option to take a variable pension. That could provide a larger pension in later years when people are more likely to need long-term care in exchange for a smaller pension earlier on. My noble friends Lord Chelmsford and Lord Jenkin of Roding mentioned that and pointed out that the Inland Revenue rules may require to be changed.

I hope that I have not gone on for too long, but I believe that we have had an important debate and that it was worth saying a few things which needed to be said to illustrate the Government's position. I am sure that many of our proposals are accepted by all noble Lords, but I know that there is some concern about certain areas in which the Government have had to take serious decisions about the way in which we should move in the future. I believe that we have made our position clear and that, for a variety of reasons which are both medical and social, we are now giving our old folk a very much better standard of living and way of life than was ever the case in the past. I very much hope that we can continue to do that. I am grateful to my noble friend Lord Dean, and to all noble Lords who have spoken, for giving us the opportunity to have this important discussion today.

5.55 p.m.

Lord Dean of Harptree: My Lords, I should like to thank all noble Lords who have taken part in this interesting and constructive debate. It has been greatly

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enriched by the deep knowledge and experience of all those who have spoken. My only regret is that we have had very few contributions from the Back Benches of the official Opposition where I am sure that there is great knowledge and interest in the subject.

I am particularly grateful to my noble friend Lord Mackay of Ardbrecknish for listening to all the speeches throughout the debate and for his usual courtesy in answering all the points that have been made with considerable thoroughness, laced with his special brand of Scottish humour. I am sure that your Lordships will want to return to this important subject at a later stage, but in the meantime I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

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