Explanatory Memorandum to the National Assistance (Sums for Personal Requirements) (Assessment of Resources) and Social Care Charges (Wales) (Miscellaneous Amendments) Regulations 2014

This Explanatory Memorandum has been prepared by the Developing Policy for Children & Adults Division of the Social Services & Integration Directorate of the Department for Health & Social Services and is laid before the National Assembly for Wales in conjunction with the above subordinate legislation and in accordance with Standing Order 27.1

 

Minister’s Declaration

In my view, this Explanatory Memorandum gives a fair and reasonable view of the expected impact of the National Assistance (Sums for Personal Requirements) (Assessment of Resources) and Social Care Charges (Wales) (Miscellaneous Amendments) Regulations 2014.  I am satisfied that the benefits outweigh any costs.

 

 

 

 

 

 

 

 

Gwenda Thomas AM,

Deputy Minister for Social Services

Date:14 March 2014          



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description

1. The National Assistance (Sums for Personal Requirements) (Assessment of Resources) and Social Care Charges (Wales) (Miscellaneous Amendments) Regulations 2014 (“the 2014 Regulations”) will come into force from 7th April 2014. They relate to the financial assessment of individuals for charging for both residential and non-residential care and will:


Residential Care

 

Non-residential Care

 

Matters of Special Interest to the Constitutional and Legislative Affairs Committee

2. None.

Legislative Background
Residential Care
3. The amount of the PEA is set out in Regulation 2 of the National Assistance (Sums for Personal Requirements) and National Assistance (Assessment of Resources) (Amendment) (Wales) Regulations 2013. In order to amend the amount, this Regulation will need to be revoked and the new amount prescribed in Regulations. This can be achieved under section 22(4) of the National Assistance Act 1948 (“the Act”). This grants power to the Secretary of State to prescribe such sums that a local authority must assume that a person provided with accommodation under the Act will need per week for their personal requirements. This power was transferred to the Secretary of State for Health by virtue of the Secretary of State for Social Services Order 1968 and the Transfer of Functions (Health and Social Security) Order 1988.  Article 2 and Schedule 1 to the National Assembly for Wales (Transfer of Functions) Order 1999 transferred this power to the National Assembly for Wales and was subsequently transferred to the Welsh Ministers by virtue of paragraphs 30(1) and (2)(d) of Schedule 11 to the Government of Wales Act 2006.

 

4. The single capital limit is prescribed in Regulation 20A of the National Assistance (Assessment of Resources) Regulations 1992 (“the 1992 Regulations”). This limit can be amended by Regulations made under section 22(5) of the Act which also grants power to the Secretary of State to make Regulations to which local authorities must give effect in assessing a person’s ability to pay for accommodation under the Act. This was transferred from the Secretary of State to the National Assembly for Wales by virtue of Article 2 and Schedule 1 to the National Assembly for Wales (Transfer of Functions) Order 1999 and subsequently transferred to the Welsh Ministers by virtue of paragraphs 30(1) and (2)(d) of Schedule 11 to the Government of Wales Act 2006.

5. Section 63(3) of the Act sets out that Regulations made under the Act shall be subject to the negative procedure.


Non-residential Care

6. Income which should be disregarded for the purposes of a financial assessment to assess a person's ability to contribute to the cost of their non-residential care is set out in the Social Care Charges (Means Assessment and Determination of Charges) (Wales) Regulations 2011 and the Social Care Charges (Direct Payments) (Means Assessment and Determination of Reimbursement or Contribution) (Wales) Regulations 2011.  Both Regulations   are made under the Social Care Charges (Wales) Measure 2010.  In order to introduce a partial disregard in financial assessments of the first £10 per week of a GIP made under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 amendments are required to both Regulations.  The powers to make the amending Regulations are exercisable by Welsh Ministers under sections 2(2), 7(2), 12(2) and 17(2) of the Measure. Section 17(5) of the Measure sets out that Regulations made under those sections of the Measure shall be subject to the negative resolution procedure.  

