Second Standing Committee on Delegated Legislation


Wednesday 15 May 1996



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The Committee consisted of the following Members:

Chairman: Mr. Patrick Thompson

Bayley, Mr. Hugh (York)

Burden, Mr. Richard (Birmingham, Northfield)

Carttiss, Mr. Michael (Great Yarmouth)

Congdon, Mr. David (Croydon, North-East)

Corbett, Mr. Robin (Birmingham, Erdington)

Cousins, Mr. Jim (Newcastle upon Tyne, Central)

Currie, Mrs. Edwina (South Derbyshire)

Evans, Mr. Roger (Parliamentary Under-Secretary of State for Social Security)

Gorst, Sir John (Hendon, North)

Hayes, Mr. Jerry (Harlow)

Lynne, Ms Liz (Rochdale)

Moate, Sir Roger (Faversham)

O'Hara, Mr. Edward (Knowsley, South)

Ottaway, Mr. Richard (Croydon, South)

Renton, Mr. Tim (Mid-Sussex)

Squire, Ms Rachel (Dunfermline, West)

Temple-Morris, Mr. Peter (Leominster)

Timms, Mr. Stephen (Newham, North-East)

Wicks, Mr. Malcolm (Croydon, North-West)

Mr. M. Hennessy, Committee Clerk

3 Second Standing Committee on Delegated Legislation Wednesday 15 May 1996


Income-Related Benefits Schemes (Miscellaneous Amendments) Regulations 1996

4.30 pm

Mr. Malcolm Wicks (Croydon, North-West): I beg to move, That the Committee has considered the Income Related Benefits Schemes (Miscellaneous Amendments) Regulations 1996 (S.I. 1996, No. 462). The main part of this statutory instrument uprates the various income support levels to take account of last year's Budget statement on long-term care. We all understand the importance of context. Britain faces an aging population and how we will provide care—often long-term care—for an increasing number of frail, elderly people is of growing importance on the parliamentary agenda. Increasingly, hospitals feel that they are not in the business of long-term health care, something which many hon. Members on all sides of the House regret. Furthermore, the number of residential homes in the private sector has increased dramatically and the costs of such care are often substantial—in many parts of the country, they could be between £300 and £500 or more a week. That is a great deal of money for most people to provide and we are concerned that many people feel that, in old age, their assets and homes are threatened by such costs. Hence, the importance of the issue and the importance of our discussion today. I wish to reiterate the Opposition's welcome for the increase in capital limits on income support from £3,000 to £10,000, with an upper limit of £16,000 rather than, as at present, £8,000. I should also like to reiterate our belief that this is only a short-term measure. It is still unlikely to prevent many people from losing their homes in the forseeable future because of the costs of residential care. I shall move on immediately to our concerns in that respect. Regulation 12 relates to capital limits for persons in residential or other types of accommodation. There are two matters on which I should like the Minister to comment, the first of which relates to people with latent preserved rights. There must still be several people with savings of between £16,000 and £8,000 who became permanent residents in independent homes before 31 March 1993 and who have been paying their own fees out of their capital. Under regulation 19 of the income support regulations, such people will qualify for preserved rights when their capital falls below the capital limit 4 for income support. At present, that is £8,000, but it will be £16,000 when regulation 12 of the draft regulations replaces the existing regulation 45. Once they qualify for preserved rights, they become eligible for between £203 and £340 per week, depending on what kind of home they live in. Those residents, by definition, have no contact with the income support section of the Benefits Agency. The home that they live in will probably have no knowledge of how much capital they currently have, unless it is acting as the resident's appointee. Will the Minister explain how the Department will alert those residents and their relatives to their new rights to income support towards their fees? If they do not find out, the new capital limits will have no meaning for them. My second question is not purely about the social security implications of the changes, but about how they interact with the duties of local authorities towards residents without preserved rights whose capital is between £8,000 and £16,000. The Government have implied that the purpose of the new £16,000 threshold for both income support and local authority charges is so that residents should not have to use up capital below that amount to pay the home's fees. I understand the objective, but I believe that that will be the case only if the social services department accepts responsibility for paying most of the fees for residents who went into private or voluntary homes independently and who have savings of between £8,000 and £16,000. On the income support side, the effect of new regulation 45 for people without preserved rights will be to give them a right to claim some income support once their savings fall below £16,000. In practice, the amount that they will receive on top of their basic pension will be quite small—that is, they will qualify for a personal allowance, a pensioner premium and a residential allowance. That will be £123.20 for residents aged between 70 and 75. However, they will receive that net of their value of their retirement pension and the tariff income from savings of between £10,000 and £16,000. That means that a 71-year-old with £10,000 in savings will be better off by £62 per week as a consequence of the new rules. A person with £15,500 of capital would be better off by only £40 a week. That is clearly not enough to allow that person to pay the fees, which are likely to be between £250 and £700 per week, depending on the type of home and which part of the country they live in. Will the Minister explain how those residents are to meet the balance of their fees? Unless a social services department is prepared to step in and take responsibility for paying the balance, the residents will have to use up their capital, albeit at a slightly lower