Transcript Direct Payments compared to Individual (Personal) Budgets

Direct Payments compared to
Individual (Personal) Budgets
Shirley Jarlett
And
Amanda Julian
The Statutory Framework for Direct
Payments
• Direct Payments were first introduced under the
Independent Living Fund in 1998
• Health and Social Care Act 2001 sections 57
and 58.
• Community Care, Services for Carers and
Children’s Services (Direct Payments)
Regulations 2003 (The Regulations)
• The Direct Payments Guidance, Community
Care, Services for Carers and Children’s
Services (Direct Payments) Guidance 2003
(English Guidance)
The obligation to offer Direct
Payments
• Individuals are not assessed for a direct
payment.
• Direct payments are integral to the assessment
and care planning process.
• Once an assessment has been undertaken,
either a community care assessment, under the
Children Act 1989 or the Carers and Disabled
Children Act 2000.
• There is an obligation under Regulation 4 of the
Regulations to offer a direct payment.
Consent and Direct Payments
• Section 57 of the Health and Social Care Act 2001 and
section 17A Children Act 1989 require direct payments to
be made only were the recipient consents to such an
arrangement.
• Paragraph 45 of the English Guidance stresses local
authorities should “make clear that a person does not
have to agree to a direct payment and that it would
arrange services in the normal way if someone decides
not to accept direct payments. They should also discuss
with people who receive direct payments what to do if
they no longer wish to receive the payments”
Ability to Manage the payment –
alone or with assistance
• The Regulations (but not the HSCA 2001
or CA 1989) specify that direct payments
can only be made to persons who appear
to be capable of managing the payment
themselves or with such assistance as
may be available.
Mental Capacity and direct
payments
• Whether a person has the mental capacity to manage the direct
payment will in essence depend on what the money is to be used
for. For example a direct payment to employ someone will require
greater mental capacity than one to purchase meals. Though the
use of a broker can enable a person to access direct payments to
employ a person assistant.
• Caution should be exercised as it would be difficult to argue that a
person has the capacity to employ a person but subsequently would
not be able to represent themselves at an Employment Tribunal
hearing or instruct someone to act on their behalf.
• The Guidance assists at paragraphs 48 and 49 by making it clear
blanket decisions should not be made about groups of people who
should or should not receive a direct payment.
• Paragraphs 51 to 54 gives further guidance on managing a direct
payment.
Who can receive a direct payment
• Regulation 2 of The Regulations provide
the exemptions to who can be offered a
direct payment.
• A local authority cannot require a person
to give reasons why they should be
offered a direct payment – Public Service
Ombudsman (Wales) Complaint
B/2004/0707/S/370 against Swansea City
Council
Further restrictions
• Regulation 6 places further conditions on the
payment of direct payments for securing the
services by the recipient from a close family
member.
• It does allow the local authority a discretion to
make a payment in exceptional circumstances.
• Research has shown most service users would if
enabled prefer to employ a family member
Residential care and direct
payments
• Regulation 7 caps the amount of
residential care that can be purchased by
direct payments to four weeks in every
twelve month period.
• The English Guidance expands this in
paragraphs 74 to 76.
What does the Guidance say?
• Paragraph 74 states
• direct payments may not pay for adults to live for the
long-term in a care home. They may be made to enable
people to purchase for themselves short stays in a care
home, but this cannot be for more than four weeks in any
twelve months. Where two successive periods are less
than four weeks apart, they may be added together to
make a cumulative total not exceeding four weeks. If
more than four weeks apart they are not added together.
It is unlikely that direct payment would be suitable for
emergency respite.
Continued..
• Paragraph 75 of the Guidance states that
additional weeks of respite can be
provided but not by a direct payment.
• Paragraph 76 restricts the use of direct
payments for the provision of residential
accommodation for children or young
people, to avoid inappropriate use of
residential accommodation.
Residents of a care home and
direct payments
• Paragraph 7 of the English Guidance
allows for people living permanently in a
care home to receive a direct payment for
day care or to try out independent living
prior to moving from the home.
