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Please note: this decision has been reproduced in plain text only. If you wish to submit a copy of a decision as part of an appeal, please download a Word copy from the link below [ref.xd1]:
(Tribual of Commissioners)
H H Judge Hickinbottom, Chief Commissioner
Mr M Rowland, Commissioner
Miss C Fellner, Commissioner
27 July 2005 CDLA/3161/2003
Suspension of payment - claimant residing in a care home - whether care home is either hospital accommodation or Part III accommodation
The three claimants were former long-term hospital patients who were placed in nursing homes under arrangements whereby the health authority channelled payments via the local authority to the homes to make up the fees that the claimants could not pay through disability living allowance and income support. The claimants appealed against decisions to maintain the suspension of the payment of the care component of disability living allowance under regulation 9 of the Social Security (Disability Living Allowance) Regulations 1991, which provided for suspension where accommodation was provided by a local authority under Part III of the National Assistance Act 1948. The tribunal allowed the appeals on the ground that it was more probable than not that the claimants’ accommodation was provided under powers contained in provisions other than Part III of the 1948 Act. The Secretary of State appealed to the Commissioners and argued that if, as had been suggested in the evidence before the tribunal, the payments made by the health authority to the local authority were made under section 28A of the National Health Service Act 1977, the subsequent payments made by the local authority to the nursing homes must have been made under Part III of the 1948 Act and that, in any event, the other powers identified by the tribunal had not been available to the local authority. The health authority was invited to make submissions on the appeals and conceded that at all material times it had been responsible for the care of the claimants because of their substantial nursing needs. It argued that it had not made payments to the local authority under section 28A of the 1977 Act but had merely used the local authority as a conduit for payments to the nursing home under sections 3 and 23 of that Act. The Tribunal of Commissioners raised the question whether regulations 8 and 12A of the 1991 Regulations had to be considered. Those regulations provided for the suspension of payment of, respectively, the care component and the mobility component of disability living allowance where the claimant was being “maintained free of charge while undergoing medical or other treatment as an in-patient – (a) in a hospital or similar institution under the NHS Act of 1977 …”. The health authority argued that the claimants were not being “maintained” in the nursing homes because the health authority paid only the nursing costs and the nursing homes charged the claimants for their accommodation an amount they could pay from their benefits.
Held, allowing the appeals, that:
1. the tribunal had erred in not considering the relationship between section 28A of the 1977 Act and Part III of the 1948 Act and in not considering the limited extent of the alternative powers it had identified (paragraphs 47 to 54);
2. as the responsibility for providing the accommodation remained with the health authority, the arrangements for the accommodation were not made by the local authority under Part III of the 1948 Act but by the health authority under sections 3 and 23 of the 1977 Act and so regulation 9 of the 1991 Regulations did not apply (paragraph 61);
3. however, regulation 8 had to be considered because a nursing home could be a “hospital”, a person who had severe learning difficulties and was consequently receiving nursing care was “undergoing medical or other treatment” and the words “under the NHS Act 1977” qualified the words “maintained free of charge while undergoing medical or other treatment as an in-patient” rather than describing the “hospital or similar institution” (paragraph 64);
4. where regulation 8 was capable of applying, it required that a claimant was to be treated as “maintained free of charge … under the NHS Act 1977” if any part of the total cost of accommodation and nursing was met under the 1977 Act, subject to specified exceptions (paragraph 72);
5. regulation 8 could not apply if nursing care provided under the 1977 Act was merely incidental or ancillary to the provision of accommodation so that the need for nursing care would be consistent with accommodation being provided by a local authority under Part III of the 1948 Act, but it did apply where the amount of nursing care provided implied a duty on a health authority also to make accommodation available under the 1977 Act (paragraph 75);
6. in the present cases, the health authority had a duty under the 1977 Act to arrange for accommodation to be provided to the claimants free of charge and, therefore, regulation 8 required payment of the care component to remain suspended and, subject to transitional provisions which applied to two of the claimants, regulation 12A required payment of the mobility component to be suspended as well (paragraphs 81 to 84).
DECISION OF A TRIBUNAL OF SOCIAL SECURITY COMMISSIONERS
1. We allow the Secretary of State’s appeals. We set aside the decisions of the Wolverhampton appeal tribunal dated 12 February 2003 and we substitute our own decisions as follows:
(1) In CDLA/3161/2003, the claimant is not entitled to payment of the care component of disability living allowance (DLA) from 2 April 1997 but remains entitled to payment of the mobility component at the lower rate from that date.
(2) In CDLA/3162/2003, the claimant is not entitled to payment of the care component of DLA from 5 March 1997 but remains entitled to payment of the mobility component at the lower rate from that date.
(3) In CDLA/3164/2003, the claimant is not entitled to payment of either the care component or the mobility component of DLA from 31 October 2001.
2. The claimants have severe learning disabilities such that they require special accommodation because of the extent of their needs for care, including nursing care. Formerly, this accommodation and care was provided to each as an in-patient at a long-stay hospital funded by the local health authority; but, as part of the Government’s programme for better and more cost-efficient caring for the mentally disabled, the hospital was closed and the claimants were moved to private nursing homes. These appeals arise out of decisions concerning the claimants’ entitlement to payment of the care component of DLA whilst they have been resident in these nursing homes. However, the funding arrangements for the claimants’ placements at the homes are such that, broadly, if the care component is paid to the claimant, then it is paid on by him or her to the home in reduction of his bill (which is otherwise paid by the local health authority); and, if the care component is not paid, then the health authority also pays that part of the bill. Therefore, although the claimants do have some interest in these appeals – because of the implications of our decisions for their entitlement to the mobility component of DLA and to income support – the protagonists in respect of the primary issue are the Department for Work and Pensions (DWP) which is responsible for DLA and the local health authority which is responsible for the relevant National Health Service expenditure. Is the DWP required to pay part of the homes’ bills by way of the care component of DLA, or is the health authority required to bear the entire cost of the placements in the care homes?
3. At the hearing of these appeals, the Secretary of State for Work and Pensions was represented by Mr Jason Coppel of Counsel instructed by the Solicitor to the Department of Health and the Department for Work and Pensions. Ms Belinda Schwehr, a legal and training consultant on care and health law, represented the health authority (Wolverhampton Primary Care Trust as successor to Wolverhampton Health Authority) and the local authority (Wolverhampton City Council, formerly Wolverhampton Borough Council). The claimants were represented by Ms Helen Winfield, a senior welfare rights officer of the local authority’s Social Services Department. We are grateful to all three advocates for their helpful submissions.