 

7. Regulation 5 of the Social Care Charges (Means Assessment and Determination of Charges) (Wales) Regulations 2011 prescribes that the maximum reasonable charge that a local authority can impose under section 1 of the Measure for the provision of a service or combination of services is £50 per week. Similarly, Regulation 5 the Social Care Charges (Direct Payments) (Means Assessment and Determination of Reimbursement or Contribution) (Wales) Regulations 2011 prescribes that the maximum reasonable amount  of a reimbursement or contribution payable that a local authority can impose for  securing the provision of a service through a direct payment is also £50 per week. In order to introduce an amendment to these weekly maxima amendments are required to both Regulations.  The powers to make the amending Regulations are exercisable by Welsh Ministers under sections 2(2), 7(2), 12(2) and 17(2) of the Measure. Section 17(5) of the Measure sets out that Regulations made under those sections of the Measure shall be subject to the negative resolution procedure.  

 

 

 

 

Purpose and Intended Effect of the Legislation

 

Residential Care

Policy Objective

8. It is the Welsh Government’s policy to undertake an annual review of the Regulations governing charging for residential care to ensure these are up to date and support social care policy objectives so as to ensure residents in Wales are not disadvantaged financially. This is in the light of current welfare benefits, financial, legal and operational circumstances. This is to ensure that the requirements in place under Regulations relating to a local authority’s financial assessment of those in residential care are appropriate and properly take into account these factors.

Effects

9. Under the Act local authorities are required to charge residents for residential accommodation, whether directly provided or arranged with the independent care sector, with the aim of recovering as much as possible of the costs. The way a local authority is to assess a person’s ability to pay is laid down in the 1992 Regulations. The Welsh Government has a longstanding commitment to keep under review the capital limit local authorities use in the assessment of a person’s ability to pay for accommodation. There is also a commitment to review the amount of the PEA that individuals in receipt of financial support from their local authority towards their residential care are able to retain for personal use. In addition, the Welsh Government keeps under review the disregards used in such financial assessments which take account of income-related benefits and payments. These reviews are undertaken annually.

 

10. The 2014 Regulations introduce a number of changes, which are described below. While these are generally in line with those being undertaken by the other three UK administrations as regards an uplift to the level of the PEA, there is distinct Welsh provision in relation to the capital limit. This is in relation to the policy of the Welsh Government not to have two capital limits, the effect of which assists proportionally more residents in Wales with their care home costs than residents in the rest of the UK. 

 

Increase in Personal Expenses Allowance    
11. Under section 22(4) of the Act, local authorities are to assume that those individuals in residential care who they support financially require a weekly sum for their personal requirements; this is known as the PEA.  Such weekly sums can be prescribed by the Welsh Ministers under section 22(4) of the Act.  It is custom and practice to uprate the PEA each year. The current amount of the PEA in Wales is £24.50 per week, as prescribed in the National Assistance (Sums for Personal Requirements) and National Assistance (Assessment of Resources) (Amendment) (Wales) Regulations 2013.

 

12. The 2014 Regulations seek to increase this amount to £25.00 per week from 7th April 2014. This maintains a slight higher level of the PEA in Wales than that planned elsewhere in the UK as PEA will increase from £23.90 to £24.40 in England and Northern Ireland, and to £24.55 in Scotland, on the same date.

 

Increase in Capital Limit 

13. Where an individual is assessed as in need of long term residential care they will be subject to a financial assessment.  The assessment is undertaken with regard to the provisions set out in the 1992 Regulations and under the charging rules set out within the Welsh Government’s statutory guidance “Charging for Residential Accommodation Guide”.  

 

14. Prior to 2010 a two capital limit provision operated in Wales providing for an upper and a lower limit.  As such individuals with capital above the upper limit funded their residential care costs in full while individuals with capital at or below the lower limit received financial support from their local authority.  Individuals with capital between the two limits were required to make a contribution towards their costs calculated on a tariff basis. 

 

15. From April 2010 a single capital limit was introduced to simplify the financial assessment and charging process.  Individuals with capital above the capital limit are required to meet the cost of their accommodation and care in full while those with capital at or below the limit receive financial support from their local authority.  The level of the capital limit is reviewed annually and from 8th April 2013 it was set at £23,750.  The 2014 Regulations now seek to increase the level of the capital limit applicable in Wales from £23,750 to £24,000 from 7th April 2014.

