SDAS consultancy case study
My client is elderly and vulnerable and has been asked to repay a significant care costs debt by the local authority.
Please could you advise on their liability, the steps that the local authority can take to recover the debt, including whether care services can be withdrawn, and how these debts are treated in insolvency?
The advice in this case study applies to England. It refers to the Care Act 2014 and the government's Care and Support Statutory Guidance (the Guidance).
For similar guidance applicable in Wales, see the Social Services and Well-being (Wales) Act 2014, and Part 4 and 5 Code of Practice (Charging and Financial Assessment).
Advising on liability
We cannot advise on whether your client is liable for a particular care costs charge or whether the local authority has correctly calculated the care charge amount owed.
If your client disputes liability, or if you have concerns about how the care costs have been calculated, Age UK might be able to provide further guidance.
How payments are made
Under section 31(2) of the Care Act 2014 and Chapter 12 of the Guidance, someone who is entitled to financial support for care and support needs, or their nominated person, will usually receive support through direct payments from the local authority.
Under section 33(5) of the Care Act 2014 and Regulation 7(1)(b) of the Care and Support (Direct Payments) Regulations 2014, the local authority can consider ending direct payments and require whole or part repayment where:
an individual has breached specific conditions attached to the direct payments, or
the direct payment has not been used to meet the needs set out in the care and support plan
The local authority's decision to recover the care costs
Before starting any recovery, the local authority should consider whether it is appropriate to recover the debt in full, recover part of it, or not pursue recovery at all.
Annex D, paragraph 6 of the Guidance states that the local authority should bear in mind the following principles when considering recovery of care costs debts:
possible debts must be discussed with the person or their representative
the local authority must act reasonably
arrangements for debt repayments should be agreed between the relevant parties
repayments must be affordable
court action should only be considered after all other reasonable avenues have been exhausted
The local authority might decide to waive or only partially recover the debt from your client where:
the amount of the debt is small and the costs of recovery would be disproportionate, or
the client or their representative could not reasonably have been aware that assets needed to be included in the financial assessment
Local authorities also have a general duty to promote the wellbeing of the individual concerned when they make decisions relating to care and support under section 1 of the Care Act 2014. This is known as the wellbeing principle.
Under paragraphs 9 and 10 of the Guidance, the local authority should consider how different recovery approaches might impact your client's wellbeing. Annex D, paragraph 5 of the Guidance highlights that many care costs debts involve very frail people in their 80s and 90s and those living with dementia. The local authority should therefore have debt recovery processes designed with those needs and limitations in mind.
Enforcing recovery of the care costs debt
Under section 69 of the Care Act 2014, the local authority can issue a money claim in the County Court to recover a care costs debt. However, Annex D, paragraph 27 of the Guidance states that it should only do so after exhausting reasonable alternatives.
The local authority should offer your client the option of a Deferred Payment Agreement (DPA) as a debt recovery alternative where possible. The local authority should only issue a County Court claim if the client refuses the offer of a DPA.
The local authority can also seek to recover costs incurred in pursuing the debt. Under section 51(1) of the Senior Courts Act 1981, the award of such costs is at the discretion of the court. Annex D, paragraph 12 of the Guidance states that the court may refuse to award costs if the local authority fails to properly consider the person’s needs, or where it has not tried to recover the debt in other ways.
Annex D, paragraph 31 of the Guidance and Chapter 9, paragraph 9.75 of the guidance suggests that where a County Court claim is issued, the local authority can charge discretionary pre-judgment interest of 8% per year under section 69 of the County Courts Act 1984.
If the local authority obtains a County Court judgment, it can apply to enforce the judgment using the usual enforcement methods.
Withdrawal of services for non-payment
Legal commentary on adult social care states that the local authority cannot withdraw those services if a person fails to pay for care provided under the Care Act 2014.
There is also a strong argument that withdrawing care services from the client due to a failure to pay care costs goes against the wellbeing principle under section 1(1) of the Care Act 2014.
If your client is considering insolvency, they should contact the local authority to check whether insolvency might affect their ongoing care package or future charging arrangements.
How care costs debts are treated in insolvency
Care costs debts are qualifying debts for DRO purposes under section 251A of the Insolvency Act 1986. They are not listed as excluded debts under Rule 9.2 of the Insolvency (England and Wales) Rules 2016.
Care costs debts are provable in bankruptcy under section 382 of the Insolvency Act 1986. They are not listed as non-provable debts under Rule 14.2 of the Insolvency (England and Wales) Rules 2016.
Care costs debts can also be included in an Individual Voluntary Arrangement.