Will there be enough to pay for the Funeral?

Margaret Richards, Solicitor and Adviser on Community Care examines some of the detailed financial implications of the Sefton case.

Jean Gould of the Public Law Project has described the circumstances which brought about the litigation in R v Sefton Metropolitan Borough Council ex parte Help the Aged and others, and the substance of the Divisional Court's ruling. She points out that arguments in the case had been heard before the decision of the House of Lords in R v Gloucestershire County Council ex parte Barry was handed down, by which time it is reasonable to assume that Jowitt J had already come to at least a preliminary conclusion. His decision purports to follow Gloucestershire, but in doing so takes for granted a crucially important issue which was not fully deliberated by the House of Lords, and which cannot be regarded as implicit in its ruling. In other words, Sefton broke new ground, thereby creating a legal situation of the utmost uncertainty and, it may be argued, the utmost inequity for a large group of frail and vulnerable people.

The Decision

As Jean Gould has said, Sefton decides that local authorities are entitled to operate financial eligibility criteria for residential care that take into account:

a) The local authority's own resources (as decided by the House of Lords in the Gloucestershire case); and

b) The resources of those who are seeking residential care. Sefton MBC's criteria, which were upheld by the Divisional Court permit the local authority to defer its responsibility to provide or purchase residential care for elderly people until their capital resources fall below £1500.

For some time now it has been regarded as inevitable that para (a) will come to apply across the whole range of community care services, and perhaps beyond. Already, for example, Gloucestershire County Council is seeking to cut its LEA's support for pupils with special educational needs on similar grounds1 and rationing on the basis of cost is becoming all too familiar in the National Health Service2. Given the House of Lords' ruling it is clear that the political process alone can now determine how far this particular aspect of a more general erosion of the post-War Welfare State can be tolerated.

Para (b), however, introduces a new dynamic. "Need" - that is to say the "lack of what is essential for the ordinary business of living"3 may now be measured, possibly primarily, in financial terms. A local authority whose resources are straitened because, for example, it has a large elderly population, may decline to exercise statutory responsibility under section 21 of the National Assistance Act 1948 (NAA) to provide/arrange residential accommodation for those who "..... by reason of age, illness, disability or any other circumstances are in need of care and attention....." whenever it deems an individual to have sufficient resources to pay his/her own care fees. In Sefton "sufficient" is considered to be the average cost of a funeral. Space does not permit a comprehensive discussion of what this writer considers to be a fundamentally flawed decision, but it is worth reflecting on two issues:

i) The underlying objectives of the community care changes.

A major reason for the change in the resourcing of residential care which took place in April 1993 was the Government's wish to transfer public funding from central government to local authorities, and to require local authorities, rather than the DSS, to act as gatekeepers of the system. Until 1993 elderly people with capital below £8,000 could be supported in residential homes by payments of enhanced rates of income support. That capital threshold has now been raised to £16,000, but the enhanced payments are no longer available because local authorities have received transferred funding to enable them to offer equivalent financial support to people who need care in a residential setting. It was always intended that financial eligibility for residential care should be determined separately from "need", by adopting a financial assessment which was very closely modelled on the previous means test for income support. The Divisional Court in Sefton paid no attention to these very clear policy factors.

One result of the decision is bound to be increased claiming of social security benefits to help to support residential placements which, at least in theory, will mean that there is double funding of residential care. Central government's response may be to bring in legislation specifically to deal with this issue, but such reactive measures are unlikely to have much effect on the more general picture of chronic under-funding of many aspects of the health and social care sectors.

ii) The policy of the NAA 1948

Like all the social welfare legislation enacted in the late 1940s the NAA 1948 provided a safety net upon which people in need could rely. The Act superseded the Victorian Poor Law and gave the new local authorities responsibilities to provide services for vulnerable groups, as well as creating a new means tested benefit to relieve poverty. Until 1977 state relief for homeless people was administered under the NAA, and during the last few months the courts have again acknowledged that it embodies a principle that those in need should not be without all assistance, even where they are excluded from eligibility under other, more specific legislation4. As far as residential care is concerned, in 1948 and for a long time afterwards, local authorities were effectively the only service providers. The independent sector, as we know it, did not come into existence until the 1980s when Mrs Thatcher's Government, through the benefits systems, created incentives to set up private homes.

