Summary: There was fault by the Council in the decision there had been an intentional deprivation of capital to avoid paying for care. First, the Council did not give Mr X an opportunity to explain the reason for the gift before making the decision. Second, the original decision did not give any reasons with reference to the relevant parts of Care and Support Statutory Guidance. Third, the Council failed to keep a written record of the panel’s consideration of Mr X’s stage two appeal against the decision. Finally, the Council did not consider Mr X’s claim that the gift was in line with an established pattern of spending or invite him to supply evidence of this. The Council will apologise to Mr X and review its decision.

The complaint

1. Mr X complained for his wife Mrs X who lacks mental capacity to manage her finances. He said the Council did not follow proper processes when it treated a cash gift to another relative as a deprivation of capital.
2. Mr X said this means the Council’s financial assessment and decision that Mrs X should pay for care privately and in full is flawed. It has created a financial loss because Mrs Y is being charged the full cost of her care for longer than she should.

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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 significant injustice, or that could cause injustice to others in the future 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(1), as amended)

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How I considered this complaint

5. I considered evidence provided by Mr X and the Council as well as relevant law, policy and guidance.
6. Mr X and the Council had an opportunity to comment on my draft decision. I considered any comments before making a final decision.

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What I found

Relevant law and guidance

7. Our Principles of Good Administrative Practice set out our expectations of councils. We expect them to be open and accountable by giving clear reasons for decisions and keeping proper and appropriate records.
8. Councils arrange care home placements after a social care assessment. People pay a charge towards the cost of their care based on a financial assessment of their income and capital. If a person has assets (including property) over £23,250, they are referred to as being ‘above the capital threshold’ and are not entitled to council funding.
9. Regulation 22(1) of the Care and Support (Charging and Assessment of Resources) Regulations 2014 (the 2014 Charging Regulations) says

“the adult is to be treated as possessing capital of which the adult has deprived themselves for the purposes of decreasing the amount they may be liable to pay towards the cost of meeting their needs for care and support…”

10. Care and Support Statutory Guidance (CSSG) says councils should have regard to Annex E where it has identified circumstances suggesting a deprivation has occurred (paragraph 3). Relevant paragraphs of Annex E are:
• A council should not assume deprivation and should ensure it fully explores the person’s reasons first (paragraph 5)
• Deprivation of assets means a person has intentionally deprived or decreased their assets in order to reduce care charges. They must have known they needed care and support and have reduced their assets in order to reduce their care contribution (paragraph 8)
• Common approaches to deprivation include: a lump-sum payment to someone else, such as a gift. Or substantial expenditure incurred suddenly that is out of character with previous spending (paragraph 9(a) and (b))
• A council should consider:
1. Significant motivation: at the time of disposal did the person have a reasonable expectation of needing care and support
2. Did the person have a reasonable expectation of needing to pay towards the cost of care (paragraph 11)
11. If the council decides there has been a deprivation, they can treat the person as still possessing it. This is called notional capital.
12. The Council’s residential charging policy on deprivation mirrors CSSG.
13. The Council has a two-stage appeal/review procedure which people may use to challenge their financial assessment. Stage one is completed by a team leader. The person puts their reasons for disagreement in writing. Stage two is completed by a panel of senior officers. The panel can ask the person to provide further information.
14. The Council’s leaflet for customers about challenging financial assessments says they can ask for a review in writing and provide any additional relevant information.