 

16. Elsewhere in the UK a two capital limit provision remains in operation.   England and Northern Ireland will retain the current levels of their upper and lower capital limits at £23,250 and £14,250 respectively, but Scotland plans to increase its upper and lower capital limits to £26,000 and £16,000 respectively from 7th April 2014.


Non-residential Care

Policy Objective

17. It is the Welsh Government’s policy to undertake an annual review of the Regulations governing charging for non-residential care to ensure these are up to date and support social care policy objectives so as to ensure those receiving community based services in Wales are not disadvantaged financially. This is in the light of current welfare benefits, financial, legal and operational circumstances. It is also Welsh Government policy to support ex-armed forces personnel and their families in their return to civilian life given the service they have given their country.

 

Effects

18. Under the Measure local authorities have discretion to charge a reasonable amount for the cost of non-residential care it provides; they also have discretion to impose a reasonable reimbursement, or contribution, for the provision of non-residential services through a direct payment. The way in which a person is financially assessed for these is laid down in the Social Care Charges (Means Assessment and Determination of Charges) (Wales) Regulations 2011 and the Social Care Charges (Direct Payments) (Means Assessment and Determination of Reimbursement or Contribution) (Wales) Regulations 2011. The Welsh Government keeps under review the disregards used in such financial assessments which take account of income related benefits and payments. These reviews are undertaken annually.

 

19. The 2014 Regulations introduce a number of changes, which are described below. One is a technical amendment to correct an omission from the Regulations, while the other is a revision of the weekly maxima for charging referred to earlier.

 

Guaranteed Income Payment (GIP)

20. A number of amendments where introduced to the residential and non-residential charging regulations last year  that applied certain disregards to  payments awarded to ex-armed forces personnel under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011. One of these was a GIP, which is made on a weekly basis to discharged injured personnel to cover the cost of their care. These payments are to acknowledge the service that such individuals had given their country.  Amendments made last year included applying a disregard of the first £10 per week of a GIP made to those in residential care.   However, this disregard  in respect of those receiving a non-residential service was omitted at that time. This outstanding amendment now needs to be made.

 

21. Therefore, the 2014 Regulations will seek to apply the same disregard in financial assessments for those in receipt of non-residential care, whether this is care provided directly by the local authority or care provided through a direct payment. It will come into effect from 7th April 2014 and will ensure equality of treatment between those ex-armed forces personnel receiving residential care and those receiving non-residential care.

Revision of the Maximum Reasonable Charge and Maximum Reasonable Reimbursement or Contribution

22. Where local authorities exercise their discretion under the Measure to make a reasonable charge for non-residential services provided, Regulation 5 of the Social Care Charges (Means Assessment and Determination of Charges) (Wales) Regulations 2011 prescribes that the maximum reasonable charge that can be made for a service or combination of services is £50 per week. Similarly, where local authorities exercise their discretion to impose a reasonable reimbursement or contribution for the provision of services through a direct payment, Regulation 5 the Social Care Charges (Direct Payments) (Means Assessment and Determination of Reimbursement or Contribution) (Wales) Regulations 2011 prescribes that the maximum reasonable amount of these is also £50 per week.

 

23. The level of these maxima was introduced from 11th April 2011 and has not been uplifted since that time. The Welsh Government now considers it an appropriate time to do this so as to ensure that the value of this financial protected afforded those who receive non-residential care remains on a par when it was first introduced. This is in the light of the changes to levels of Welfare Benefits, Pensions and service provision costs that has occurred since that time, as well as the affect of inflation over that three year period.

 

24. The 2014 Regulations will uprate the level of the reasonable maximum charge, and the reasonable maximum reimbursement or contribution, to £55 per week to take account of those factors. This will come into effect from 7th April 2014.