Provision for the recovery of money
and termination of a direct payment
• Regulation 9 provides the framework to
enable the local authority to recover
money from a recipient if the authority is
satisfied the money is not being used to
secure the provision of service it relates to.
• Regulation 10 provides the framework for
the local authority to terminate a direct
payment agreement
Restrictions on the National Health
Service to make direct payments
• The Department of Health, under its policy
the National Framework for NHS
Continuing Healthcare and NHS funded
Nursing Care 2007, has made it clear that
the NHS cannot make direct payments
under the Health and Social Care Act
2001.
In conclusion
• Direct payments have a statutory
framework that has been further expanded
by Regulations and Guidance that provide
for who can receive the payments and
what they can be used for. The framework
lays down how Brokerage, Independent
Living Trusts are to be used. Further how
the process must be audited.
Personalisation of Social Care
• By contrast to direct payments the Government
has not introduced legislation to govern the use
of Individual/Personal budgets. Rather they
have bought in the idea for change through
policy documents.
• The Government vision is to ensure that people
with disabilities are citizens with powerful rights
to non-discrimination and equality. The vision is
for a society where everyone is respected and
included as equal members of society.
Putting People First Concordant –
published December 2007
• Central Government, Local Government, the
professional leadership of adult social care and
the NHS jointly committed to the transformation
of Care Services over the next three years
• An extra £520 million has been pledged to
transform the care of older and disabled people.
This will be allocated as a Social Reform Grant
over the next three years. The grant includes
some NHS resources in recognition of the
impact on social care in improving people’s
health and wellbeing.
Key principles
• To give the vast majority of people who receive
funded care their own personal budgets so they
can choose their own support services they want
for themselves or their family. An increasing
amount of people to access direct payments.
The Health and Social Care Act 2008 introduces
direct payments to those who lack capacity
though it only covers those who are in receipt of
payments under section 57 Health and Social
Care Act 2001.
Key principles continued
• High quality care homes, home care and day services to be
rewarded while poor performers not to be used by local authorities
and the NHS.
• First stop shops becoming common place. To include people who
are not eligible for social services support. Access to advice and
advocacy about community care services.
• Investing in support to keep older people healthy.
• Closer collaboration between the NHS and local government.
• Assessment and paperwork to become streamlined so social
workers spend more time on the frontline.
• Co-ordinated services social workers to be based in primary health
centres as well as GPs and nurses.
• Champions to promote dignity for older people.
• Inter-generational programmes
• New technology to be at the heart of ensuring people can remain in
their own homes and live independently.
How is it to be achieved?
• The Government proposes the use of Individual/Personal Budgets
being a notional pot of money established for someone’s care and
support. The person controls how the money is spend.
• Our Health, Our Care, Our Say: A new direction for community care
services 2006 and budget statements of 2007 supported by the
Comprehensive Spending Review envisages a system wide
transformation of the provision of adult social care services based
on a common assessment process with greater emphasis on self
assessment. Though the duty to assess under section 47 National
Health Service and Community Care Act 1990 is not affected by this
policy statement. The guidance on assessments has not changed
in stating that an assessment involves an meeting with the person
being assessed.
• The strategic movement is for Person Centred Planning and Self
Directed Support.
What is the basis to make cash
payments outside direct payments?
• In order to deliver on the policy vision it has been
necessary to find a basis on how to provide cash
payments in lieu of services that are more flexible than
direct payments.
• The Government in 2006 stated:
• “Individuals who are eligible for these funds will have a
single transparent sum allocated to them in their name
and held on their behalf rather like a bank account.
They can chose to take this money out either in the form
of a direct payment in cash or a provision of services or
as a mixture… This will offer the individual much more
flexibility to choose services which are more tailored to
their specific needs.”
Local Authority Circular (2008) 1 –
Transforming Adult Social Care
• This LAC was issued in January 2008 and
provides the basis of what is expected of local
authorities. It supports the policy of
Independence, Wellbeing and Choice and
reinforces both Our Health, Our Care, Our Say
and Putting People First.
• What it does not do is change the statutory basis
for the provision of personal budgets.
• What it does do is inform how these policies
should be delivered operationally and
strategically and should be followed as
guidance.