4. The issues raised have required consideration of the statutory provisions under which the State ensures that those who need nursing care receive it. There was no dispute about the broad structure of that legislation, which is as follows.
The statutory scheme I: the duties and powers of health authorities
5. The National Health Service Act 1977 imposes a duty on the Secretary of State for Health to provide a comprehensive and free health service, including necessary accommodation and nursing services. In England, the Secretary of State’s functions under the Act are in practice normally exercised through local administration, in the form of a local health authority (established under section 8) or a local primary health trust (established under section 16A). The relevant local administration in this case in fact changed from a health authority to a primary care trust during the course of the relevant events; but the distinction between these forms of administration is irrelevant for the purposes of this appeal. We shall refer to the local administration simply as “the health authority” whatever its precise form from time to time.
6. Section 1 of the Act provides:
“(1) It is the Secretary of State’s duty to continue the promotion in England and Wales of a comprehensive health service … and for that purpose to provide or secure the effective provision of services in accordance with this Act.
(2) The services so provided shall be free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment, whenever passed.”
Section 3 provides:
“(1) It is the Secretary of State’s duty to provide throughout England and Wales, to such extent as he considers necessary to meet all reasonable requirements –
(a) hospital accommodation;
(b) other accommodation for the purpose of any service provided under the Act;
(c) … nursing … services; … ”
By virtue of these provisions, where there is a reasonable requirement for a person to be accommodated in a hospital or elsewhere because of the extent of his care needs in the form of nursing services, a health authority on behalf of the Secretary of State is bound to provide such accommodation free of charge. Section 65 authorises health authorities to charge for accommodation and services provided to private patients at National Health Service hospitals, but not otherwise.
7. By section 128(1), the term “hospital accommodation” has to be construed in accordance with the wide definition of “hospital” in that section, which includes “any institution for the reception and treatment of persons suffering from illness”. A care home can amount to a “hospital” where the resident requires and is provided with nursing services (Minister of Health v General Committee of the Royal Midland Counties Home for Incurables at Leamington Spa  1 Ch 530, Chief Adjudication Officer v White (reported as R(IS) 18/94) and Botchett v Chief Adjudication Officer (reported as R(IS) 10/96)). By the same definition section, the term “illness” means “mental disorder within the meaning of the Mental Health Act 1983 and any injury or disability requiring medical or dental treatment or nursing”. It is common ground that the claimants’ severe learning disabilities fall within this definition of “illness”, as they clearly do.
8. Section 23 allows the Secretary of State to arrange for a voluntary organisation or any other person to provide any service under the Act. Consequently, nursing services and hospital accommodation or other accommodation required in connection with the nursing services may be provided by placing the person concerned in a voluntary or a commercially-run care home.
9. The powers and duties of local authorities are entirely separate from the powers and duties of the Secretary of State and health authorities in relation to the National Health Service. In particular, Part III of the National Assistance Act 1948 gives powers to, and imposes duties on, local social services authorities to make arrangements for providing residential accommodation in certain cases. Section 21(1) provides:
“Subject to and in accordance with the provisions of this Part of this Act, a local authority may with the approval of the Secretary of State, and to such extent as he may direct shall, make arrangements for providing –
(a) residential accommodation for persons aged eighteen or over who by reason of age, illness, disability or any other circumstances are in need of care and attention which is not otherwise available to them; …”
Section 21(8) provides:
“Nothing in this section shall authorise or require a local authority to make any provision authorised or required to be made (whether by that or by any other authority) by or under any enactment not contained in this Part of this Act or authorised or required to be provided under the National Health Service Act 1977.”
This provision makes clear that the duty on a local authority to provide residential accommodation for a person because of care needs is a longstop; it only arises when the necessary care is not available to that person from elsewhere, for example from the National Health Service under the 1977 Act.
10. Section 26, despite the anachronistic wording of its side note, allows a local authority to make arrangements with anyone for the provision of this accommodation, so that under these provisions a person may be placed in a care home run on either a voluntary or a commercial basis.
11. Section 22 reflects the longstop nature of the provisions. It requires the local authority to recover the full cost of accommodation it has arranged from the person concerned so far as is possible, according to a statutory means test. If a person has sufficient resources to be able to meet the whole cost of accommodation in a care home, he is treated as self-funding and not eligible for assistance under Part III of the 1948 Act (Steane v Chief Adjudication Officer  1 WLR 1195 (also reported as R(A) 3/96)). If he is unable to pay at the standard rate, then the local authority is under a duty to assess his ability to pay, and determine what lower rate he shall be liable to pay (section 22(3)). However, under these provisions, it is the local authority that is acting in accordance with its longstop obligations. It is the local authority that pays for the accommodation and it is the local authority that recovers the cost from the resident.
12. Before deciding that the relevant needs call for the provision by a local authority of care services (including arrangements under Part III of the 1948 Act), section 47 of the National Health Service and Community Care Act 1990 requires the local authority to carry out an assessment of the relevant person’s needs. Again as a reflection of the longstop nature of the local authority’s obligations, if it appears that the person has needs that might be met by the National Health Service or a housing authority, the relevant health authority or housing authority has to be notified.
13. Prior to the Health and Social Care Act 2001, because under section 3 of the 1977 Act the Secretary of State could legitimately consider that, consistent with his long-term general duty to continue to promote a comprehensive free health service, it was not necessary to provide nursing services to a particular person, a local authority could provide such services to people to whom accommodation was provided under Part III of the 1948 Act (R v North and East Devon Health Authority ex parte Coughlan  QB 213). However, this was only permissible where the nursing services were merely incidental or ancillary to the provision of the accommodation and of a nature that an authority whose primary responsibility was to provide social services could be expected to provide; because, if the nursing services were key, then the Secretary of State would have been obliged to provide them as part of his 1977 Act duties, and the longstop obligations of the local authority would not have been triggered. The Secretary of State therefore had to form a tenable judgment as to whether it was necessary for him to provide such services given his duties under sections 1 and 3 of the 1977 Act. In practice, this judgment was made by a health authority in accordance with locally agreed eligibility criteria.