 

Implementation and Risk if Legislation is not made

25. The 2014 Regulations will come into force on 7 April 2014. If this date is not achieved then individuals in residential care in Wales will be disadvantaged in their financial assessments for this than those elsewhere in the UK by having less generous allowances in those assessments. Equally, those ex-armed forces personnel receiving non-residential care in receipt of a GIP, will not have the £10 disregard of part of this afforded to those who receive these who are in residential care. In addition, the maxima for local authority charging for non-residential care will not have been uprated since it was first introduced in 2011.

 

Consultation
Residential Care
26. The proposed amendment to the single capital limit and the PEA for residential charging assessments are part of a regular annual exercise, which stakeholders (i.e. local authorities) are aware of and which simply review and increase existing levels as appropriate. As such it is not considered necessary to consult on these changes (a similar stance is taken by the other UK nations).  Local authorities in Wales have already been given written advance notice by officials of the proposed changes to enable them to plan ahead.

Non-residential Care

27. The technical amendment being made to the Regulations governing charging for non-residential care for the partial disregard of a GIP are to ensure consistency and equality of treatment of ex-armed forces personnel who receive of such payments, whether they are receiving residential or non-residential care. In view of this it is not considered necessary to consult on these changes.

28. A consultation was thought appropriate to be held on the revision of the maximum reasonable charge and maximum reasonable reimbursement or contribution. This was in view of the fact that no previous revision of these maxima had taken place. Details of the consultation undertaken are included in the Regulatory Impact Assessment attached.

Regulatory Impact Assessment – Options, Cost and Benefits

Residential Care

 

Impact of the proposed changes to the Personal Expenses Allowance (PEA)

29. In calculating a resident’s charges, local authorities are required to allow residents to keep an amount of their weekly income for their personal expenses.  This requirement is laid down in section 22(4) of the Act. 

 

Option 1:  Do Nothing

30. This would mean that the PEA is maintained at the level of £24.50 per week. It has become practice to uprate the PEA annually and therefore, there is an expectation by local authorities and care home residents that the amount of the PEA will be increased. To freeze the level of the PEA would result in individuals not benefitting from any amount of the increases applied to UK state pensions and benefits from 7th April 2014 as all of this increase would be retained by local authorities to contribute towards the cost of their accommodation and care.

 

Costs

31. There would be no new cost implication to local government from this option.

Benefits

32. This option would provide no new benefits to care home residents in Wales. It would though result in the estimated £2.1million p.a. increased income received by residents through increases in UK state pensions and benefits going in full to local government. 

 

Option 2:  Make the Legislation

33. Making the 2014 Regulations will provide for an increase in the level of PEA from £24.50 to £25.00 per week. This will enable individuals in residential care who are supported financially by their local authority to retain a slightly increased amount of their income each week for personal expenses.  Implementing the Regulations will also result in a slightly higher level of PEA for residents in Wales than that applicable in the rest of the UK.

 

Costs

34. From 7th April 2014 the amount of the state pension will increase by 2.7% and the increase in the level of the standard minimum guarantee income (applied to individuals of state pension age) will equate to 2.0%.  The weekly income care home residents receive, against which local authorities charge for accommodation and care costs, will therefore increase accordingly in the form of increased state pensions and benefits. 

 

35. Consequently this increase to the PEA (by 2.1%) is considered affordable given that the increase in state pensions is slightly above the percentage increase in the PEA.  Hence local authorities will benefit from an element of this increase to help meet the costs of those residents they support financially.

 

Benefits

36. The increase will enable individuals in care to receive a slight increase in the amount of money they retain for personal expenditure whilst generating an increase in revenue of around £1.745 million p.a. for local authorities through an increase in the level of contributions received from the residents they support.

 

 

Impact of the Proposed Capital Limit Increase

37. Under the 1992 Regulations local authorities may not contribute financially to the care costs of residents who have capital, including property, savings and investments above the level of the single capital limit.  Such residents are, therefore, expected to meet the full costs of their residential accommodation and care from their own resources.  If individuals have capital at or below the capital limit then they will receive maximum state financial support whilst contributing whatever income they receive deemed eligible by the 1992 Regulations.    

