Summary: Mr X complained about how the Council decided to treat his aunt as having deprived herself of £2000 of her savings. We found fault with how the Council made its decision and with the information it provided about care charging. This led to Mr X’s aunt possibly having to contribute to her care costs for longer than she should have done. The Council agreed to review its decision and its procedures. It also reviewed the information it provides about care charging. This was a suitable remedy, so we completed our investigation.

The complaint

1. Mr X complained the Council wrongly included £2,000 of notional capital in the Care Act financial assessment for his aunt, Mrs Y. He says the Council was wrong to decide Mrs Y deprived herself of this money. As a result, he says Mrs Y had to meet the full cost of her care for longer than necessary. He wants the Council to remove the notional capital from the assessment and recalculate the support it should have paid.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
5. We may investigate matters coming to our attention during an investigation, if we consider that a member of the public who has not complained may have suffered an injustice as a result. (Local Government Act 1974, section 26D and 34E, as amended)

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How I considered this complaint

6. I considered:
• the information provided by Mr X and discussed the complaint with him;
• the Council’s comments on the complaint and the supporting information it provided; and
• the relevant law and guidance.
7. Mr X and the Council had an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

Law and guidance

8. The charging rules for residential care are set out in the “Care and Support (Charging and Assessment of Resources) Regulations 2014” (the regulations), and the “Care and Support Statutory Guidance 2014” (CSSG). When the Council arranges a care home placement, it must follow these rules when undertaking a financial assessment to decide how much a person must pay towards the costs of their residential care.
9. The rules state that people who have over the upper capital limit should pay for the full cost of their residential care home fees. However, once their capital has reduced to less than the upper capital limit, they only have to pay an assessed contribution towards their fees.

Deprivation of assets

10. Regulation 22 says councils must treat people as still having capital they have deprived themselves of for the purpose of reducing the amount they need to contribute to the costs of their care. Capital treated this way is often referred to as ‘notional capital’.
11. However, the CSSG says councils should not automatically assume deprivation. It says there may be valid reasons someone no longer has an asset and councils should ensure they fully explore this first.
12. The CSSG says that when deciding if someone has deprived themselves of assets, councils should consider:
1. whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset; and
2. whether the person had a reasonable expectation of needing to contribute to the cost of their eligible care needs.

Disability related expenditure

13. Where a council takes into account disability-related benefits when completing a financial assessment, it should also consider if the person has any disability-related expenditure. This is money the person uses to meet any needs related to their disability which the council is not meeting.
14. Councils should assess how much of their benefit income the person needs to pay for these necessary disability-related costs and allow them to keep this amount.

What happened

15. Between July and November 2018 Mr X’s aunt, Mrs Y, had several hospital admissions, because of falls, followed by short periods of care. Mrs Y declined financial assessments offered by the Council and funded these periods of care herself.
16. In late March 2019, Mrs Y celebrated a significant birthday with her family. Shortly after the celebration, Mr X says Mrs Y asked four relatives to accept £500 “as a thank you for all the time, expense and care each had provided to her” over the past several years. Mrs Y’s relatives accepted and they cashed cheques for these amounts between late April and May 2019.
17. In April 2019, the Council admitted Mrs Y to one of its care homes following a hospital stay for another fall. The Council discussed longer term care choices with Mrs Y and Mr X, and Mrs Y agreed to the Council assessing her care needs.
18. During the assessment Mr X also told the Council he was aware that Mrs Y’s assets were above the upper capital limit of £23,250. The Council explained to Mr X that Mrs Y would need to fund her own care until her assets were below this limit. After this she may be eligible for financial support from the Council.
19. In mid-June, Mr X applied for financial help with care fees on behalf of Mrs Y and the Council completed a financial assessment. The Council asked Mr X to explain the four cheques of £500. Mr X explained the cheques were “a thank you for all the time, expense and care each had provided to her”.
20. The Council first treated these payments as gifts and decided that Mrs Y had deliberately deprived herself of assets to reduce the cost of her care. It decided that Mrs Y had £38,000 in savings, including the £2,000 notional capital she had paid to her relatives.
21. Mr X asked the Council to reconsider its decision. He told the Council it should consider the payments to her relatives as payments for “services rendered” by them to support her to live independently over the past three years, rather than gifts.
22. In its letter rejecting Mr X’s first appeal, the Council again said the main question was whether Mrs Y had a reasonable expectation of contributing to the costs of her care. It then said the Council was satisfied that Mrs Y gave money to her family members with the intent to avoid or reduced the cost of her care. However, it did not explain how it had reached this decision.
23. In its final decision to Mr X the Council accepted the payments were not gifts. However, it told Mr X it still treated Mrs Y as having deprived herself of capital because the law said it must disallow payments to family members. It referred to a court case about disability related expenditure to support its decision. It also said it would have treated the payments in the same way if it considered them to be gifts.
24. Mr X then complained to the Ombudsman in October 2020.

My findings

Disallowing payments to family members who provide care

25. In its response to my enquiries, the Council said it still considered Mrs Y to have deprived herself of capital because the law says the Council must disallow payments to family members. It explained it treated payments of capital to family members for care they provided in the same way it does when considering whether such payments are disability-related expenditure (DRE). It said it had provided Mr X and Mrs Y with a copy of its DRE policy which said it disallowed payments to family members. The Council explained it does not have a written policy on how it treats payments of capital to family members but that it follows the CSSG.
26. The guidance on DRE in the CSSG applies to deciding how much of someone’s current disability related income the Council should allow them to keep. The DRE rules do not apply to capital and are separate from the guidance on deprivation of assets. The guidance on deprivation of assets does not say that councils should automatically disallow payments to family members.
27. The court case the Council referred to says that councils may disallow payments from income to family members under their DRE policies, but it does not say that councils must disallow such payments. It also does not say that this principle applies when considering deprivation of capital.
28. The rules for deciding what counts as DRE and whether someone has deprived themselves of capital are different. The principle of disallowing payments to family members the Council applies to DRE cannot be applied to deprivation of capital. To do so would be to assume that such payments were intentional deprivation, which the CSSG says councils must not do.
29. In its final decision letter to Mr X, the Council treated the payments to Mrs Y’s family in the same way as it treats such payments under its policy on DRE. This was fault. The Council should only have considered Mrs Y’s available capital under the deprivation of assets rules.

