In the Matter of the Care Act 2014

IN THE MATTER OF THE CARE ACT 2014

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ADVICE

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1. I am asked to advise on behalf of the National Association of Finance Officers (NAFO) in respect of the obligation upon its members to undertake a consultation exercise as a result of changes to the statutory regime for charging for residential and community care services brought about by the Care Act 2014 (“the 2014 Act”). The 2014 Act received royal assent on 14th May 2014 and the first parts are due to come into effect on 1st April 2015. The draft guidance and draft secondary legislation have been published and a consultation exercise held by the Department of Health. It is possible that the final guidance and secondary legislation will change as a result of that consultation. However, this advice is given on the basis of the current documents and will need to be reconsidered in the light of any changes made.
2. Although the new statutory charging regime adopts much of the current approach, it does enact some very significant changes. The most important in respect of charging that are due to come into force next April are:
3. The local authority now has a power rather than a duty to charge for residential care so it may chose not to charge in circumstances where it was previously obliged to do so. However, the local authority is not permitted to pay towards the cost of residential accommodation for a person whose resources exceed the capital limits.
4. The local authority may, in appropriate circumstances, undertake a ‘light touch’ financial assessment rather than a full assessment.
5. Deferred payment agreements must be offered to anyone who meets the qualifying criteria. They may also be offered to others who do not meet the criteria.
6. Administration costs and interest may be charged on deferred payment agreements.
7. A maximum limit may be set on the amount of payments that can be deferred under such an agreement by reference to the value of the property against which it is to be secured. The local authority may refuse to defer further payments once that limit is reached.
8. I am instructed that these changes have caused some concern amongst NAFO members as to whether they need to hold a consultation exercise in order to bring these changes to the attention of the public and other relevant parties. Some have taken the view that consultation is needed because the local authority’s powers will be different and it will need to make decisions about how to use them. Others take the view that unless their charging policy is actually going to change, there is no need to consult. I understand that the Department of Health had not intended there to be any requirement that local authorities would need to consult having itself consulted on the draft guidance and secondary legislation.
9. I am asked to address a number of questions set out in my instructions: the first group in relation to charging for residential care; and, the second in relation to deferred payment agreements. Before doing so, I consider the nature of the duty upon a local authority to consult.

Duty to Consult

1. The extent to which a local authority must consult before changing its established policy or practice will depend on any express promises made and on the nature and extent of the consultation prior to adopting the current policy or practice. The leading case on the duty consult isR (on the application of Bhatt Murphy (a firm) and others v Independent Assessor; R (on the application of Niazi and others) v Secretary of State for the Home Department [2008] EWCA Civ 755 where Laws, LJ set out the applicable principles (at paragraphs 41-42 and 49):

[41] …. a public authority will not often be held bound by the law to maintain in being a policy which on reasonable grounds it has chosen to alter or abandon. Nor will the law often require such a body to involve a section of the public in its decision-making process by notice or consultation if there has been no promise or practice to that effect. There is an underlying reason for this. Public authorities typically, and central government par excellence, enjoy wide discretions which it is their duty to exercise in the public interest. They have to decide the content and the pace of change. Often they must balance different, indeed opposing, interests across a wide spectrum. Generally they must be the masters of procedure as well as substance; and as such are generally entitled to keep their own counsel. All this is involved in what Sedley LJ described (BAPIO [2007] EWCA Civ 1139 para 43) as the entitlement of central government to formulate and re-formulate policy. This entitlement – in truth, a duty – is ordinarily repugnant to any requirement to bow to another's will, albeit in the name of a substantive legitimate expectation. It is repugnant also to an enforced obligation, in the name of a procedural legitimate expectation, to take into account and respond to the views of particular persons whom the decision-maker has not chosen to consult.

[42] But the court will (subject to the overriding public interest) insist on such a requirement, and enforce such an obligation, where the decision-maker's proposed action would otherwise be so unfair as to amount to an abuse of power, by reason of the way in which it has earlier conducted itself. In the paradigm case of procedural expectations it will generally be unfair and abusive for the decision-maker to break its express promise or established practice of notice or consultation. In such a case the decision-maker's right and duty to formulate and re-formulate policy for itself and by its chosen procedures is not affronted, for it must itself have concluded that that interest is consistent with its proffered promise or practice. In other situations – the two kinds of legitimate expectation we are now considering – something no less concrete must be found. The cases demonstrate as much. What is fair or unfair is of course notoriously sensitive to factual nuance. In applying the discipline of authority, therefore, it is as well to bear in mind the observation of Sir Thomas Bingham MR as he then was in ex parte Unilever at 690f, that “[t]he categories of unfairness are not closed, and precedent should act as a guide not a cage”.