 

Option 1: Do Nothing

38. This would mean that the capital limit applied within the financial assessment would be maintained at £23,750. The Welsh Government has made a previous commitment to keep the capital limit under review. Therefore, there is an expectation that this will be considered and increased annually.

 

Costs

39. There would be no new cost implication to local government from this option.

 

Benefits

40. This option provides no new benefits to individuals in residential care.  Individuals would be unable to retain any additional amount of their personal capital than at present although residents would benefit over residents elsewhere in the UK owing to the single capital limit in place.

 

Option 2: Make the Legislation

41. Making the 2014 Regulations will apply a modest uplift of £250 to the current limit bringing the capital limit in Wales £750 above the upper limit in place in England and Northern Ireland, albeit it will be £2,000 below the upper capital limit which will be in place in Scotland.  

 

Costs

42. Implementing the 2014 Regulations will result in an increase in the capital limit by 1.1%, an estimated increase in spend by local government on residential care by around £0.100 million p.a. This is considered broadly affordable for local authorities when taken together with the increased revenue outlined above resulting from residents’ increased UK state pensions and benefits.    

 

Benefits

43. It will provide a reasonable benefit for residents who will not have to self fund their costs any longer than those in most of the rest of the UK. This, coupled with the advantage of Wales having a single capital limit, ensures proportionally more residents in Wales are assisted with their residential care costs than residents in the rest of the UK.  



Non-residential Care

Impact of the proposed partial disregard of an Guaranteed Income Payment (GIP) made under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011.  

44. A number of amendments where introduced to the residential and non-residential charging regulations last year  that applied certain disregards to  payments awarded to ex-armed forces personnel under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011. One of these was a GIP, which is made on a weekly basis to discharged injured personnel to cover the cost of their care. These payments are to acknowledge the service that such individuals had given their country.  Amendments made last year included applying a disregard of the first £10 per week of a GIP made to those in residential care.   However, this disregard  was erroneously omitted at that time from the Regulations governing charging for non-residential care. This outstanding amendment now needs to be made.

 

Option 1: Do Nothing

45. Not remedying this omission would disadvantage a recipient of a GIP who was also in receipt of non-residential care as they would not have this disregard in any financial assessment for charging. This would be unlike those financial assessments for residential care where the disregard of the first £10 per week of a GIP would be applied. 

Costs

46. There would be no new cost implication to local government from this option. However, ex-armed forces personnel in receipt of a GIP would have the full amount of this taken into account for non-residential charging resulting in £520 p.a. more of their GIP being taken into account for this charging in comparison with those in receipt of a GIP receiving residential care.

 

Benefits

47. There are no benefits to individuals from this option.

Option 2: Make the Legislation.

48. Making the 2014 Regulations would remedy the omission in the Regulations governing charging for non-residential care of the disregard of the first £10 per week of a GIP received by ex-armed forces personnel under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011, thus putting them on a par with those in residential care who receive a GIP and are assessed for charges.

 

Costs

49. There would be negligible cost implications for local government from this option given that the maxima for non-residential care charging referred to earlier mitigates the financial impact of the introduction of this small disregard upon them.

 

 

 

Benefits

50. Amending the Regulations to include a first £10 per week disregard of a GIP an individual receives when assessing their ability to pay towards their non-residential care, whether this is provided by their local authority or through a direct payment, will ensure consistency and equality of treatment of these individuals. It will allow them to retain up to £520 p.a. of their GIP before charging incurs to meet their daily living costs.

 

Revision of the Maximum Reasonable Charge and Maximum Reasonable Reimbursement or Contribution

51. In assessing the reasonable charge for non-residential care provided, or the reasonable reimbursement or contribution to impose for non-residential care provided through a direct payment, a local authority must not set these at a level above maxima set out in the 2011 Regulations. This maxima is currently set at £50 per week.    

 

Option 1: Do Nothing

52. This would retain the current level of the maxima set and take no account of the changes which have occurred since its introduction to the level of UK state pensions and benefits, service provision costs or inflation. 

