Ombudsman issues guidance to councils on deprivation of capital decisions

The Local Government and Social Care Ombudsman has issued guidance to councils on the issue of Deprivation of Capital decisions, which uses casework examples to highlight some of the issues it sees based on the complaints it investigates.

The guidance is aimed at financial assessment practitioners in local authorities and sets out the Ombudsman’s approach to investigating complaints from people whose local authority has decided they have intentionally deprived themselves of capital when assessing how much they should contribute to their care fees.

Deprivation of capital is when someone knowingly reduces their capital for financial benefit. The value of the capital the person has deprived themselves of is called ‘notional capital’.

For a council to treat someone as possessing notional capital it must consequently be satisfied that they have:

• deprived themselves of an asset, and;
• have done so with the intent of reducing what they have to pay towards the cost of their care and support.

The Ombudsman’s guidance warns councils against assuming someone has deprived themselves of an asset with the intent of reducing what they should pay towards their care and support.

It says there may be valid reasons why someone no longer owns an asset and councils should “fully explore this first”.

Three of the key approaches that the Ombudsman takes to investigating complaints into Deprivation of Capital investigations are listed in the guidance:

1. “We expect councils to make enquiries including obtaining a version of events from the user of services or their representative before making decisions on deprivation of capital.”

2. “The person must have had a ‘reasonable expectation’ they may need to pay towards that care and support at the time of the deprivation.”

3. “The council should consider the timing of the disposal of an asset. This can help inform a decision about the person’s motivation for disposing of the asset.”

The guidance notes that common issues seen in the complaints the Ombudsman receives include: assuming all gifts are deprivation of capital, wrongly applying the Personal Expenses Allowance to people who fund their own care, and not keeping proper records of how decisions are reached.

The guidance includes a case study of a council which decided a man had deprived himself of capital by spending more than the Personal Expenses Allowance.

This was despite him paying for his own care with the sale of his second home, until his capital fell to £23,250, after which he contacted the council.

The local authority told the man that gifts, clothing and other expenses (including maintenance of the home his wife still lived in), should have come from his Personal Expenses Allowance (currently £26.65 a week).

The Ombudsman found the council at fault for telling the man he should have kept his personal expenditure within the Personal Expenses Allowance, as this only applies to people being charged by a council to fund their own care.

Michael King, Local Government and Social Care Ombudsman, said: “With increasing pressures on council budgets, and a growing number of people in need of care in this country, we know that decisions about whether people have intentionally deprived themselves of capital can be a difficult – and for the families involved – emotive issue.

“The guidance we are issuing today sets out how we look at councils’ decisions, and the common areas we find fault where we have been asked to investigate.

“We hope that by publishing this guidance those practitioners involved in making such decisions can have some clarity about the steps they need to take to ensure the decisions they make are fair and equitable.”

Responding to the Ombudsman’s guidance, Cllr David Fothergill, Chairman of the Local Government Association’s Community Wellbeing Board, said: "Adult social care makes up a large proportion of council spending and with decreasing budgets and growing pressures, delivering statutory services have become more and more challenging.

“Councils rightly expect that all those who can afford to contribute financially to their own care actually do so in accordance with national and local charging policies. If people try to avoid paying for their care, this ultimately puts further pressure on the system and the taxpayer, and It is unfair to those who do make the expected financial contribution.”

Cllr Fothergill added: “Councils support further guidance to ensure that work around possible deprivation of capital is handled fairly, accurately and carefully.

“Adult social care services are under enormous financial strain and given councils’ responsibility to protect and spend public resources diligently, they have a duty to act where they suspect deliberate deprivation has taken place.”

Lottie Winson