Summary: Mrs B says the Council wrongly treated her as depriving herself of capital. The Council failed to follow the guidance when reaching its decision on deprivation and put forward various reasons for reaching its decision which failed to address the facts of the case. An apology, agreement to consider the case again and training for officers is satisfactory remedy.

The complaint

1. The complainant, whom I shall refer to as Mrs B, complained the Council wrongly treated her as depriving herself of capital and, in doing so, failed to consider the reasons she put forward for donating money to her son.
2. Mrs B says the inference that she has tried to mislead or deceive the Council has seriously affected her health and well-being.

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The Ombudsman’s role and powers

3. 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)
4. If we are satisfied with an organisation’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)

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How I considered this complaint

5. As part of the investigation, I have:
• considered the complaint and Mrs B's comments;
• made enquiries of the Council and considered the comments and documents the Council provided;
• The Care Act 2014;
• The Care and Support Statutory Guidance.
6. Mrs B and the organisation had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

What should have happened

7. Councils can make charges for care and support services they provide or arrange. They must assess a person's finances to decide what contribution he or she should make to their care charges. They should take a person's capital and savings into account subject to certain conditions. If a person's capital is over the upper capital limit of £23,250 he or she will be liable to meet the full cost of their care. Once their capital has reduced to less than the upper capital limit, they must only pay an assessed contribution.
8. The Care and Support Guidance 2014 (the guidance) says people should be able to spend their money as they wish, including making gifts to family and friends. However, it is important people pay the contribution they are responsible for towards their care costs. It says a local authority should ensure people are not rewarded for trying to avoid paying their assessed contribution.
9. There are some cases where a person may have tried to deliberately avoid paying for care and support costs through depriving themselves of assets, either capital or income. In such cases, the Council may either charge the person as if they still had the asset or, if the asset has been transferred to someone else, seek to recover the lost income from that person.
10. Deprivation of assets means where a person has intentionally deprived or decreased their overall assets to reduce the amount they are charged towards their care. This means they must have known they needed care and support and have reduced their assets to reduce the contribution they are asked to make towards the costs.
11. The guidance says local authorities should not assume someone has intentionally deprived themselves of assets to reduce their contribution to care fees. Paragraph 11, Annex E of the guidance says there may be other valid reasons. It says, when deciding whether the purpose of the deprivation was to avoid care fees, local authorities should consider:
• whether avoiding the care and support charge was a significant motivation in the timing of the disposal of the asset; at the point the capital was disposed of could the person have a reasonable expectation of the need for care and support?
• did the person have a reasonable expectation of needing to contribute to the cost of their eligible care needs?
12. Past case law says local authorities cannot look into the mind of the person. They can only look at the nature of the proposal within the context of the time and circumstances in which it took place.
13. There is a basic principle, established by the courts, that councils need to explain the reasons for their decisions. It is not enough to say a decision is in line with the guidance; the council needs to explain why this is the case. Specifically, it needs to address the two questions in paragraph 11, Annex E of the guidance.
14. If a local authority decides a person has intentionally deprived themselves of assets to avoid paying care fees, it may treat those assets as notional capital in its financial assessment. Notional capital is where the local authority counts the value of the assets in its financial assessment, as if the person still owned them.

What happened

15. Mrs B had a stroke in January 2022. Mrs B began receiving care at home in March 2022. Mrs B did not apply to the Council for funding and funded her own care. In March 2022 Mrs B transferred £49,900 to her son. Mrs B says she had agreed to make that payment to her son to cover various matters before she had her stroke.
16. In January 2023 Mrs B applied to the Council for funding. At that point Mrs B had less than £20,000 in savings. Mrs B told the Council she had transferred £49,900 to her son in March 2022. Mrs B later provided the Council with receipts for the amount her son had spent from those funds in 2023.
17. The Council wrote to Mrs B on 7 July to explain the Care Act allowed it to financially assess individuals as still possessing assets that had been gifted away. The Council told Mrs B it was therefore treating her as still having £44,134 of the amount she had gifted to her son in March 2022 as capital. The Council told Mrs B this meant she would need to continue to pay for her care. The Council told Mrs B she had a right of appeal.
18. Mrs B challenged the Council’s decision and it wrote to her again on 7 August. The Council referred to the invoices Mrs B had provided and noted none of the invoices were in Mrs B’s name and all the payments had been made following her request for a financial assessment. The Council said it therefore continued to treat her as having an additional £44,134 in capital which meant she was not entitled to financial support for her care package. The Council told Mrs B it could reassess her case in September 2023 when it considered her capital would have fallen below the threshold.
19. Mrs B applied for Council funding again in November 2023 and the Council awarded funding towards Mrs B’s care package.
20. In response to my enquiry on the complaint the Council said it had treated Mrs B as having deprived herself of capital as the invoices she had provided showed the payments had been made after she spoke to Council officers in January and March 2023 about the threshold for Council funding.