The Act was also realistic. Section 22 requires local authorities to recover the costs of providing residential care from users who have the means to pay. "The full costs" of providing accommodation are to be met, and only where a resident "satisfies the local authority that he is unable to pay" the full charges, will the local authority determine a lower contribution. Section 22(5) empowers the Secretary of State to make regulations to determine what an individual's contribution should be. The National Assistance (Assessment of Resources) Regulations 1992 were enacted under this enabling provision.

Clearly, therefore, statutory responsibilities under section 21 of the NAA were intended to extend to individuals who have means, but whose needs for care and attention fall within section 21. Lord Lloyd, who gave a powerful judgment for the minority in the Gloucestershire case made a similar point in his picturesque comment: "Parliament cannot have intended that the standards and expectations for measuring the needs of the disabled in Bermondsey should differ from those in Belgrave Square".

The Policy and Practice Guidance to which Jean Gould has already referred also reflects this principle, by stating that service provision should not be related to a user's ability to pay for a service. Every practitioner who has experience of dealing with older clients who have assets, but who are too frail or too disorientated to manage them, or to look after themselves will understand the argument that money is no substitute for physical or mental capacity, and that need in the NAA sense cannot be tested by financial resources. Obviously individuals who wish to do so may opt out of the NAA, but the safety net and the protection guaranteed by a local authority provided or commissioned service is intended to be universally available, subject to the prescribed means test.

In Sefton the Divisional Court emphasised the rider in section 21 (1(a)) which restricts the duty to provide residential accommodation to individuals who "are in need of care and attention which is not otherwise available to them". Jowitt J concluded that, in considering whether or not this facility "of last resort"5 is open to an individual the local authority is entitled to have regard to the resources available to him or her. As has already been argued this is a perverse interpretation of section 21 (1 (a)) and indeed, Jowitt J subsequently conceded that, when determining whether to accept statutory responsibility, local authorities should look beyond the pure financial resources available to the would-be resident to his or her "own physical and mental resources". He went on to say:

"In many cases a sufficiency of means to make private arrangements to receive the needed care and attention is likely to be decisive of whether a duty is owed under section 21 (1(a)). However, there will obviously be cases in which, despite the adequacy of his means, someone is unable to call on the kind of advice and assistance of which he stands in need. Circumstances can vary so much from person to person that it would be unprofitable to attempt to define them.....".

The problem with this concession is that it clouds the distinction between needs and resources which the 1948 Act purported to draw. Jowitt J implies that some elderly people needing residential care who have modest resources will be forced to exhaust those resources before the local authority will help them. Others, who are perhaps slightly more frail or vulnerable, or who perhaps do not have devoted carers, will be provided for by the local authority and, in the process, will be able to hang on to more of their resources under the NA(AR) Regulations. There are many possible variations on this theme, all of them raising the possibility that Sefton's policy, if indeed it does involve considerations which go beyond a bank balance, is liable to penalise further the many families who make great sacrifices to care for elderly relatives and, paradoxically, to encourage the abandonment of these personal responsibilities so that the State may take over and some assets can be preserved.

Detailed Implications of the Decision in Sefton

It will be apparent that the possible practical implications of the Sefton decision are very serious indeed. If, as may be anticipated, other local authorities accept the Divisional Court's ruling as a green light to adopt similar policies, practitioners will see growing inequities up and down the country between "Sefton" authorities and those which continue to apply the spirit of the NA(AR) Regulations.

In areas where new policies are adopted, clients will need to have some explanation of the possible consequences. Although local authorities have a responsibility to publicise their policies, experience of other aspects of community care leads to considerable pessimism as to the likely level of awareness (even amongst professionals), and clients should not be taken by surprise when the time comes to consider residential care.