14. The Health and Social Care Act 2001 changed the position. Section 49 removed from local authorities the power to provide nursing care by a registered nurse. This came into force in relation to those paying substantial charges under section 22 of the 1948 Act on 1 October 2001 – when the National Health Service also started paying for nursing care required by self-funding residents (Department of Health Circular HSC 2001/17) – and it came fully into force on 1 April 2003. From that date, all nursing care for residents of care homes has been provided by the National Health Service under the 1977 Act, whether that care be key or merely ancillary.
15. Although local authorities now cannot fund nursing care to those resident in homes, health authorities remain empowered by section 28A(2) of the 1977 Act to make payments to local social services authorities “towards expenditure incurred or to be incurred by them” in connection with certain specified functions, including the provision of accommodation under Part III of the 1948 Act. With effect from 1 November 1999, the Health Act 1999 added section 28A(2A) which gives health authorities the power to make payments to local authorities towards expenditure incurred by them in connection with the performance of any of their functions that have an effect on the health of individuals; have an effect on, or are affected by, any National Health Service function; or are connected with any National Health Service function. Section 28A(5) and (8) requires a health authority when exercising such a power to comply with any conditions for payment prescribed by the Secretary of State. Therefore, although local authorities cannot now fund nursing care for those resident in care homes, health authorities can fund local authorities in relation to a wide range of other functions that may relate to health.
Entitlement to DLA and income support for those in hospitals or care homes
16. We are directly concerned only with the claimants’ entitlement to DLA. DLA is a non-contributory benefit for people who are so disabled that they need help to cope with their disability. It has two components, in respect of care and mobility.
17. It is necessary to set out in full only the relevant parts of regulations 8 and 9 of the Social Security (Disability Living Allowance) Regulations 1991 (SI 1991/2890) as amended, made respectively under what are now section 73(1)(b) of the Social Security Administration Act 1992 and section 72(8) of the Social Security Contributions and Benefits Act 1992. At the time with which we are concerned, so far as the care component was concerned, the regulations provided:
8(1) Subject to regulation 10, it shall be a condition for the receipt of a disability living allowance which is attributable to entitlement to the care component for any period in respect of any person that during that period he is not maintained free of charge while undergoing medical or other treatment as an in-patient –
(a) in a hospital or similar institution under the NHS Act of 1977, the NHS Act of 1978 or the NHS Act of 1990; or
(b) in a hospital or other similar institution maintained or administered by the Defence Council.
(2) For the purposes of paragraph (1)(a) a person shall only be regarded as not being maintained free of charge in a hospital or similar institution during any period when his accommodation and services are provided under section 65 of the NHS Act of 1977 or section 58 of, or paragraph 14 of Schedule 7A to, the NHS Act of 1978, or paragraph 14 of Schedule 2 to the NHS Act of 1990.
Persons in certain accommodation other than hospitals
9(1) Except in the cases specified in paragraphs (1A) to (4), and subject to regulations 9A and 10, a person shall not be paid any amount in respect of a disability living allowance which is attributable to entitlement to the care component for any period where throughout that period he is a person for whom accommodation is provided –
(a) in pursuance –
(i) of Part III of the National Assistance Act 1948; or
(ii) of Part IV of the Social Work (Scotland) Act 1968 or section 7 of the Mental Health Scotland Act 1984;
(b) in circumstances where the cost of the accommodation is borne wholly or partly out of public or local funds in pursuance of those enactments or of any other enactment relating to persons under disability or to young persons or to education or training;
(c) in circumstances where the cost of the accommodation may be borne wholly or partly out of public or local funds in pursuance of those enactments or any other enactment relating to persons under disability or to young persons or to education or training.
Regulation 9(6) provides that references in regulations 9 and 10 to the cost of the accommodation do not include the cost of domiciliary services in respect of a person in a private dwelling, or various other ancillary costs in respect of which grants or payments are made out of public funds. From 1 March 2002, sub-paragraphs (f) and (g) were added expressly to provide that the costs of any services provided under the 1977 Act and its Scottish counterpart are to be ignored for the purposes of assessing the costs of accommodation in regulations 9 and 10.
18. Regulation 8 is of potential relevance to these appeals because, as indicated above (paragraph 7), a nursing home can amount to a “hospital” for the purposes of the 1977 Act and consequently regulation 8. We will return to the proper scope of regulation 8 in due course.
19. In England and Wales, regulation 9(1)(a) applies only where accommodation is provided under Part III of the 1948 Act by the local authority itself, regulation 9(1)(b) applying if the local authority makes arrangements for a person to be accommodated in a private care home. Regulation 9(1)(b) also applies if the cost of accommodation is borne under some provision other than Part III of the 1948 Act, provided that the enactment relates to a person under disability or to young persons or to education or training. Regulation 9(1)(c) was revoked from 6 October 2003, but it is common ground that it was of little importance before then because, as explained above (paragraph 9), Part III of the 1948 Act is a provision of last resort so there can be few if any circumstances in which it can be used but is not. It was suggested in the present appeals that regulation 9(1)(c) might have applied if, instead of Part III of the 1948 Act, some other power not falling within regulation 9(1)(b) had been exercised by the local authority; but, for reasons that will become apparent, it is not necessary for us to decide whether any such power might exist.
20. From 6 October 2003, regulation 10(8) was amended as follows:
“Regulation 9 shall not apply in any particular case for any period during which –
b) the whole of the cost of the accommodation is met –
(i) out of the resources of the person for whom it is provided, or partly out of his own resources and partly with assistance from another person or a charity; or
(ii) on his behalf by another person or a charity.”
Again, in relation to Part III of the 1948 Act, that provision does not add a great deal to the decision in Steane (see paragraph 11 above).
21. Turning to the mobility component, regulation 12A (which came into effect on 31 July 1996) has the same effect in relation to the mobility component as regulation 8 has in respect of the care component (i.e. the mobility component is not payable to those being maintained by the National Health Service in a hospital or similar institution); but regulation 12B(4) disapplies regulation 12A in the case of a person who was entitled to the mobility component while being maintained by the National Health Service in a hospital or similar institution for a year before 31 July 1996 and has remained so maintained continuously since then. There is no equivalent to regulation 9 that relates to the mobility component.