Analysis

21. Mrs B says the Council wrongly treated her as having deprived herself of capital when calculating her contribution to care costs. Mrs B says she had agreed to gift some money to her son before she had her stroke and the Council failed to take into account her reasons for gifting the money to her son.
22. As the Council has noted, the Care Act gives it the power to decide a person possesses capital if the Council is satisfied the person has deliberately deprived themselves of assets. I set out in paragraphs 8-11 what the guidance says about deciding whether deprivation has occurred. The guidance is clear the Council must consider various factors before making its decision. I set out those factors in paragraph 11. None of the Council’s documentary records satisfy me it considered the guidance or the tests set out in the guidance when deciding Mrs B had deprived herself of capital. That is fault. I am also concerned the Council has put forward various different reasons why it considers deprivation of capital occurred in this case. None of those reasons refer to the tests set out in the guidance.
23. When the Council initially told Mrs B it was treating her as having deprived herself of capital it provided no explanation of the basis on which the Council had reached its decision. Nor did the Council say at that stage it would reconsider Mrs B’s case again once it was satisfied her capital would have fallen below the threshold. On both points that is fault.
24. Then, when Mrs B challenged the Council’s decision it said it had made that decision based on the invoices Mrs B provided. The Council said those invoices were not in her name and related to payments made after her request for a financial assessment. That again does not refer to the tests set out in the guidance. It also failed to recognise that, irrespective of when Mrs B’s son spent the money Mrs B had transferred to him, Mrs B’s transfer of funds to her son took place in March 2022 and not following her request for financial support in January 2023. Failing to apply the test set out in the guidance and failing to take into account the evidence properly is fault.
25. When the Council responded to my enquiries it provided a different reason for why it had treated Mrs B as having deprived herself of capital. The Council now says between January and March 2023 several officers spoke to Mrs B about the Council’s policy on capital thresholds and when someone would have to pay for care. The Council says the invoices Mrs B shared then showed all the payments were made after her conversations with various Council officers. That again though fails to take into account the fact Mrs B transferred the funds to her son in March 2022. It appears Mrs B’s son did not spend the money until March and April 2023, which is after Mrs B had spoken to the Council about seeking funding. However, that does not change the fact the transfer of funds to her son took place almost a year before Mrs B approached the Council for funding. As the guidance makes clear the timing of any financial gifts should be taken into account this is something the Council should have considered. Failure to do that is fault.
26. The decision on deprivation is ultimately for the Council to make, it is not the role of the Ombudsman. However, for the reasons set out in this statement I am not satisfied the Council has taken into account the guidance when deciding Mrs B has deprived herself of capital. Nor am I satisfied the Council has taken into account the right information when reaching its decision as Mrs B transferred the money to her son 10 months before she applied for Council funding, during which time she funded her own care.
27. I therefore recommended the Council apologise to Mrs B and reconsider, taking into account the guidance, whether Mrs B should be treated as having deprived herself of capital. The Council should then write to Mrs B to confirm its decision. I also recommended the Council carry out a training session for those who make decisions on deprivation of capital to make sure they are aware of the guidance, the tests they need to apply when considering a case and how to record the decision. The Council has agreed to my recommendations.

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Agreed action

28. Within one month of my decision the Council should:
• apologise to Mrs B for the distress she experienced due to the faults identified in this decision. The Council may want to refer to the Ombudsman’s updated guidance on remedies, which sets out the standards we expect apologies to meet;
• reconsider whether, in all circumstances, Mrs B intentionally deprived herself of capital to avoid care and support charges. It should consider all the evidence, request any additional evidence required from Mrs B and fully explain its decision.
29. Within two months of my decision the Council should carry out a training session for officers dealing with deprivation of capital decisions. That training session should cover what is set out in the guidance, the tests the Council should apply and how to record decisions.

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Final decision

30. I have completed my investigation and uphold the complaint.

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Investigator's decision on behalf of the Ombudsman