…

[49] I apprehend that the secondary case of legitimate expectation will not often be established. Where there has been no assurance either of consultation (the paradigm case of procedural expectation) or as to the continuance of the policy (substantive expectation), there will generally be nothing in the case save a decision by the authority in question to effect a change in its approach to one or more of its functions. And generally, there can be no objection to that, for it involves no abuse of power.

Residential Care

1. The current practice of all local authorities to charge for residential care in all cases is one that was imposed by statute. The local authority has not made any promise to continue that practice nor is there any person who can have had a legitimate expectation that it would continue. In my opinion, unless there had been an express promise that the local authority would stop charging as soon as it was able to, then I do not consider a local authority continuing with its existing practice to be under a duty to consult.
2. I also do not consider there to be a duty to consult where the local authority proposes to change its existing practice to make use of its new power, for example by exempting some people from the charge. This is because there is no detriment to existing service user resulting from the change. Those who are to be exempted will pay less whereas those not affected will pay the same. I have reached this conclusion because I cannot see anything in the current draft guidance and secondary legislation that would permit the local authority to charge some people more as a result of charging others less. However, if that were an option, then a duty to consult those who are detrimentally affected would probably arise.
3. Having said that, the decision to charge less for some users might be subject to challenge on public laws groundsother than a duty to consult; it might be said that the decision took into account irrelevant considerations or was irrational or failed to have regard to the public sector equality duty, for example.
4. If a local authority intends to change some parts of its existing practice, it will need to consider whether there is anyone who has been promised that these particular aspects will not change or who will be adversely affected by the change. If so, they will need to be consulted. Further, where it has been the local authority’s habit to consult on all changes to its social care policies and practices or it has expressly said that it will consult on changes to its charging regime, I would recommend that there is a consultation exercise.
5. In general, it will be sufficient to consult on the changes to the existing practice or policy. However, the consultation does need to be a genuine meaningful consultation and there may be circumstances when a narrow focus on the proposed changes in isolation from the broader considerations would rob the consultation of any real meaning. In those circumstances, the consultation would need to cover the wider issues.
6. Where a consultation is necessary in the interests of fairness but is not held, upon a challenge it is likely that the court would hold the change of practice or policy involved to be unlawful. Any person who had suffered a detriment would be entitled to be relieved from that burden but, given that the change would be to charge less,this seems unlikely to have much impact. The greater concern for a local authority is likely to be the cost of the judical review proceedings and the risk of public criticism in the judgment.

Deferred Payment Agreements

1. The local authority will have new powers to charge interest, to charge administration costs and to set a financial limit beyond which no further deferrals will be allowed. Given that a deferred payment agreement is, as between the person in care and the local authority, contractual in its nature, I do not think these new provisions can be applied to any person who has an existing deferred payment agreement. On that basis, those with existing deferred payment agreements will not be adversely affected by any changes.
2. It also seems unlikely that there is anyone who has been promised by the local authority that a deferred payment agreement will be available to them on the existing terms at some time in the future. If, through some unusual set of circumstances, such people do exist, they would need to be consulted on the changes.
3. Where it has been the local authority’s habit to consult on all changes to its social care policies and practices or it has expressly said that it will consult on changes to its charging regime, I would recommend that there is a consultation exercise in respect of the maximum value to be deferred and the rate of interest to be charged. These could be different for those where the criteria for a mandatory deferred payment agreement are met and those where the agreement is discretionary. In my view there is no need to consult on the administration charge as it is set out in the guidance that this must reflect the actual costs of administering the deferred payment scheme.
4. Following the reasoning in the Bhatt Murphy case, I do not consider there to be a duty to consult other than as set out above. Again, the decisions made in relation to the exercise of the new powers could be challenged on other public law grounds.

I trust that I have addressed all of the questions raised in my instructions but please let me know if I can be of further assistance.

Christine Cooper
2nd September 2014

1

IN THE MATTER OF THE CARE ACT 2014

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ADVICE

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Christine Cooper

Field Court Chambers

DX 457 Chancery Lane

Beverley Lambert,

Head of Income & Payment Team

Hertfordshire County Council

On Behalf of National Association of Finance Officers