22. Entitlement to income support is also affected if the claimant has been maintained free of charge for more than 52 weeks while undergoing medical or other treatment as an inpatient in a hospital or similar institution under the 1977 Act (i.e., the same circumstances that bring regulation 8 of the 1991 Regulations into play: see the definition of “patient” in regulation 21(3) of the Income Support (General) Regulations 1987 (SI 1987/1967), which refers to regulation 2(2) of the Social Security (Hospital In-Patients) Regulations 1975). Regulation 21 of, and Schedule 7 to, the 1987 Regulations provide for a reduction in the claimant’s applicable amount. Regulation 21 and Schedule 7 used also to make special provision where accommodation was provided under Part III of the 1948 Act in a care home not owned by the local authority. As we are not directly concerned with income support it is unnecessary to set out the legislation in detail. However, it is necessary to summarise the income support position of these claimants so that the background of these cases can be properly understood. As regards both DLA and income support for a single claimant, the overall effect of maintenance under the 1977 Act and under the 1948 Act respectively is as follows.
23. If the claimant is maintained as a long-term patient or resident in a hospital or similar institution (including a nursing or care home) under the 1977 Act, he is not entitled to either component of DLA. On current figures, his applicable amount for income support purposes after 52 weeks is only £16.40 per week (which might be reduced in certain extreme circumstances that do not arise in this case); so that, if he has no other resources, that is the amount of income support he will receive. That is effectively “pocket money” which the resident is allowed to keep; and the scheme is consistent with the notion implicit in the 1977 Act of “free health care”, i.e. that that the whole of the cost of the reasonably necessary accommodation and care is borne by the National Health Service.
24. On the other hand, if the claimant is a resident maintained under Part III of the 1948 Act in accommodation that is not owned by the local authority, the mobility component of DLA is payable if the claimant satisfies the usual conditions set out in section 73 of the Social Security Contributions and Benefits Act 1992 (and, if payable, will be kept by the resident to assist him cope with his mobility difficulties); but the care component is not payable because of the effect of regulation 9 of the 1991 Regulations. His applicable amount for income support purposes will generally be the amount for a single person with the disability premium (currently a total of £80.05 per week for a person aged between 25 and 60). Because the care component is not payable, the income support applicable amount does not include the premiums usually applicable to severely disabled claimants (although, before it was phased out between 2002 and 2003, a residential allowance would also have been included in the applicable amount). The statutory means-test under the 1948 Act (provided for in the National Assistance (Assessment of Resources) Regulations 1992 (SI 1992/2977) as amended) disregards any mobility component of DLA but does not disregard income support (save for housing costs, which are not applicable to a long-term resident.) If the claimant has no other resources, the amount of income support he receives will be equal to the applicable amount; but that will have to be paid on to the local authority under section 22 of the 1948 Act, save for £18.80 per week or such other sum as a local authority may in special circumstances consider appropriate for personal requirements (section 22(4) and the National Assistance (Sums for Personal Requirements) (England) Regulations 2001 (SI 2001/1005) as amended). Again, this is “pocket money” which the resident is allowed to keep together with any mobility component of DLA.
25. DLA is a non-means-tested benefit. Therefore, although resources that disentitle a self-funding resident from assistance under the 1948 Act are likely also to disentitle him from income support, he will be eligible for both components of DLA on the basis of the usual statutory criteria.
The evidence and submissions before the appeal tribunal
26. As we have indicated, all three of the claimants suffer from severe learning difficulties. They are incapable of managing their own affairs and have appointees for social security purposes. Each has required special accommodation because of the extent of the care he or she requires. They were formerly long-stay patients in National Health Service hospitals but now live in nursing homes.
27. We will need to deal in some detail with the benefit history of each claimant, and also with the form of and authority for the payment of the claimants’ accommodation and care costs in the nursing homes.
28. However, in practice, those costs were paid for as follows. While the claimants were in National Health Service hospitals, accommodation and care were effectively paid for by the health authority. When the claimants moved to their respective private nursing homes, the health authority, local authority and homes entered into a funding arrangement. The health authority agreed to pay to the local authority all of the costs levied by the home in respect of each claimant, save for an amount calculated on the basis of the benefits (DLA and income support) to which the health authority considered each claimant was entitled less only the mobility component of DLA and an amount equal to the “pocket money” a claimant would be entitled to keep if accommodated under Part III of the 1948 Act. Although there were some invoices passing between the health authority and the local authority, and the local authority and the home, the local authority merely passed any money it received from the health authority to the relevant home. Under the arrangement, the local authority could not become liable for any amount other than that which it received from the health authority, nor could it become the recipient of any financial benefit as a result of the arrangement. Inevitably, the arrangement was financially neutral so far as the local authority was concerned. Any social security benefits that were received by any claimant (save for the elements referred to above) were payable to the home. The claimants were billed by the home for an amount in the sum of these benefits but, if there was any shortfall for any reason, then the health authority would in practice pick up that shortfall and make it good to the home through the local authority. Furthermore, if a claimant died or moved from a nursing home, the health authority continued to make payments until the vacancy was filled. Therefore, it was the intention that neither the local authority nor the claimants had any real financial interest in these arrangements; insofar as the home’s costs for each claimant were not paid by benefit, the health authority paid them. This was the reason why the claimants knew nothing of the substance of these arrangements at all.
29. We now turn to the claimants’ benefit history. The first two claimants claimed DLA in 1992, shortly after the benefit was first introduced and when they were long-stay patients in a National Health Service hospital. It appears that it was decided that they were entitled to the middle rate of the care component and the lower rate of the mobility component, but payment of the care component was suspended because they were in hospital. After they had moved to the nursing home on 27 February 1997, new claim forms were submitted which were treated as applications for review of the earlier suspension decisions effective from 2 April 1997 and 5 March 1997 respectively. Only one of those claim forms survives, and from that it appears that initially the Benefits Agency was informed that the nursing home received payments from the health authority. However, a representative of the local authority subsequently indicated that the claimants were being accommodated under Part III of the 1948 Act, and it was on that basis that it was decided that the payment of the care component to both claimants should remain suspended. The income support they were paid was also consistent with the understanding that they were being accommodated under Part III. It appears that the latest decisions in respect of DLA were not made until 18 August 2000; although it is possible that there were earlier decisions and that the decisions in 2000 were decisions not to revise or supersede them.
