Labour peer David Lipsey prefers to drop the Lord from his name. But then right from the start his peerage has raised some eyebrows. When he first had to select his new moniker, he took his inspiration from his home for the past 20 years. But, for some reason, the powers that be felt Tooting Bec was inappropriate for a Lord of the realm.
Displaying the forthrightness that has characterised his recent comments on long term care (LTC), Lipsey stood firm. “I told them it was Tooting Bec or nothing,” he says. But this was no gesture of defiance. “It just hadn’t occurred to me that it’s a peculiar name. It’s where I live and love.”
The Lord of Tooting Bec has been in the public eye recently, leading a backbench revolt in the House of Lords against the government’s refusal to include LTC insurance regulation in the Financial Services & Markets Bill.
A party loyalist for the most part, Lipsey says he felt strongly about this as a member of the Royal Commission on LTC and non-executive director of the Personal Investment Authority (PIA). Considering the vulnerability of the elderly LTC market, he believes it would have been “morally reprehensible” to let the Bill go through without taking a stand on this matter.
“After tabling the amendment to the Bill, I had to follow it through,” he says. “I made it clear that, unless things moved forward, the government would face defeat on this issue in the House of Lords. Ministers have now assured me that it has always been their intention to regulate LTC and I have no reason to doubt their word. You can be loyal but you don’t have to be a poodle.”
Lipsey describes himself as a “political junkie” since the age of 11. “My mother remembers me leaving my brother in our `boat’ under the table to catch up with the latest political news in the paper,” he recalls.
But his path into politics was not quite as straight as he once planned. Born in Stroud, Gloucestershire, in 1948, the son of a small businessman, Lipsey went on to read politics, philosophy and economics at Oxford, believing himself bound for a politician’s career. Put off by the prospect of a long working week and weekends spent looking after a constituency, he began working for the General and Municipal Workers Union before becoming a political adviser to Labour MP Anthony Crosland and prime minister James Callaghan.
He regards Crosland as the greatest political influence on his life. “Reading Crosland’s The Future of Socialism
turned me from a gauche left-wing student into a social democrat,” he explains.
Jobless after Labour lost the 1979 general election, Lipsey started as a journalist on the now defunct New Society
, eventually rising to such high profile positions as economics editor of the Sunday Times
and political editor of The Economist
. He became non-executive director of the PIA in 1994, before taking up his seat in the House of Lords last October.
It was in this PIA capacity that the government asked Lipsey to sit on the Royal Commission on LTC, which was announced in December 1997. He says he knew little about the subject before this but came at it from his fundamental principles – reasonable state provision and concentrating this money on those that need it most.
Unwilling to endorse policies he felt were unrealistic, Lipsey, along with fellow commissioner Joel Joffe, refused to sign up to the main Commission report, which proposed the government pay for personal care. The two dissidents produced their own minority report, recommending more of a public/private partnership and an enhanced role for the private insurance industry (although Lipsey feels LTC insurance will always be too expensive to serve as a universal solution).
Lipsey says that while he realised, by splitting the Commission, they risked diminishing its influence, the majority was unwilling to compromise on what he considered a purist position.
“Of course a unanimous report would have been better,” he says. “But tantalising and tempting though the majority report is, great crowd pleaser though it is, what it actually does is subsidise the better off and their children’s inheritance. I want the money spent on better services. People who want to leave inheritances should be able to do so, but they should insure themselves privately to do this.”
Lipsey takes comfort in the fact that the record of minority reports on Royal Commissions is better than that of majority. He points to Beatrice Webb’s minority report to the Poor Law Commission in 1908 – which long outlived its majority report and led to subsequent social reform – and hopes his and Joffe’s note of dissent has a similar destiny.
Asked about the lack of activity surrounding LTC, Lipsey blames the government’s trying to push things through too quickly. “Ministers asked the Royal Commission to keep to a break-neck timetable,” he says. “But when we did report, they realised there would be no public money to spend in this area until the comprehensive spending review this July. Saying that, I know the government has been working hard on this issue and, fingers crossed, it will produce a well thought-out policy that satisfies the majority of older people.”
The most important thing, he adds, is to get some certainty. His main objection to the Commission’s majority report was that the recommendations would prove so expensive that, even if the government did bring them in, some ensuing government would get rid of them as soon as it needed to save money. This would leave people in limbo – they would get no state support and would not have taken out private cover.
“The recommendations of the minority report give a position that can hold, is a fraction of the cost of the majority report and makes the future role of private insurance exactly clear,” he says.
As a member of the New Labour inner circle, recent life peer Lipsey has faced accusations of cronyism, primarily from the political right – charges that he naturally refutes. “I’m sure I was asked to come here (the House of Lords) partly because I’ve been a New Labour supporter since before New Labour was invented,” he says. “But I don’t think this amounts to cronyism. I also bring a certain amount of knowledge and experience to the House. I don’t know what the government is expected to do – appoint people without knowledge and experience?”
But Lipsey has certainly not toed the party line in the Lords, leading the backbench revolt on LTC regulation. He views the House as a place for “less partisan debate”, the main purpose of which is simply to exist – thereby balancing out the government and preventing abuse of power. He has little time for many of its “laughable” traditions and says that, with a younger breed of Lords taking over from the departed hereditary peers, the mood of the place is changing for the better.
He is similarly confident about the outlook for LTC regulation, predicting that the Financial Services Authority will take charge of the issue in the near future. “Ministers have told me they are favourably disposed to LTC regulation, subject to ensuring the costs do not exceed the benefits,” he says. “I don’t see this as a particularly high hurdle. The government has said it aims to get this done by the time it produces the scope order for the Financial Services Act – clarifying exactly what it covers – which I imagine will be by the end of the year. I don’t foresee any backsliding on this issue and will give the government hell if there is.”
Some of Lipsey’s recent comments on regulation have not been particularly well received by the LTC industry, but he stands by what he has said. Particularly controversial was his assertion that, without regulation, elderly people are likely to be ripped off by “unscrupulous salesmen” in a scandal that could make the pensions misselling look like a “vicarage tea party’.
The industry argument is that sales of pre-funded LTC polices actually went down during 1999 as people waited for the government response to the Royal Commission – proving there has not been a spate of misselling.
“My view is why look in the crystal when you can read the book,” he says. “I’m sure most of the insurers and salesmen in the LTC market intend to behave ethically, but the dangers of a commission-driven market speak for themselves. Most of the companies involved in the pensions misselling scandal were household names, but that didn’t stop things going seriously wrong.”
He adds that the problem with LTC is that people will only know they have been missold at the point they come to claim. “Pensions misselling was going on in the mid-80s,” he says, “but only came to light years later. That’s why I don’t think people can say there hasn’t been any LTC misselling.
“The true test of that is whether a LTC policy delivers what people expect it to when they come to claim – were they really told at point of sale that they would have to be pretty decrepit to get any money?”
Lipsey says he has never thought about how the financial sector might see him but is convinced that nothing he has advocated is against the long term interests of the private sector. “I can’t be diverted by criticism,” he adds.
An attitude, whatever people believe his motivation to be, that can only be good for the long term future of LTC.