rate, to continue living in the home. The implication of the changes to the charging legislation is that residents with savings of below £16,000 will become the responsibility of the social services department, which will therefore pay the balance. That needs to be clarified. It could be argued that the wording of section 21 of the National Assistance Act 1948 means that social services departments have no duty towards anyone who went into a home 5 independently and who still had savings from which the fees could be paid. There is no doubt that once a social services department agrees that it has a duty to accommodate someone who is in need of care and attention, it must ignore savings of £16,000 or less when deciding how much the resident should pay. However, section 21 of the 1948 Act states that the social services department's duty to provide—or procure—accommodation arises only if the person needs "care and attention which is not otherwise available to them". The social services departments could argue that the existing residents have accommodation and care available to them and are in no danger of losing it because they can continue to meet the fees out of their income and savings. It is that interface between social security and social services responsibilities that needs to be clarified. Returning to the changes to the capital limits, local authorities are concerned that, given the general problem of the non-take-up of pensioner income support, the new rules will suffer from the same problem when introduced, unless specific measures are taken to increase people's awareness of the changes. Not only may people not understand the new rules, they may not even be aware that they have come into force. The Minister may say that that is the responsibility of the local authorities. However, their hands are tied because they receive low subsidies and many authorities do not have the resources to undertake publicity campaigns. If the Government are introducing a new national policy—which they are—they should be responsible for the publicity campaigns, especially information for elderly people. Does the Minister intend to launch a publicity campaign to notify people of their new rights? I realise that it is a complex subject; I have had to deal with it in detail. It involves inevitably complex regulations and the interaction of two public bodies—those responsible for social services and those responsible for social security—which adds to the complexity. However, it is an issue of some importance to many people in this country.

4.40 pm

Mr. Anthony Steen (South Hams): This is a very important regulation which affects constituents throughout the country. As has been said, the percentage of people reaching retirement age and living longer is increasing. There is a particular problem in Devon. Although there are many private homes, the Liberal-run local authority is determined to keep open its publicly run residential and nursing homes at a considerable cost to the council tax payer. Will my hon, Friend the Minister say something about the effect that that is having on Devon county council's ability to spend money on the elderly? At the moment, that money is being spent on running publicly funded local authority residential and nursing homes. If those homes were closed, private sector homes—which are half full— 6 would be filled with people from the council's homes and the local authority could save £7 million to £8 million a year. When considering the regulation, was a view taken about whether the money that local authorities receive from the public purse should be reduced if they continued to run residential and nursing homes that could be run cheaper and as well in the private sector, in which there is space? Some consideration should be given to whether the private sector provides better value for money than the state sector. It is fitting that the regulation has been introduced. The Department has repealed 13 statutory instruments, but it has introduced 71 new ones. I welcome this statutory instrument because it deals with a current issue in the right way. During the past two years, 7,839 new statutory instruments have been introduced, whereas only 605 regulations have been repealed. I must correct what I have said—because of this regulation, 7,840 new statutory instruments have been introduced. Clearly, this is not a statutory instrument for deregulation. The regulation is necessary because of the changing demographic profile of the nation. New provisions are needed for the benefit of those people who, until now, have been short changed in many ways because their savings were eroded as soon as they went into residential homes. The regulation will protect them. My deregulatory zeal is in no way offended as the regulation is of great benefit to all our constituents. It is one of the few cases of regulation that I would support. However, it would be especially useful if my hon. Friend the Minister were to deal with the question of public and private homes. When a county council—in Devon, a Liberal-run council—forces elderly people to live in a publicly-funded home that costs more, his savings will be used up more quickly and the Government will be compelled to spend money earlier than if they were getting better value from another sector. We should consider that point; I hope that my hon. Friend the Minister will say something about it. When my hon. Friend returns to his Department, he might have regard to the fact that although, in 1995, he repealed 13 and introduced 71 statutory instruments, he did not deregulate even one. He might want to be the first Minister in his Department to set a deregulatory pattern. As I said during a debate on a previous statutory instrument, it would be marvellous if, when Ministers add to the number of statutory instruments, they persuade their officials to find one that they can repeal, so that the total number is not increased. That comment does not apply on this occasion, but I hope that the Minister will ensure that his officials take some cognisance of the fact that he is constantly adding to the number of statutory instruments, but not deregulating any at all.