30. In any event, on 12 March 2001, the claimants’ appointee wrote to the DWP to ask for a revision of the suspension decisions in respect of both claimants and also another claimant whose case is not before us. It was submitted that the accommodation was not provided under Part III of the 1948 Act because the claimants were able to pay for it out of their social security benefits; and that neither the local authority nor the health authority made any contribution to the cost of their individual placements but rather the health authority contributed to the running costs of the home “by making a section 28A (NHS Act 1977) grant payment”.
31. For some reason, initially only the request of the claimant who is not before us was processed. The claim was refused, but on 26 November 2001 an appeal was allowed on the ground that the claimant had “always been self-funding”. The tribunal had before it the documents we have from the local authority confirming that the information given earlier to the effect that the claimants were accommodated under Part III of the 1948 Act was erroneous; and from the health authority stating that the health authority made a grant payment under section 28A of the 1977 Act to the local authority who then used it to contribute to the general running costs of the nursing home rather than to support an individual resident. It was also stated in a health authority’s letter that the administrative arrangements were that the nursing home invoiced the local authority and the health authority then reimbursed the local authority on receipt of an invoice (presumably from the local authority). There is evidence that the Secretary of State intended to challenge the tribunal’s decision, but he did not do so within the time allowed.
32. The Secretary of State eventually refused the claims of the first two claimants whose cases are before us.
33. The claimants appealed on the ground that the payments from the local authority to the homes were not made under Part III of the 1948 Act, as evidenced by the absence of (i) the assessments of care needs required by section 47 of the 1990 Act, and (ii) the assessment of means required by section 22 of the 1948 Act. They submitted that, instead, in making payments to the home the local authority had been acting under one of two other statutory provisions, i.e. section 137 of the Local Government Act 1972 or section 2 of the Local Government Act 2000. With a side note of “Power of local authorities to incur expenditure for certain purposes not otherwise authorised”, section 137(1) of the 1972 Act provides:
“A local authority may, subject to the provisions of this section, incur expenditure which in their opinion is in the interests of, and will bring direct benefit to, their area or any part of it or all or some of its inhabitants, but a local authority shall not, by virtue of this subsection, incur any expenditure –
(a) for a purpose for which they are, either unconditionally or subject to any limitation or the satisfaction of any condition, authorised or required to make any payment by or by virtue of any other enactment …”
Under the heading “promotion of well-being”, section 2(1) of the 2000 Act provides:
“(1) Every local authority are to have power to do anything which they consider is likely to achieve any one or more of the following objects–
(b) the promotion or improvement of the social well-being of their area
(3) In determining whether or how to exercise the power under subsection (1), a local authority must have regard to their strategy under section 4.
Section 4 requires every local authority to prepare a community strategy for promoting or improving the economic, social and environmental well-being of their area and contributing to the achievement of sustainable development.
34. The Secretary of State resisted the appeals, on the basis that:
(1) When the arrangements were initiated, section 28A only permitted a health authority to assist a local authority with certain statutory functions, of which Part III was the only possibly relevant one. Accordingly, it was submitted, if the local authority was making payments to the nursing home from funds supplied by the health authority under section 28A (as both the local authority and the health authority said they were), it could only be doing so under Part III of the 1948 Act – which, of course, was what the local authority had originally stated the position to be. Regulation 9 therefore applied to disentitle the claimants to the care component of DLA.
(2) Section 137 of the 1972 Act had not been available to the local authority because it did not authorise expenditure for a purpose for which it was authorised or required to make a payment by any other Act (see section 137(1)(a)), whereas here Part III of the 1948 Act authorised or required the payments.
(3) The scope of section 2 of the 2000 Act did not extend to the duplication of powers contained in Part III of the 1948 Act.
35. Meanwhile, on 25 October 2001, the third of the claimants whose appeals are before us went to live in a nursing home. He had originally been residing in the same hospital as the other two claimants but he had latterly been living in a different hospital and it appears that he had been in other accommodation between 1980 and 1997. In particular, between 1987 and 1997 he was living in a local authority care home, which was presumably accommodation provided under Part III of the 1948 Act. The same local authority and health authority were involved with all three claimants and, although the third claimant was transferred to a different nursing home, the same arrangements with that home were adopted.
36. The third claimant too had been awarded the middle rate of the care component and the lower rate of the mobility component of DLA from dates before 31 July 1996. However, it appears that payment of both care and mobility components had been suspended while he was in hospital between 1997 and 2001, which we infer was because he had previously been living in a local authority home and therefore did not have the same transitional protection under regulation 12B(4) of the 1991 Regulations in respect of the mobility component as did the other two claimants. Following his move in 2001, it was decided that the mobility component should be paid again from 3 January 2002 (the date when the Secretary of State considered that he had first been informed of the move) but that payment of the care component should remain suspended from 31 October 2001 (the first Wednesday after his move).
37. The claimant appealed on the same grounds as the other two claimants and the three appeals were eventually heard together on 12 February 2003. The tribunal allowed the appeals on the basis that in each case it was more probable than not that the local authority had been acting under either section 137 of the Local Government Act 1972 or section 2 of the Local Government Act 2000, rather than under Part III of the 1948 Act, and that in those circumstances there was no bar to the payment of DLA.
38. The Secretary of State now appeals against the tribunal’s decisions with the leave of Miss Commissioner Fellner. The Chief Commissioner certified the cases as raising issues of special legal difficulty, and consequently he directed that they should be dealt with by a Tribunal of Commissioners. At the same time, he invited the local authority and the health authority as interested parties to attend the oral hearing and make submissions. The consequence was that Ms Schwehr was instructed on behalf of both authorities, and the basis of the cases advanced by the authorities changed very considerably.
The new evidence and submissions before the Commissioners
39. As a reflection of the real protagonists in this case, resistance to the appeal has been led by the health authority, although with the support of the local authority and the claimants.