Can a payment be made under
other legislation?
• The Local Government Act 2000 section 2 enables a
local authority to do anything they consider likely to
promote the wellbeing for social, economical or
environmental reasons, subject to section 3 which
prohibits the use of section 2 to raise money.
• In 2001 the Government issued guidance in the form of
Power to promote or improve economic, social or
environmental well-being 2001.
• Paragraph 6 stresses that the “the purpose of
introducing the well-being power is to reverse that
traditional cultural approach, and to encourage
innovation and closer joint working between local
authorities and their partners to improve communities”
What at the limits to section 2 LGA
2000?
• Section 3 of the LGA 2000 limits the use of
section 2.
• Section 3 prevents the use of the powers in
section 2 if there is a prohibition under limitation
under other statutory provisions, and prevents
the use of section 2 to raise money.
• It does not prevent a local authority from
charging for services provided under section 2
LGA.
• Nor does it prevent companies set up under the
provisions of section 2 from raising money as
long as it is reinvested in the company.
Can section 2 be used to provide
social care services?
• The provisions of section 2 LGA known as the
wellbeing provisions can be used to make
payments to enable services users to access
services that do not conform to the traditional
model for the provision of social care services.
• The power under section 2 LGA 2000 has be
widened under section 93 LGA 2003 to enable
local authorities to charge for discretionary
services.
What has section 2 LGA been used
for?
• Money released under section 2 has been used
to:
– Top up day care outside the assessed need
– To assist elderly residents on discharge from hospital.
– To assist vulnerable people and families to remain in
their own home.
– To bridge the perceived gap for housing with care
schemes.
– To provide grants.
– To provide community alarm systems.
What could the payment be used
for ?
• Direct payments have not been provided to
purchase in house services, the rationale being
that local authorities cannot sell their services.
• This principle may not apply to services provided
under section 2 LGA. While section 3(2)
prohibits the raising of money there is no
restriction on the recovery of money for services
provided. This would also apply were the
authority had provided the money to purchase
the service in the first instance.
Sustainable Communities Act 2007
• Enables local authorities to transfer functions from one
public authority to another if doing so would promote the
economic, social or environmental wellbeing within its
area, this can include funding.
• These functions reflect the wellbeing provisions of the
LGA 2000.
• The 2007 Act enables a local authority via a selector to
request that a proposal be approved by central
government. It is a power of first resort meaning as long
as the proposal is not expressly prohibited or subject to
limitations or restrictions in another statutory provision
the power can be used inventively.
• The power could therefore be used to enable the use of
other public funding streams to be incorporated under
agreement into the individual or personal budgets
Consent and Capacity and
Individual/Personal budgets
• As there is no statutory framework to provide an
individual or personal budget can the wellbeing
provisions under section 2 LGA enable a payment to
those who cannot consent and/or lack the capacity to
agree to a direct payment?
• Section 3 LGA prohibits the use of section 2 if there is a
limitation or statutory bar to making the payment. It
could be argued that as there is a statutory bar under the
Health and Social Care Act 2001 then payments may not
be made directly to those who lack capacity. Though the
use of independent user trusts are permissible within the
provisions of the National Assistance Act section 30.
Further in R (A&B) v East Sussex CC (No 1) [2002]
EWHC 2771 admin: argued the point successfully.
conclusion
• There is no statutory or regulatory framework for providing individual
budgets under current legislation.
• Payments to provide discretionary care outside the traditional model
can be provided under the provisions of the Local Government Act
2000 section 2 subject to section 3.
• There is still a statutory duty to offer direct payments once an
assessment of need has been completed.
• There is still the statutory duty to assess under section 47 NHSCCA
1990.
• In order to be clear on whether it is a direct payment or a
personal/individual budget it is important to know under what
provision the service is being provided under. If it is a direct
payment then the statutory framework will apply, if it is an individual
budget then it can be spent on services that are not traditionally
provided by social care.
Implications of cash payments on
benefits
• In making cash payments there are
implications with regard to tax and national
insurance for the service user if they
employ a personal assistant.