4.46 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): I begin by dealing with the issue raised by my hon. Friend the 7 Member for South Hams (Mr. Steen). I believe that he will be satisfied with the point that is made in the explanatory note to the instrument, which states: "These Regulations do not impose any costs on business." I say to my hon. Friend that, whatever else we are talking about in relation to the instrument, we are not discussing the regulation of business or commerce. The instrument relates to the public administration—the sound and good administration—of the benefits system. I appreciate that it is always desirable to take away from, rather than add to, the mass of delegated legislation, but it is also important that our rules, in their minute particulars, are perceived to be fair and that they meet emerging circumstances as they occur. I am encouraged by the fact that the hon. Member for Croydon, North-West (Mr. Wicks) touched on regulation 12 only. I can only infer that the rest of the instrument—which is generally beneficial on any argument—is to be welcomed. Rather than explain the whole instrument to the Committee, I shall take one example. The disregard for charitable or voluntary payments of £10 per week is increased to £20 per week. That has been welcomed by the charities and it is designed to give greater help to people. The debate has touched on one aspect only—regulation 12—which is the much-heralded increase to the capital limits for income support. The first matter that the hon. Member for Croydon, North-West raised concerned publicity and how people would know about the change. I stress that the change was announced by my right hon. and learned Friend the Chancellor of the Exchequer in last November's Budget speech. I respectfully suggest that it received widespread press and media coverage. Those who are or may be affected by the scheme are well aware of the change, but the Benefits Agency is not relying on that general publicity. It is taking a number of steps to ensure that those who might benefit are aware of the changes. Articles have been placed in "Touchbase", a Benefits Agency publication that is aimed at advisers and which has a circulation of 90,000. Explanatory leaflets and posters have been distributed to all local offices of the Benefits Agency. People with capital between £8,000 and £16,000 who might newly qualify for income support have been targeted by means of a mailshot to residential care and nursing home owners. Income support claimants with capital between the old limits who live in such homes have been identified by means of a computer scan. We are aware of the need to publicise the changes, but I suggest to the Committee that there is already widespread knowledge of them because they are beneficial and directly helpful. The second question that I was asked touches on the issue that my hon. Friend the Member for South Hams raised about the new arrangements. The instrument affects two classes of people in residential care and nursing homes. The preserved rights cases—those 8 prior to 31 March 1993, which are old cases for which my Department pays according to scales that are fixed and published—will be directly affected. That is fairly straightforward and there is no problem with that. If someone goes into residential or nursing home care without preserved rights, a different regime will operate. I draw that to the attention of my hon. Friends and the hon. Member for Croydon, North-West. There is a separate code of legislation that deals with the issues mentioned in respect of the new regime, which does not arise from this instrument. Under the new regime, the social services department of local authorities will have an obligation and duty to contract for the full cost of the residential or nursing home care. They will assist if the resident's capital is below the new £16,000 limit as long as they are satisfied that the duty exists. The extent of that duty is a matter for my hon. Friends in the Department of Health and I shall ask them to write to the hon. Member for Croydon, North-West to clarify the specific point that he raised. Income support will be payable to the person who has gone into residential or nursing home care, but that will be recouped by the local authority. The guiding control of the arrangements for people with less than the £16,000 limit will lie with the local social services departments.