40. Initially, the appeals against the tribunal’s decisions were resisted on the grounds argued before the tribunal. However, the appellant Secretary of State then wrote to the health authority asking a number of detailed and pertinent questions about the financial arrangements made between the health authority and the local authority, and requesting disclosure of relevant documentary evidence. Among other matters, not unreasonably the Secretary of State wished to see documentary evidence of compliance with directions made by the Secretary of State for Health under section 28A(5) of the 1977 Act, as was required when making a payment under section 28A. He also wished to know whether the basis upon which payments had been made had changed at any time since 1997.
41. After a delay of some months, the Secretary of State received a response on behalf of both the local authority and the health authority to the effect that there was no contemporaneous documentary evidence as to the basis of the arrangements made by the authorities although there were some invoices and records of payments available. However, the authorities’ understanding of the arrangements was set out in detail, as follows:
“(a) The [health authority] agreed to pay grant aid under s28A to each of the nursing homes that were to accommodate former long-stay hospital patients. The s28A grant aid was intended as a contribution towards the general running costs of the homes. It was intended that the residents (or any relatives/carers acting on their behalf) would individually contract with the homes and would be individually responsible for meeting the fees required by the homes. The [health authority] agreed to provide s28A grant aid to each of the homes so that they would be able to offer accommodation to each of the residents/former patients at rates they might reasonably be expected to pay from their own incomes on a self-funding basis. The amount of the grant was intended to represent any shortfall between the costs to the home of providing the accommodation and care and the amount that the residents/former patients might reasonably be expected to pay from their own incomes. This amount was based on a general assumption about the weekly rates of benefits each resident would be expected to receive, less any DLA mobility component, and less an amount equivalent to the personal expenses allowance which other residents in care homes might be expected to keep for themselves. The anticipated/projected incomes of the residents were banded according to general assumptions about the benefit levels payable to different claimant groups (e.g. higher rates were expected for claimants aged 60 or over).… No individual financial assessments were ever undertaken. If, for whatever reason, a resident was not able to pay their full banded fee, the [health authority] undertook to increase the s28A grant aid towards the running costs of the home by amounts equivalent to the shortfalls, at least until these difficulties could be resolved (e.g. where, as in the case of each of the respondents …, DLA has been withdrawn pending the outcome of these appeals). If, however, a resident had additional resources at her/his disposal (e.g. s/he had substantial capital assets) s/he was not expected to contribute any more than the banded fee. (Indeed, it is known that a number of residents accommodated in homes where s28A grants were paid have had and do have substantial capital assets yet are still only expected to pay the same rates as other residents within their band, although I am not aware that [any of the present claimants has] any significant assets at their disposal). The criteria for calculation of the sum to be paid has remained the same ever since the former long-stay patients took up residence in the homes, and the amounts have changed only to the extent that (due to annual up-ratings etc) the anticipated benefit incomes have varied.
(b) It was decided that s28A grant aid should be paid to any nursing home that accommodated any former long-stay hospital patient who had severe learning disabilities (and/or mental health difficulties) and who, in the opinion of the [health authority], should more appropriately be accommodated in a nursing home so long as the [health authority] was satisfied that the s28A payment would be likely to secure a more effective use of funds than the deployment of an equivalent amount on the provision of services under s3(1) the NHS Act 1977 in hospital. The large majority of individuals in respect of whose needs it was decided that s28A grant aid should be payable by the [health authority] were those former long-stay patients at [a named hospital], although a smaller number were previously patients in other long-stay hospitals. Essentially, however, the criteria for selection was entirely dependent on the [health authority] acknowledging that it had a responsibility for them and that s28A grant aid should be deployed in meeting their needs more appropriately than in hospital. This has been consistent with a national programme to promote the resettlement of former long-stay hospital patients with severe learning disabilities. The [claimants in the first two cases] had, along with a large number of other long-stay residents at [the hospital], been identified by [the health authority] as in need of reprovision some years before 1997, but it took until 1997 before suitable arrangements could be made for them. The [third claimant] had also been identified by [the health authority] as in need of reprovision some years before 2001, although it took until 2001 before suitable arrangements could be made for him.
(d) s28A grant aid is currently paid to assist a range of different nursing homes to provide accommodation for up to 77 residents. To date, 74 residents are accommodated and, due to vacancies, further accommodation is also available for 3 more residents should it be required (s28A grant aid is paid regardless of whether a room is occupied or vacant). For demographic reasons, there is a continuing, albeit slow, growth in the numbers of residents for whom s28A grant aid is used.
42. On the basis of this evidence, Mr Coppel for the Secretary of State submitted that, however one viewed the arrangements made by the health authority and the local authority, “the cost of the accommodation was borne wholly or partly out of public or local funds” and fell within the scope of regulation 9(1)(b) even if it did not fall within the scope of regulation 9(1)(a) (which in our view it did not, because the nursing homes were not owned by the local authority). Alternatively, if the enactment pursuant to which the cost was borne was not an “enactment relating to persons under disability”, the case fell within regulation 9(1)(c) because the cost could have been borne under Part III of the 1948 Act even if it was in fact borne under some other enactment. On any view, the submission went, the Secretary of State’s appeals were bound to succeed because the circumstances fell within one or another paragraph of regulation 9(1) such that the care component of DLA was not payable to any claimant during their period in their nursing home.
43. On the basis of the evidence and submissions of the health authority and local authority to that date, this submission appeared to have some merit, as the authorities themselves recognised. This prompted them to abandon reliance upon their submissions based on section 28A of the 1977 Act and section 137 of the 1972 Act, and the relegation of their submissions based on section 2 of the 2000 Act to a mere alternative to a new primary submission.
44. The new submission – made on behalf of both the health authority and the local authority, and supported by the claimants – was that the local authority had merely been acting as a conduit for sums of money that the health authority had been paying to the nursing home. It was submitted that the payments were made by the health authority under sections 3(1)(c) and 23 of the 1977 Act in order to provide the claimants with nursing services. These payments were made through the local authority because local authorities were encouraged to assist health authorities by making available their computerised payments systems and they had the power to do so under section 1 of the Local Authorities (Goods and Services) Act 1970. The claimants, it was submitted, were responsible for the costs of their accommodation, which they met from their benefits.