What happened

15. Mrs X has dementia and lives in a care home. She gave £12500 to a relative in May 2024. Mr X said this was to enable the relative to purchase a property closer to them.
16. The Council carried out a financial assessment in November 2024. It included details of Mrs X’s income and savings. The assessment listed £12500 notional capital (house purchase for the relative). The outcome was Mrs X had savings over the capital threshold and so had to pay the full cost of her care until March 2025.
17. The Council wrote to Mr X enclosing a copy of the financial assessment and explaining it had included the £12500 gift as notional capital as ‘by giving away capital they are depriving themselves of savings that would be used within the weekly assessed charge’. The letter included information about the appeal procedure. (see paragraph 14)
18. Mr X used the Council’s appeal procedure to challenge its decision. He said:
• The relative decided to move to Norfolk in 2023 before Mrs X moved into a care home
• The relative could not afford to move and so they (Mr and Mrs X) agreed to help out
• The transfer wasn’t contrived. He also gifted £12500 from his own account
• The gift wasn’t out of character. Both he and Mrs X had both done similar transfers in the past. He was willing to provide evidence if the Council needed this.
19. At stage one the Council did not change its decision. It wrote to Mr X to tell him this. The letter said:
• Could the person have a reasonable expectation of needing care? Mrs X had had a social care assessment in December 2023 which said she needed assistance with all care needs. So she had a reasonable expectation of needing care at the time of the gift.
• Did the person have a reasonable expectation of the need to contribute towards the cost of that care? She had been in a care home since January 2024 and he was told that council arranged care was chargeable so had a reasonable expectation of the need to contribute towards the cost of care.
• Was avoiding care costs a significant motivation in the timing of disposing of the asset? The relative was already on the property ladder and her previous home was sold for more. (the inference being there would be no need for financial assistance as the excess capital from the sale of the first house would have been available for moving costs)
• On a balance of probability she deprived herself of capital in order to qualify for council funding sooner.
20. Mr X escalated his appeal to stage two. He said:
• He had not had an opportunity to justify the transfer
• The Council’s reasoning was given after the decision had been made
• At stage one, he was just asked for the details of the relative’s properties and ownership details.
• The timescale of the relative’s move was relevant. The relative had decided to move in 2022 and the sale and purchase had taken between January 2022 and May 2024 to complete. The gift was decided on in 2022 before care fees were an issue for Mrs X.
21. The Council’s panel considered Mr X’s submissions. The Council told us it had not retained any records of the panel’s considerations. It said in future it would ensure it kept recordings.
22. A form called ‘deprivation case – referral form’ which is a summary of key information for the panel said:
• Mrs X had been in a care home since January 2024. Mr and Mrs X made a gift of £12500 each to their relative to help her buy a property closer to them. The new property cost less than the old one. Mr X said the surplus was absorbed by essential expenditure and debt clearance, stamp duty and fees. The representative’s stated reasons for the transfer were:
1. To enable the house sale to go ahead
2. To purchase a home closer to Mr and Mrs X
• 26% of total assets were transferred.
23. The Council’s stage two appeal outcome said:
• It had taken into account the reasonableness of the gift compared to their overall financial situation in line with guidance from the Office of the Public Guardian, Mrs X had the right to make reasonable gifts as per OPG guidance.
• Mrs Y had been receiving privately funded residential care since January 2024.
• A large reason was to pay off another relative’s debt.
• The Council has a duty to the taxpayers and to ensure that people pay their fair contribution towards their care, and the repayment of another person’s debt would not be in line with this
• £12500 was 18% of Mrs X’s total capital. In this case, the Council would allow a gift of £9700 being 10% of total capital. This would reduce the notional capital.
24. Mr X was unhappy with the outcome to the appeal and so complained to us.

Findings

25. There was fault by the Council:
• It failed to explore the reasons for the gift before making the decision that there had been a deprivation thus denying Mr X the opportunity to put his case and explain intention/motivation. This was not in line with paragraph 5 of Annex E.
• The initial decision failed to explain and set out reasons, applying the guidance in Annex E. However, this is to some extent mitigated in the stage one appeal response where the Council has set out its reasoning in line with the key questions set out in Annex E
• It failed to keep a written record of the stage two appeal panel’s consideration. This is not in line with our Principles of Good Administrative Practice
26. Mr X said he had evidence of a previous similar pattern of gifting and said that it was therefore typical and offered to provide the Council with supporting evidence. The Council should have explored this with him further and invited him to provide documents to substantiate his claim that the gift was consistent with previous spending behaviour.
27. The faults I have identified call into question the decision-making process and whether the outcome might have been different had the Council considered the issue in line with Care and Support Statutory Guidance. This has caused Mr X avoidable uncertainty and frustration.

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Agreed Action

28. It is not the LGSCO’s role to decide whether or not the £12500 gift was a deprivation of capital. That decision is for the Council. Where we have identified fault in a decision, we may recommend reconsideration of the decision without the fault identified. Within one month of this decision, the Council will complete the following actions:
• An apology to recognise the avoidable frustration and uncertainty. We publish guidance on remedies which sets out our expectations for how organisations should apologise effectively to remedy injustice. The organisation should consider this guidance in making the apology I have recommended in my findings.
• Reconsideration of the decision by a panel made up of different local authority officers. Before the panel takes place, the Council should give Mr X an opportunity to submit whatever additional evidence he wishes, including evidence to support his claim of a previous history of similar gifts. Ensure a full written record is kept of the panel meeting.
• If the outcome is different (more favourable for Mrs X), the Council should recalculate her financial assessment to determine the date her capital fell to the funding threshold and backdate funding provision accordingly.
29. The Council should provide us with evidence it has complied with the above actions.

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Decision

30. I find fault causing injustice. The Council had agreed actions to remedy the injustice.

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Investigator's decision on behalf of the Ombudsman