 

Costs

53. There would be no new cost implications from this option to those in receipt of non-residential care. There would be for local authorities as the value of the current maxima would in real terms have diminished since its introduced due to the factors outlined above. This would, as a consequence, reduce in real terms the charge income they are able to recover from those in receipt of non-residential care


Benefits

54. This option would have no benefits for local authorities. It would, however, for service users reduce in real terms the level of the maximum reasonable charge a local authority could make for non-residential care, and the level of the maximum reasonable reimbursement or contribution that can be imposed for non-residential care provided through a direct payment.

Option 2: Make the Legislation

55. Making the 2014 Regulations will increase the weekly maxima for charges, reimbursements and contributions, by a modest amount of £5 per week from £50 to £55 per week. This would come into effect from 7th April 2014. This increase acknowledges the level of inflation, and the changes in the level of UK state pensions, benefits and services provision costs, which have occurred since the current maxima of £50 per week was introduced under the 2011 Regulations. It would in real terms put the current level of the maxima on a par with its level when it was introduced. This would be the first revision of the weekly maxima since its introduction in 2011. 


Costs

56. There will an additional cost of £5 per week to those in receipt of non-residential care, whether it is provided by their local authority or through a direct payment. This is considered affordable given the rises in state pensions and disability related benefits which have occurred over the period since 2011, which have been over 7% p.a. It will raise for local authorities an estimated additional £1.367 million p.a. in charge income.


Benefits

57. Increasing the maxima would provide additional income for local authorities to meet increased service provision costs since the level of this was first set. It would also honour the Welsh Government’s commitment to local government through the Partnership Agreement to ensure that the financial consequences of initiatives placed upon them are met. It would also, for both service users and local authorities alike, place the real terms affect of the maxima back on a par with that when its present level was first set in 2011.


Consultation

58.  A consultation was thought appropriate to be held on the revision of the maximum reasonable charge and maximum reasonable reimbursement or contribution. This was in view of the fact that no previous revision of these maxima had taken place.

 

59. A shortened public consultation was held on the proposed increase in the maxima, with local authorities, the NHS, third sector organisations and service users being invited to comment; the consultation was also published on the Welsh Government’s website. The consultation ran from 7th February to the 7th March 2014.


60.  26 responses to the consultation were received. In summary the responses said:

 

 

61. A fuller summary of the consultation is due to be published on the Welsh Government’s website at:

 http://wales.gov.uk/consultations/?status=closed&lang=en&pageNum=2

 

62. Welsh Ministers considered the consultation responses and on balance, decided to revise the maxima by £5 per week to £60 per week as was proposed in the consultation. This was on the basis that all local authorities wished to see an increase, with a substantial number supporting this level of increase. While third sector organisations wished to see no change or a reduction in the maxima, agreeing to this request would have meant a funding shortfall for local authorities. This would have resulted in the Welsh Government not honouring its commitment to local authorities under the Partnership Agreement to ensure the financial consequences of initiatives placed on them are met. It would also have meant that the real terms affect of the magma would have reduced over the period since it was first introduced in 2011.   

 

Competition Assessment
63. Not applicable.
 
Post Implementation Review
64. The effect of the changes will be monitored by officials via their regular  contact with local authority financial assessment officers and with third sector organisations.

Summary
Residential Care
65. The 2014 Regulations will benefit those in residential care in Wales.  They will ensure that all residents with capital at or below £24,000 are not required to pay towards their residential care costs from these funds.  They will also enable residents to retain an additional amount of their income for their personal expenses in the form in an increased level of PEA.

Non-residential Care   

66. The 2014 Regulations will correct an omission in the Regulations governing charging for non-residential care by introducing a disregard of the first £10 per week of a GIP received by ex-armed forces personnel under the Armed Forces and Reserve Forces (Compensation Scheme) Order 2011, thus putting them on a par with those in residential care who receive a GIP and are assessed for charges.

 

67. The 2014 Regulations will also increase the weekly maxima for charges, reimbursements and contributions, by £5 per week to £55 per week. This would acknowledge the level of inflation, and the changes in the level of UK state pensions, benefits and services provision costs, which have occurred since the current maxima was introduced in 2011. It would put in real terms the level of the maxima on a par with its level when it was first introduced.