45. This submission was supported by further evidence in the form of letters from the local authority to the effect that payments made to the nursing homes had been made on behalf of the health authority, that social work assistance at the time of the first two claimants’ move to the nursing home had been provided only to assist the health authority carry out their responsibilities and that the accommodation had been secured by the health authority and not by the local authority. We were told by Ms Schwehr who had investigated the position – and we accept – that the local authority case files for the claimants did not contain any of the documents (contracts, assessments and so on) that would or should have been there had arrangements been made by the local authority under Part III of the 1948 Act. We were also told – and again accept – that the health authority files contained no contemporaneous evidence as to the arrangements. However, a recent note written by the health authority’s Head of Finance (Primary Care), who had been the Assistant Director of Finance at the relevant time, stated as follows:
“The contracts with [the nursing home] were agreed by [the special projects manager of the health authority] as part of the [hospital] resettlement.
The amounts for these contracts were agreed in negotiation by [the special projects manager] working with the resettlement team, and notified to me in the finance department of the Health Authority.
The amounts agreed represented the anticipated gross cost less any benefit that the clients were believed to be entitled to at the time which, after deducting an amount for a personal allowance, would be paid to the care home for their accommodation.
[The health authority] notified [the local authority] of what should be paid, through Payment Mandate Schedules … and the Council made the payment.
I thought I was agreeing to spend this money by way of an overall section 28A agreement, on the basis that [the local authority] could pass this money on to the homes for the HA. I did not take legal advice at the time.
It was the general belief at the time that the point of doing it this way, rather than purchasing full care home places for the patients after they left the hospital, was that it would meet the dual objectives of minimising the re-settlement cost to the HA, whilst fulfilling the governmental expectation that long-stay hospitals be phased out.
If it had been appreciated that there was an alternative means of procuring the necessary ongoing specialist care for these clients, by use of a formal NHS contract with the homes, to supplement the provision their benefits directly purchased, based on their residence in a registered setting, I can think of no reason why the HA would have objected to using those means, in conjunction with use of the Council’s established payment system.”
46. Mr Coppel criticised this submission as not only altering the legal basis of the authorities’ case, but as attempting to rewrite the history of the arrangements – because, he submitted, the evidence was clear that the health authority had thought they were making (and the local authority had thought that they were receiving) payments under section 28A. At least until section 28(2A) came into force, receipt by the local authority of money under section 28A in these circumstances necessarily implied expenditure by them under Part III of the 1948 Act. He submitted that the health authority should be taken to have made the necessary arrangements with the nursing homes on behalf of the local authority and to have done on its behalf the necessary assessment of the claimants’ care needs under section 47 of the 1990 Act and the necessary assessment of their means under section 22 of the 1948 Act; but that, even if the required assessments had not been made, the arrangements still had to be regarded as made under Part III of the 1948 Act. On any view, he submitted, regulation 9 must apply.
The error in the appeal tribunal’s decisions
47. It is now conceded on behalf of the claimants that the tribunal’s decisions are erroneous in point of law. We agree.
48. First, the tribunal erred in the manner in which it dealt with the relationship between section 28A of the 1977 Act, and Part III of the 1948 Act.
49. The tribunal found that the arrangements made by the local authority were funded by the health authority under section 28A of the 1977 Act. However, having made that finding, the tribunal failed to address the Secretary of State’s argument that, at least until 1 November 1999, the only relevant powers under which the local authority could have acted when applying those funds were those in Part III of the 1948 Act. The arrangements for the first two claimants had been made in 1997 and there was no evidence that the legal basis of the arrangements for those claimants had changed. It had also been asserted by the authorities that the third claimant was accommodated under the same arrangements as the other two. On the basis that the local authority was funded under section 28A, there was therefore a most powerful argument for finding that Part III powers had in fact been used during the periods in issue before the tribunal, an argument that the tribunal failed to address.
50. Conversely, if the tribunal was right to hold that Part III powers had not been used by the local authority in making payments to the home, that raised the question whether the local authority really had been funded by the health authority under section 28A of the 1977 Act; and, if not, the further issue of whether the health authority should be regarded as having funded the accommodation of the claimants itself (rather than assisting the local authority), so that regulations 8 and 12A came into play rather than regulation 9. Neither issue was considered by the tribunal, as it ought to have been.
51. Second, in respect of the payments made by the local authority to the homes, the alternative powers identified by the tribunal each had fatal flaws.
52. Section 137 of the Local Government Act 1972 (the only power of the alternatives that was in force before 18 October 2000) was not available to the local authority precisely because, as the Secretary of State had submitted, the powers under Part III of the 1948 Act were available. As indicated above (paragraph 33), section 137(1)(a) makes clear that it provides a power in a local authority to incur expenditure for certain purposes “not otherwise authorised”. Furthermore, it is to be noted that, as Mr Coppel submitted, since 18 October 2000 section 137 has in any event applied only to parish and community councils.
53. It is unnecessary for us to consider whether the other power identified by the tribunal (section 2 of the Local Government Act 2000) might have authorised the local authority to make arrangements for accommodating these claimants at some time after 18 October 2000 and, if so, whether it is an “enactment relating to persons under disability” so as to bring regulation 9(1)(b) into play, or whether acting under that power rather than under Part III of the 1948 Act would have brought regulation 9(1)(c) into play. Suffice it to say that the provision was not in force when the arrangements were first entered into and there is no evidence that the legal basis of the local authority’s arrangements had altered since 18 October 2000. Moreover, section 2(3) requires a local authority to have regard to a community strategy prepared by it under section 4 before exercising the power under section 2. In this case, there is no evidence that the local authority had even got as far as preparing a community strategy before the Secretary of State made his decisions on the payability of DLA, far less that any regard was had to it.
54. On these grounds, the tribunal’s decision is erroneous in point of law. It misconstrued the relevant legislation and reached a conclusion that was not supported by adequate reasoning or even by adequate evidence. Accordingly, we set the tribunal’s decision aside and make our own findings and determination of the relevant issues in the light of the more substantial evidence before us.
Was the accommodation provided under Part III of the 1948 Act?
55. On the evidence, there is no doubt that the health authority and the local authority had section 28A of the 1977 Act in mind when the arrangements for accommodating the claimants in the nursing homes were made. Ms Schwehr and Ms Winfield made no suggestion to the contrary. For the reasons given above, if the payments by the health authority to the local authority were made under section 28A, then the onward payment to the homes must have been made under Part III of the 1948 Act – and, consequently, the care component of DLA would not be payable because of the effect of regulation 9(1)(b). However, we agree with Ms Schwehr that the contemporaneous understanding of an authority and its officers is not necessarily determinative. In identifying the powers under which an authority has acted – and, indeed, whether it has acted with proper authority – it is more important to have regard to the substance of what is done in the light of the powers available to the authority, than to the form and to the contemporaneous understanding of individuals.