• The Department of Work and Pensions
class the recipient of a direct payment as
the employer for the purposes of PAYE
and NI, they are classed as non business
employers.
Payment in lieu of services and the
minimum wage
• The Department for Business Enterprise and
Regulatory Reform (DBERR) deal with the
national minimum wage and state that all direct
payment recipients and by analogy it would
include individual budget recipients must ensure
that they pay their employees at least the
minimum wage.
• If a carer or personal assistant is paid less than
£87 per week no National Insurance is payable
but the carer or PA is a worker under the
national minimum wage regulations.
Benefits in Kind and payments in
lieu of services
• Board and lodgings or accommodation is not
normally charged for national insurance or tax if
the employer can show that the employee is
living in.
• Other benefits in kind may be subject to tax.
The Income Tax (Earnings and Pension) Act
2003 (ITEPA) section 201(1) describes a benefit
in kind as a an “employment related benefit”.
• Section 751(2) ITEPA states “a benefit or facility
of any kind provided to an employee or a
member of his/her household.”
What is a benefit in kind?
• A benefit must be over and above what an employer
would give as a fair bargain. If the employee would
receive the same benefit if not an employee then it is not
a benefit for tax purposes. The essence is that the
employee must not be in a more beneficial position then
if they had not been employed by the person giving the
benefit.
• For example if a carer or PA was given money for petrol
this may be taxed as benefit in kind unless they can
show the whole tank of petrol was used on business
mileage.
• Unless covered by the exemptions in the ITEPA then the
benefit will be taxable.
What could be the implications for
a recipient of a cash payment?
• If a recipient of a cash payment is not aware that
they are liable as an employer for tax and
national insurance or that benefits in kind given
during the course of employment may be
taxable they may become the subject of an
investigation by HMRC. If this is were to happen
then they could find that they owe a substantial
amount in back payments.
• The result would be that they would have
insufficient funds to purchase the care for which
the payment was made.
What would the implication be for
the local authority
• If a person were unable to purchase the care
identified in the support plan due to the pounds
per point not taking into account the minimum
wage this could be challenged as unreasonable.
• If a recipient of a cash payment is liable to pay
their employee the minimum wage net of tax and
national insurance the setting of the pounds per
point will need to reflect this. Otherwise it might
mean there is a shortfall between what is
allocated and what is needed to actually
purchase the care identified in the support plan.
Minimising the risk
• To minimise the risk the use of brokerage
is advocated.
• Paragraph 100 of the English Guidance on
direct payments states the local authority
needs to make the recipient of the
payment aware of their legal obligations.
By analogy the same could be set of any
cash payment being paid in lieu of
services.
Recent Court of Appeal Decision social security benefits
• THE FACTS:
• A recent decision on appeal from CIS/1068/2006
– a carer had prior to 2004 been in living in the
administration area of an authority who paid him
directly as a carer. These payments were
disregarded for income support purposes. The
couple moved the new authority paid the wife
directly, the Rowan Organisation issued payslips
to the husband.
Case continued – the decision
• For income support the direct payment
was disregarded as part of the wife’s
income – schedule 9 paragraph 58 Income
Support (General) Regulations.
• The payments to the husband were taken
into account as income reducing their total
income support by £53.50 per week
• The husband appealed to the Court of
Appeal
The Court of Appeal Judgment
• The appeal was based on section 136 Social
Security Contributions and Benefits Act that
requires payments to a family member for
benefit purposes be counted only once when
they come into the family, at that point they are
disregarded. They cannot counted again on
being transferred from one member of the family
to another.
• The Court held under section 136(1) of the Act
that the payments made were for services
rendered and in his hands became income.
Implications for Local Authorities
• When considering making a payment intended to
provide respite for the carer who is a family member if
the payment is made direct to the carer it will be
disregarded for benefits purposes.
• If the money is paid directly to the service user to pass
on to the carer it will be seen as income under the
benefits legislation and will result in a loss of income for
the family.
• The wider implication is that any payment from the
recipient of the cash payment will either be treated as
income for those on benefit not just family members. It
will also if the payment is over £87 be subject to national
insurance payments and tax by HMRC.