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Some of the national minimum standards address issues that are genuinely the preserve of a regulatory regime. We believe that genuine and sustainable quality will be fostered by the promotion of diversity and choice. We have had this debate many times, and the Minister knows my views. To the extent that the national minimum standards are limiting choice and diversity of supply, and certainly to the extent that they are reducing the amount of supply available, they will do nothing to enhance standards.
I am grateful to my hon. Friend the Member for North Thanet for making the obvious but important observation that quality costs. The Government have not recognised that the regime to which they aspire has a huge price tag attached to it. In Committee, I repeatedly asked the Minister whether the Government recognised that they must pay for the substantial increase in costs that both independent and local authority homes will face in delivering the quality agenda. No one disagrees with the quality agenda, but it is living in a cloud-cuckoo world to imagine that one can impose it without dealing with the cost issue. Cost pressures have become more acute since we debated the Care Standards Act 2000. The increase in the national minimum wage, which has not had a significant impact on London and the south-east, has had a huge impact outside that area on an industry that incurs 70 per cent. of its costs in wages and salaries.
Most local authorities have increased their fees to independent sector providers in line with the preserved rights fee level increase, which will be 1.8 per cent. from this April. Yesterday, the Secretary of State for Social Security interestingly indicated in a written answer that the Government intend to increase preserved rights benefits by a further 1.9 per cent. as soon as possible this year, which would give a total increase of 3.7 per cent. I welcome that, and so will the industry. However, can the Minister tell us how he intends to ensure that local authorities, which have traditionally taken their lead in setting the following year's budgets from the preserved rights settlement announced by the Department of Social Security in the autumn, are encouraged and enabled to follow that lead when they have already set this year's budgets? Most of those budgets do not leave any slack to provide further uplifts in payments to home operators.
The Minister will, of course, quote overall levels of Government support for social services and the level of funding to social services in general. The figures that he will quote are, of course, correct. However, he will acknowledge that there are other pressures on those funds. Even within the social services area, huge increases in the cost of children's services are squeezing available resources for care of the elderly.
I should like to quote to the Minister from a letter sent recently from the leader of Kent county council to the Secretary of State, in which he outlined two additional costs that all local authority social services departments will be facing as a result of legislative changes. The letter states:
"an increase to the capital limits would result in a loss of income, as people with capital between £16,000 and £18,500 would no longer be expected to pay the full costs of their care, but would be part subsidised by us. For that reason . . . a prudent sum of £1 million was budgeted. In the event, the fact that capital limits for the purposes of assessing income support have not been increased in tandem means that the loss of income is far greater. In effect, this represents £4-£6 per week for every client with capital of between £10k and £16k; and more significantly, £170-£180 per week for every client with capital between £16k and £18.5k."
The total cost for Kent will be about £2.5 million, compared with the £1 million originally budgeted. That is just an example of the pressure from all sides that the sector faces. Will the Minister deal with that point? He will have had a chance to consider it because he has seen the letter from the leader of Kent county council.
There is a crisis in the care sector. Some 15,000 beds were lost in the year to April 2000 and we estimate a loss of up to 40,000 beds in the current year. The impact on the national health service is serious, as the hon. Member for Isle of Wight mentioned, with delayed discharges from hospitals and, perversely, the reopening of the Nightingale format geriatric wards in NHS hospitals to take the patients who cannot be discharged. Those wards offer the kind of conditions that the Government are committed to stamping out, to which end they introduced the Care Standards Act 2000.
Time does not permit me to rehearse in detail all the aspects of the national minimum standards that are causing huge concern to the industry, but the Minister knows what they are. They include physical standards, room sizes and sharing ratios. Although those are not necessarily bad things, they are unrealistic given the inability, or unwillingness, to fund the changes and capital investment required. If rigorously enforced, they will lead to a contraction of the sector and to a reduction in its diversity. Independent family-run homes will close, especially those located in listed country properties that cannot be converted easily to meet the standards, and Posthouse-style, corporately owned care homes will take over their role.
Perhaps that is the Government's agenda. Perhaps they find it easier to deal with a handful of big corporations than a large number of independent providers. However, that appears to me to be destructive of choice and diversity and it will not lead to the improvements in care standards and quality to which we all aspire.
I shall give figures from two local authorities that summarise the problem. The cost of delivering care in Coventry's local authority residential care homes is £470 a week. It offers independent sector care providers £121 a week. The London borough of Hackney spends £851 a week on its own homes. It offers independent care providers £284 a week. To anyone with an O-level in economics, it is obvious that the outcome will be a rapid and continuous contraction of the sector, and an inadequacy of supply that will make it impossible for anybody--local authorities or national care standards commissioners--to enforce the quality standards that the Government, and all of us, want.
If the Government cannot address the supply problem, the 244 specific standards required for registration under the national minimum standards will be the straws that break the camel's back in many parts of the independent care home sector.