Mr. Steen: My hon. Friend may be coming to this point, but I am concerned about those local authorities that insist on running their own homes.

Mr. Evans: I was about to refer to that matter. I should say that responsibility for that is a matter for the Department of Health, but I understand that local authorities must spend 85 per cent. of their community care funding on the independent sector. The Government have introduced measures to ensure that local authorities do not discriminate against private homes in favour of their own residential accommodation. In addition—this is directly relevant to my Department—the income support levels are higher for residents in independent sector homes than for residents in local authority homes. We know from our constituency cases that this is a well-known and well-trodden area of public concern, but it is a matter for the Department of Health and I cannot properly develop the argument. I commend the instrument to the Committee. It will be beneficial in a number of ways although we have focused on the one matter that causes general concern.

4.53 pm

Mr. Wicks: I shall be brief. I refer to the issue of the relationship between social services and social security—the two sides of Richmond house. Under the new regime, I understand that if someone goes to a residential home, he is there because he has satisfied his local social services department's criteria, so the payment issue is not difficult. What about those who have themselves decided to go to a residential home 9 without the social services department being involved? We welcome the new regime of capital limits, but such people will be affected. I understand that less may be paid to the home in certain circumstances. Who will pick up the remainder of the bill, given that the social services department has not made the assessment for the person to be there in the first place? The measure will work only if the social services department pays the bill.

Mr. Roger Evans: The point raised by my hon. Friend is referred to the 1948 Act and is a duty in law for the social services department. But, again, that is a matter for the Department of Health and I cannot directly assist the hon. Gentleman. It is also part of separate delegated legislation that runs in parallel with the instrument. I shall ask my hon. Friends in the Department of Health to write to the hon. Gentleman.

Mr. Steen: Will my hon. Friend the Minister please clarify one other point? He said that under the statutory instrument, people who go into private homes get a higher sum from the Government than if they go into local authority homes. Presumably, he is saying that for someone in a private home, the local authority picks up a larger percentage of the cost from the taxpayer, here in the centre, than if that person were in a local authority home where the local authority cannot claim quite so much back from the centre. If that is the case, have the Government considered, through these instruments, finding a way to ensure 10 that the local authority does not fill its own homes first? That is the experience with many local authorities, which fill their homes first and then pass on everyone else to the private sector. Has any work been done that would entitle a higher percentage of public money to be spent on private homes and very much less if people go into public homes?

Mr. Evans: That is an important issue of which many of us have experience in our constituencies. The difficulty is that the reason we moved from the preserved rights position—where there were national levels of benefit and charges for care and nursing homes—to the modern system was precisely to give local authorities greater flexibility to negotiate and determine what is possible in the particular circumstances of their areas, rather than trying to set different rates at a national level. That is the purpose of the new system and, broadly speaking, it works better. The specific matter that my hon. Friend raised, which I am well aware is of concern to him, is a matter for the Department of Health. I will draw his remarks to the attention of my ministerial colleagues in that Department and ask them to write to him.

Question put and agreed to.

Resolved, That the Committee has considered the Income-Related Benefits Schemes (Miscellaneous Amendments) Regulations 1996 (S.I. 1996, No. 462).

Committee rose at three minutes to Five o'clock.


Thompson, Mr. Patrick (Chairman)

Carttiss, Mr.

Congdon, Mr.

Currie, Mrs.

Evans, Mr. Roger

Hayes, Mr.

Lynne, Ms

Moate, Sir Roger

Ottaway, Mr.

Renton, Mr.

Wicks, Mr.

The following also attended, pursuant to Standing Order No. 101(2):

Steen, Mr. Anthony (South Hams)