Deprivation of assets

30. In its September 2019 letter to Mrs Y, where the Council first decided she had deprived herself of capital, the Council said it must consider whether the deprivation had occurred because of ‘either’ of the reasons given in paragraph 12. This is not correct.
31. Regulation 22 is clear that councils must decide whether avoiding or reducing a contribution to their care costs was the significant motivation in someone’s decision to dispose of the asset. The CSSG says councils should not automatically assume deprivation and should ensure they fully explore this first.
32. The CSSG says that, when considering whether to treat someone as having an asset, such as savings, they no longer have, councils must consider both:
1. whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset; and
2. whether the person had a reasonable expectation of needing to contribute to the cost of their eligible care needs.
33. There is no dispute between Mr X and the Council that Mrs Y had a reasonable expectation of needing to contribute to her care costs.
34. However, under regulation 22 the Council should also have properly considered why Mrs Y made the payments to her family. This meant finding out the reason Mrs Y chose to make the payments to her family members at the time she did and whether her intent was to avoid or reduce her contributions to her care costs.
35. The Council says it considered the following when deciding about Mrs Y’s motivation or intent when she made the payments.
• Her age.
• That she had substantial and critical care needs.
• Her history of hospital admissions.
• There was no evidence of other payments in the past three years.
• The Council had previously explained its DRE rules for non-residential care and the financial assessment rules from her previous periods of reablement care.
36. However, these do not adequately address the question of Mrs Y’s motivation. The evidence shows the Council failed to consider other relevant information or has not explained why it did not take this into account, when considering Mrs Y’s motivations. This includes:
• the relatively small size of the payments compared with Mrs Y’s other savings;
• the number of weeks of care fees Mrs Y did not have to pay because of the payments to her relatives;
• Mr X’s explanation that Mrs Y made the payments as a “thank you” to her family members;
• the support provided by those family members; and
• the time the Mrs Y gave the cheques, in relation to her birthday celebration, rather than the time her relatives banked them.
37. I am not satisfied the Council properly considered Mrs Y’s motivation for making the payments before treating the payments as notional capital. This was fault which led to Mrs Y having to possibly contribute the full cost of her care for longer than she might have had to.

Information provided to Mrs Y and Mr X

38. In letters the Council sent to Mrs Y about her care, it explained its policy was to treat any gifts given after someone moved into residential care as deprivation of capital. This was fault. The rules and guidance about deprivation of capital apply equally before and after someone is receiving care. In both cases, councils must not automatically assume deprivation has taken place and should fully explore the reasons first. The Council accepted the wording in these letters could be misleading and has updated the wording to reflect the requirements of the law and guidance.
39. The Council also told Mr X that when Mrs Y became eligible for support with her care costs, she would need to pay her contribution directly to the care home. However, the CSSG says that where a council is funding a care home place, it should pay the full, agreed fee to the care home and ask the resident to pay their contribution to the council. The Council’s policy of requiring residents to pay their contributions directly to independent care homes does not comply with the CSSG. This was fault. The Council said it has started a review of how it manages resident contributions and intends to update its systems to allow residents to pay their contributions to the Council.
40. In its leaflet on charging for residential care the Council says it will treat the value of any pre-paid funeral plan as if people still have that money. This appeared to be a blanket policy which does not consider the market or surrender value of the plan, the motivation for buying the plan or when the person bought it. While this does not affect Mrs Y, in my view this may have affected other people in the Council’s area. The Council accepted the information in its leaflet implied it had a blanket policy, but told us that it does not and it considers each case individually. It has removed that wording from its leaflets.
41. In the same leaflet, the Council says that it will only pay the maximum rate the Council has negotiated with care homes in its area. However, the law requires the Council to assess the needs of each person needing care, and assign a personal budget needed to meet that person’s needs. If the only available care home that can meet someone’s needs is more expensive, the Council must adjust the personal budget accordingly. While this does not affect Mrs Y, in my view this may have affected other people in the Council’s area. The Council accepted the wording implied it would only pay up to a set amount. It said it does negotiate higher rates with care homes where necessary and it has updated the wording to reflect this.

Agreed action

42. Within one month of my final decision the Council agreed to reconsider its decision that Mrs Y intentionally deprived herself of income. This review should seek to establish Mrs Y’s true motivations for making the payments at the time she did and whether her intent was to avoid or reduce her contribution to her care costs.
43. Within three months of my final decision the Council agreed to:
• review its procedures for deciding about deprivation of assets to ensure it makes decisions in accordance with the regulations, particularly that it fully explores the motivation for any disposal; and
• update the Ombudsman on the progress of its review into how it manages residents’ contributions to care placements part-funded by the Council and provide estimated timescales for the changes.

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Final decision

44. I have completed my investigation and I uphold Mr X’s complaint. There was fault in how the Council decided Mrs Y had deprived herself of capital. The Council should reconsider the decision and make service improvements.

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Investigator's decision on behalf of the Ombudsman