As yet it is only possible to speculate on some of the more detailed implications of the decision. Practitioners will need to monitor local developments very closely. However, some of the most obvious areas are as follows:

(i) In Sefton, Jowitt J rationalised the relationship between the local authority's policy of not acting under section 21 in respect of anyone with capital over £1500, and the NA(AR) Regulations by saying that individual resources have to be considered twice; once as part of the assessment of need, whereby the local authority determines whether an individual "needs" care and attention; and secondly, where responsibility has been accepted and a placement made, in considering precisely what the resident's contribution to the cost of his or her care should be. In practice, therefore, clients with modest resources who are seeking residential care will be subject to at least two financial assessments: an initial "Sefton" assessment and subsequently, once they have passed the Sefton threshold, to a means test under the NA(AR) regulations. Given, however, that the capital limit set by Sefton is so far below the two capital thresholds prescribed by the NA(AR) Regulations, there is a clear conflict with the Government's policy, that residents should be able to keep at least £10,000 capital to pass on to their families on their death. (That policy is of course replicated in the income support rules for people in residential care).

ii) The preliminary financial assessment which "Sefton" authorities will conduct has no statutory basis. This raises numerous questions as to what information the assessors will seek, and whether any methods of assessment which may be used could be held to be unlawful. For instance:

Will local authorities consider only cash in the bank or the building society, or will they take into account the value of an individual's home?
Will they ignore assets which would be disregarded in an assessment carried out under the NA(AR) Regulations - the value of personal assets for example, or the value of the house where occupied by partners or by certain relatives?
How far will an individual's income be relevant to the equation?
What will local authorities do if elderly people who are patently in need of residential care, and at risk at home, simply refuse to disclose information about their assets?

iii) It is possible that "Sefton" authorities may seek to take account of gifts or other attempts to shelter assets. Again, in the absence of statutory power, such an approach would be highly problematic. Regulation 25 of the NA(AR) Regulations allows local authorities to assess notional capital, and section 21 of the Health and Social Services and Social Security Adjudication Act 1983 offers the possibility of recovering assessed contributions based on notional capital from third parties to whom assets have been given. However, the context of a preliminary assessment, which tests eligibility only, is very different, and it is suggested that attempts to "adopt" reg 25 are likely to be challenged. On the other hand, the Sefton decision is likely to fuel the present concerns of clients with modest assets to protect what they have saved for, and avoidance measures may proliferate. If this happens local authorities may find that their policies have become counter-productive.

iv) The Sefton decision leaves unclear the position of the client who makes his or her own arrangements with a provider of residential care, and whose capital is subsequently reduced below the local authority's policy threshold. Legal advisers are reminded that all clients who may need residential care are entitled to an assessment of need by the local authority under section 47 of the NHS and Community Care Act, 1990, and that under the Direction on Choice6 they must be allowed a free choice of home subject only to the fees being consistent with the local authority's normal rate for residents with needs equivalent to those of the client. Third party top-ups are also a possibility, but in general it should be argued that clients who have settled in a particular establishment "need" to be there and should not be moved. On balance, even where Sefton policies are in operation, it will be advisable to ask the local authority to assess a client's needs before he or she makes private residential care arrangements so that the local authority can be aware of the home chosen and can indicate its willingness to take over the arrangements once capital is sufficiently reduced.

v) The ability to advise clients as to how care may be funded through social security benefits will add considerable value to legal services after Sefton. Eligibility for the attendance allowance will become a particularly important issue and it is well worth investing in the know-how required to enable clients to make a successful claim.

Conclusions

The decision of the Divisional Court will raise considerable practical challenges for legal advisers wherever local authorities follow the lead set by Sefton MBC. In addition, however it raises some very fundamental questions, for if need may be tested by individual resources there can be no obstacle in principle to rationing health care as well as social care services on the basis of individual resources, even though it is not lawful to charge directly for NHS services. It is to be hoped, therefore, that the Court of Appeal will have the opportunity to consider such questions more deeply.

Margaret Richards, Solicitor and Adviser on Community Care,

1 The Guardian, 29th April 1997.

2 R v Cambridge District Health Authority ex parte B [1995] 1FLR 1055.

3 Per Lord Lloyd of Berwick, in Rv Gloucestershire County Council ex parte Barry, 20 March 1997.

4 R v Hammersmith and Fulham LBC ex parte M, The Times, 19 Feb 1992.

5 Chief Adjudicator Officer v Steane (HL) July 1996

6 LAC (92) 27