Security, recovery and deferred paymentsCare and Support Statutory GuidanceCare and Support Statutory GuidanceCare and Support Statutory Guidance
The scheme in outline
11.27Previously, local authorities had a power, under section 22 of the Health and Social Services and Social Security Adjudications Act 1983, to place charges unilaterally against property to secure care home charges, and a discretion whether to enter into a deferred payment agreement, under section 55 of the Health and Social Care Act 2001.
11.28These have been replaced by a duty to enter into a deferred payment agreement in many ‘care home cases’, and a power to enter into deferred payment agreements in other ‘care home and supported living accommodation cases’, with a power to take security in a range of different ways: under sections 34–36 of the Care Act 2014 and the Care and Support (Deferred Payment) Regulations 2014.
11.29The Care and Support Statutory Guidance describes as ‘the universal deferred payment scheme’, the aim of which is that ‘people should not be forced to sell their home in their lifetime to pay for their care’ (paragraph 9.3).
11.30The statutory basis of the deferred payment scheme is sections 34–36, and section 69, of the Care Act 2014, which define a ‘deferred payment agreement’, and make additional provision, as follows:
34(2) A ‘deferred payment agreement’ is an agreement under which a local authority agrees not to require until the specified time either or both of the following–
(a)the payment of the specified part of the amounts due from an adult to the authority under such provision of this Part or of regulations under this Part as is specified in regulations;
(b)the repayment of the specified part of a loan made under the agreement by the authority to an adult for the purpose of assisting the adult to obtain the provision of care and support for the adult.
(3)The care and support mentioned in subsection (2)(b) includes care and support the provision of which–
(a)the authority does not consider to be necessary to meet the adult’s needs;
(b)is in addition to care and support which is being provided, arranged for, or paid for (in whole or in part) by the authority.
Recovery of charges, interest etc.
69(1) Any sum due to a local authority under this Part is recoverable by the authority as a debt due to it.
(2)But subsection (1) does not apply in a case where a deferred payment agreement could, in accordance with regulations under section 34(1), be entered into, unless–
(a)the local authority has sought to enter into such an agreement with the adult from whom the sum is due, and
(b)the adult has refused.
11.31Thus, by virtue of section 69(1) and (2), even though a local authority may not be under a direct duty to enter into a deferred payment agreement, in a particular case, it must offer to do so wherever it has power to do so, under the Care and Support (Deferred Payment) Regulations 2014, otherwise it will not be entitled to seek to recover any charges owing to it.
11.32The advantage for some care home and support living residents may be that, in addition to preserving the ‘family home’ for emotional reasons, they may be able to continue to take advantage of any increases in its value and, also, rent it out to obtain income to defray their care charges.
The detailed scheme
11.33The detailed scheme is found in the Care and Support (Deferred Payment) Regulations 2014.
When the local authority must enter into a deferred payment agreement
11.34The ‘duty’ arises when the adult has an ‘eligible need’ for care home accommodation but their capital is less than £23,250.00 excluding the value of their home. By virtue of regulation 2 of the Care and Support (Deferred Payment) Regulations 2014, a local authority must enter into a deferred payment agreement when:
•an adult is able to provide adequate security (under reg 4);
•the adult agrees to the local authority’s terms and conditions (under reg 11);
•the local authority is meeting the adult’s eligible needs by providing them with care home accommodation, or would have done so (but the adult is making their own care home arrangements);
•the adult has assets amounting to less than £23,250.00 (excluding the value of their home); and
•the adult’s home is not disregarded for means-testing purposes (eg because it is occupied by a spouse or dependent relative, as defined in the charging machinery).
When the local authority may enter into a deferred payment agreement
11.35The power arises where an adult has an ‘eligible need’ for care home or supported living accommodation and intends to retain their home, irrespective of the value of the adult’s capital.
11.36By virtue of regulation 3 of the Care and Support (Deferred Payment) Regulations 2014, a local authority may enter into a deferred payment agreement when:
•an adult is able to provide adequate security (under reg 4); and
•agrees to the local authority’s terms and conditions (under reg 11); and
•the local authority has decided to meet the adult’s eligible needs by providing care home or supported living accommodation and the adult intends to retain their home, or when that is the decision the local authority would have reached, had it been asked to meet the adult’s needs (but the adult is making their own arrangements).
11.37Paragraphs 9.5 and 9.8 of the Care and Support Statutory Guidance encourage local authorities to exercise their discretionary power generously and, as has already been seen, by virtue of section 69(1) and (2), a local authority must offer to enter into a deferred payment agreement whenever it has power to do so under the Care and Support (Deferred Payment) Regulations 2014, otherwise it will not be entitled to seek to recover the charges owing to it.
The machinery
11.38Both the duty and the power to enter into a deferred payment agreement is contingent on the service user being able provide ‘adequate security’, as defined in regulation 4 of the Care and Support (Deferred Payment) Regulations 2014, that is:
•a first legal charge; or
•such other security as the local authority considers sufficient; in both cases
•equal to the amount of the deferred charges plus any deferred interest or administration costs
11.39Local authorities should have ‘an explicit and publicly-accessible policy of what other types of security they are willing to consider in addition to a first charge, but local authorities may consider the merits of each case individually’: paragraph 9.62 of the Care and Support Statutory Guidance, which goes on to give examples of potential alternative forms of security.
