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My Lords, managing provider failure in the adult social care market is a local responsibility. I cannot comment on the finances of individual providers. However, the Care Quality Commission has financial oversight of the larger providers and would supply local authorities with early warning if one of the businesses were to fail and its regulated activities to cease, allowing time for local contingency plans to be implemented. The Department of Health would co-ordinate any appropriate national response.
I thank the Minister for his response but it is disappointing that he cannot be more reassuring on government contingency plans for the fallout that would result from the collapse of major and small providers in the care industry. The problem goes wider than Four Seasons, given the rising costs of care, the postponement of the care cap and the inability of cash-starved local authorities to increase fees to meet rising costs and demands. The Southern Cross collapse affected 31,000 frail and elderly residents, who had to be found alternative care. Surely the Minister recognises that and the fact that there needs to be a wider government strategy to ensure the financial sustainability of the sector and to deal with the huge scale of closures that will happen unless the funding problems are addressed.
My Lords, the collapse of Southern Cross in 2011 was the main reason that the previous Government gave the CQC market oversight responsibilities, which will give early warning of any failure of a large provider. It is worth noting that the LGA believes that at least 95% of all local authorities have contingency plans ready to be implemented.
My Lords, the former Health Minister, Norman Lamb, called for a cross-party commission to review future funding for health and care services in this country. Does the Minister not agree that we have to start talking, honestly and openly, about what standards of health and care older people can expect now and in the future? Having a commission to look in depth at this and to come up with strong recommendations seems—to me, at any rate—a rather good idea. Does the Minister agree, and will he comment on whether such a commission might be established?
My Lords, the idea of having a commission has been discussed a number of times in this House, and there will be a long debate on this matter on Thursday. In the spending review the Government are enabling local authorities to increase their precept by 2% and they are increasing the contribution to the better care fund by £1.5 billion, which will see a real increase in the resources available for adult social care.
My Lords, does my noble friend agree that in circumstances of provider failure one of the most important things is for residents to be maintained in their existing homes? In fact, that was achieved in the overwhelming majority of cases following the Southern Cross collapse. It is often possible to separate the going-concern basis of individual homes from the commercial situation of the provider as a whole.
I fully agree. Our interest is in the residents in the homes. The CQC’s oversight regime is not intended to prop up a provider—that is an entirely different matter. My noble friend is absolutely right that when Southern Cross went into insolvency, very few homes—in fact, I do not think that any homes—closed as a direct result at the time; most of them carried on as going concerns.
My Lords, is the Minister working with the Department of Health, the CQC and BIS to ensure that the new financial instrument, whereby an individual can invest in a single room in a care home for a guaranteed rent, protects the user of that room as much as it provides any yield for the investor? Evidence in the student sector has shown very mixed results. Students can move on elsewhere, but elderly care residents have nowhere else to go and their protection, and indeed the trading viability of a care home, could be affected if investors had to move out quickly.
My Lords, I could not see where the question was coming from. I am not fully briefed on the financial instrument that my noble friend—I am sorry; the noble Baroness—referred to. I will have to research it and get back to her.
My Lords, does the Minister agree that Four Seasons, which is the subject of the Question from my noble friend on the Front Bench, is only one of the groups facing financial crisis? It is estimated that by 2020 there will be a funding gap of £3 billion for the residential care sector, and 15 social care groups warned the Chancellor of this before the Autumn Statement. Have the Government any long-term plan for funding and improving social care or are they committed to short-term solutions and to saying that it is a matter just for local authorities?
My Lords, clearly, it is a matter principally for local authorities. However, the Government are making available in the spending review another £1.5 billion for the better care fund and allowing local authorities to raise a special precept of 2%. The oversight provisions of the CQC cover 45 providers, which cover some 20% of the market. It is intended that that will give early warning to local authorities of any likely collapse.
My Lords, can the Minister confirm that anyone who has their care package funded by a local authority is entitled to alternative provision? Anyone who is a self-funder under the law is entitled only to advice. Are the Government taking steps with local authorities to ensure that older people and their families are aware exactly what their entitlement would be in the event that their care home were to close?
My Lords, it is up to local authorities to have contingency plans in place in the event of the closure of a home in their area. As I said earlier, the Local Government Association has indicated that at least 95% of local authorities have contingency plans in place.
My Lords, the problems of care home residents through the demise of Southern Cross was dealt with very significantly by the rest of the care home sector; a condition of that happening was that it was in “robust condition”. Can the Minister reassure us that the care home sector is currently in equally robust condition?
My Lords, it is true, as the noble Lord says, that the fallout from the collapse of Southern Cross was that the industry took on most of the homes currently owned or operated by Southern Cross. I think that if a large provider went into insolvency, many of those homes would be taken over by the industry. The important thing is that the industry has confidence in its long-term future. As I said earlier, I believe that the commitment to increasing the better care fund and allowing local authorities to have a 2% precept for social care will provide that level of long-term confidence.