11.40The total deferred amount is defined in regulations 5 and 6 of the Care and Support (Deferred Payment) Regulations 2014:
•the starting point is 100 per cent of the charges for care home or supported living accommodation, or of any loan made for the purpose of assisting the adult to obtain care home or supported living accommodation, plus the amount of any top-ups under section 30(2) of the Care Act 2014 which the local authority has agreed to include, up to the ‘equity limit’;
•but there is then provision for adjustments to be made, most notably, that a local authority need not defer an amount where, after payment, the adult would retain at least £144.00 of their weekly income.
11.41Time for repayment of the deferred amount is, by virtue of regulation 7, whichever is the soonest of:
•the date of sale or disposal of the land or other secured asset; or
•90 days after the death of the adult (or some longer period allowed by the local authority).
11.42There is further machinery as follows:
•deferred payment agreements can be terminated early by the adult on reasonable notice (reg 8);
•the local authority can charge restricted sums in interest and for administration (regs 9 and 10);
•deferred payment agreements must contain certain terms, conditions and information (reg 11).
11.43The Department of Health has produced standard sample deferred payments legal agreements as well as other supporting material.
1www.local.gov.uk/care-support-reform/-/journal_content/56/10180/6522542/ARTICLE.11.44The Care and Support Statutory Guidance addresses deferred payments in Chapter 9, advising in particular:
•that local authorities are entitled not to include ‘top up’ payments in deferred payment agreements (paragraph 9.12);
•that while, in certain circumstances, local authorities may stop deferring care costs, that only means that future care charges are not deferred (paragraphs 9.14–9.18);
•that local authorities should provide information and advice (paragraphs 9.19–9.31);
•on the mechanics of deferred agreements (paragraph 9.32 onwards).
11.45The Department of Health and the Local Government Association has produced a range of additional practical guidance.
2www.local.gov.uk/care-support-reform/-/journal_content/56/10180/6522542/ARTICLE.11.46Section 36 of the Care Act 2014 makes provision for regulations that will entitle local authorities to enter into ‘alternative financial arrangements of a specified description with an adult’, similar to deferred payment agreements.
Remedies
11.47Where the service user declines to enter into a deferred payment agreement, and arrears accrue, the ordinary remedies apply, pursuant to section 69 of the Care Act 2014: usually, an action to recover the debt followed by an application for a charging order under the Charging Orders Act 1979 and Part 73 of the Civil Procedure Rules 1998, protecting the charge by entry of a notice or restriction at HM Land Registry.
Top ups
11.48In ‘Preferred accommodation’ at para
9.45 above, it was noted that local authorities must provide certain types of accommodation at the adult’s preferred location, providing various conditions are met, including that the adult or a third party pays any additional cost, beyond that provided for in the adult’s personal budget.
11.49This section looks in a little more detail at the machinery of ‘top ups’.
11.50There has to be a written agreement committing the payer to paying the additional cost and addressing a list of specified matters and the local authority must ensure that the payer has access to sufficient information and advice to enable them to understand the agreement (regulation 5 of the Care and Support (Choice of Accommodation) Regulations 2014). The agreement must address the following matters:
(3)The written agreement must include–
(a)the additional cost;
(b)the amount specified in the adult’s personal budget in relation to the provision of accommodation;
(c)the frequency of payments;
(d)details of the person to whom the payments are to be made;
(e)provision for review of the agreement;
(f)provisions about the matters specified in paragraph (4).
(4)The specified matters are–
(a)the consequences of ceasing to make payments;
(b)the effect of increases in charges made by the provider of the preferred accommodation;
(c)the effect of changes in the payer’s financial circumstances.
11.51As the Care and Support Statutory Guidance makes clear, at Annex A, if the payer ceases to make the payments due, for whatever reasons:
•the local authority may move the adult to alternative accommodation (although this will be subject to a re-assessment of needs and consideration of the adult’s well-being);
•the local authority may seek to recover any outstanding debt from the payer.
11.52Age UK has produced a useful factsheet on the choice of accommodation.
3www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS60_Choice_of_accommodation_care_homes_fcs.pdf?dtrk=true.Complaints/appeals about financial matters
11.53Currently, any complaints may invoke the Local Authority Social Services and NHS Complaints (England) Regulations 2009.
11.54As noted above, it is likely that additionally, or by way of substitution, the government will introduce an appeal procedure: it has created a power in the Care Act 2014, at section 72, to introduce an appeals procedure by way of regulations, in relation to all or many decisions made under Part 1 of the Care Act 2014 and is currently undertaking a consultation.
4www.gov.uk/government/uploads/system/uploads/attachment_data/file/400757/2903104_Care_Act_Consultation_Accessible_All.pdf.The cap on care costs and associated means-testing
11.55The Care Act 2014 contains provision for a lifetime cap on care costs, in sections 15 and 16, which was to be set at £72,000.00, whether those costs were incurred in care homes or by way of home care. ‘Hotel costs’ associated with care provision are excluded from the cap, but were to be made subject to a separate cap of £12,000.00 per annum.
11.56In addition, the Care Act 2014 contains provision for means testing, under section 17. The government’s intention had been to raise the upper limit to £118,000 and the lower limit to £17,000, so that only those with assets worth more than £118,000.00 would have to pay the full price, whereas all those with assets of between £17,000 and £118,500 who met the eligibility criteria for care would be entitled to some financial support according to a sliding scale.
11.57Both these changes were due to be brought into force in April 2016, but that has now been deferred until 2020.
11.58There is a government fact sheet about these changes.
5www.gov.uk/government/uploads/system/uploads/attachment_data/file/268683/Factsheet_6_update__tweak_.pdf.