56. In the present case it is particularly significant that the health authority accepts – on the facts we consider inevitably, but nonetheless against its interests – that it has at all material times been responsible for the arrangements for caring for the claimants. Not only was this conceded at the hearing, the responsibility was acknowledged in the evidence submitted by the two authorities in response to the Secretary of State’s request for information (quoted in paragraph 41 above). It is clear that, when they were in hospital, these claimants had substantial nursing requirements and required accommodation as a result. The fees paid to the nursing home (£925 per week per person, in addition to payments made by the claimants from their income support payments) are consistent with the purchase of substantial nursing care rather than mere residential care (which Ms Schwehr told us currently costs an average of about £336 per week for a person with learning difficulties in the local area).
57. In the absence of any evidence of any assessment against the health authority’s eligibility criteria resulting in a decision that they should no longer be regarded as having such needs, either at the time of transfer to a nursing home or thereafter – indeed, it was not suggested by Ms Schwehr that any assessments took place – we are quite satisfied that no such assessment took place in respect of any claimant. The assessment of a person’s care needs is no mere formality. It is obviously important that such needs are properly assessed so that they can be properly met. Assessment is also important from an administrative point of view, as it justifies the subsequent expenditure and implies a duty periodically to reassess the person’s needs, to ensure that the expenditure is still justified. The continuing liability for expenditure also implies a duty periodically to ensure that the services purchased still represent good value for money. When a patient has been assessed as requiring accommodation because of the extent of his nursing needs, it is clear from Coughlan that the burden of reassessment – and the burden of deciding whether the claimants no longer need nursing services – falls upon the health authority. This must particularly be so where the patient suffers from a condition that over time is unlikely to improve to a significant extent. In the absence of any such assessment, the health authority remains liable to arrange for those needs to be met and cannot lawfully pass responsibility for a patient to a local authority. This is of course for good reason because, unlike health authorities, local authorities formerly had limited power and now have no power to purchase nursing services for people living in private care homes. Without a positive assessment that a person has no continuing requirement for substantial nursing services, a transfer of responsibility of that person from health authority to local authority may result in a requirement for nursing care not being met.
58. Therefore, we consider the concession by the health authority in these appeals that at all material times it remained responsible for the care of the claimants was well made. Indeed, it was made plain at the hearing that understandably the local authority would not have considered it appropriate to accept responsibility for these claimants, having regard to the claimants’ nursing needs and to section 21(8) of the 1948 Act.
59. Given that the health authority understood that it remained responsible for the care of the claimants – which necessarily involved nursing care to such an extent that residential accommodation was required – what was the intention of the arrangements into which it entered with the local authority and the homes? In the absence of contemporaneous documents, it is impossible to be certain as to exactly what the authorities thought they were doing but it appears that the health authority wished to transfer as much as possible of the cost of caring for these claimants to the Department of Social Security, as it then was. This is reflected in the evidence of the health authority’s Head of Finance (that one objective was to minimise the resettlement costs to the health authority: see paragraph 45 above). It is inconceivable that the health authority would not have known that that it could purchase accommodation in nursing homes under sections 3 and 23 of the 1977 Act; but it would also have known that the patients concerned would then not be entitled to income support (except for the “pocket money” figure) which could have reduced the health authority’s costs at the expense of the DWP.
60. The language used in some of the documents supports the submission of Ms Schwehr that the health authority wished as far as possible to have an arrangement similar to that in the case of Steane. In that case, it had been decided that the claimant was self-funding when she was able to meet from her own resources the whole of the charge levied by a care home, notwithstanding that the charge was lower than it might otherwise have been because the home received a substantial grant from a local authority under section 65 of the Health Services and Public Health Act 1968. It is open to a health authority to make payments under section 28A to a local authority to enable the latter to make a grant to a home under section 65 or to make payments directly to a home under section 64 of the 1968 Act. However, sections 64 and 65 enable grants to be made only to voluntary homes and not to commercially-run homes. The only way the local authority could make payments to the homes in these cases was under Part III arrangements and, of course, it was perfectly proper for the health authority to make payments under section 28A to enable the local authority to do so. The problem facing the authorities and which they never resolved was that, if the claimants required full nursing care, the local authority was precluded by section 21(8) of the 1948 Act from making arrangements under Part III of that Act. The responsibility lay with the health authority. It is unclear whether the authorities failed to notice this problem – they might have each been proceeding on different assumptions – or whether they noticed it but chose to ignore it. The lack of documentation can be regarded as consistent with a generally amateurish approach to public administration by both authorities, but it can equally be regarded as consistent with a realisation on their part that they were attempting to do something which was not lawfully possible under the statutory provisions under which they wished to act. It is unnecessary for us to determine which view represents the truth. Neither case reflects well on the authorities.
61. Whatever the authorities’ precise understanding, we accept that the arrangements in the present cases were not made under Part III of the 1948 Act. The evidence suggests that, in relation to the funding arrangements, the substantive parties were the health authority and the homes. Save for those which might be derived from social security benefits, all the public funds were derived from the health authority; and it was always intended that the local authority would never actually incur any expenditure for which it would not be reimbursed by the health authority or have any real financial interest in the arrangements at all. In those circumstances, we accept Ms Schwehr’s submission that the local authority acted merely as a conduit for the health authority’s payments – which, perhaps fortuitously, was lawful under section 1 of the 1970 Act – and that the payments made through the local authority must be regarded as payments lawfully made by the health authority to the nursing homes in satisfaction of their duty to the claimants under sections 3 and 23 of the 1977 Act.
62. Regulation 9 is consequently not applicable; but the conclusion we have reached does raise the question whether regulation 8 applies.
63. By way of reminder, regulation 8(1) and (2) provides:
“(1) Subject to regulation 10, it shall be a condition for the receipt of a disability living allowance which is attributable to entitlement to the care component for any period in respect of any person that during that period he is not maintained free of charge while undergoing medical or other treatment as an in-patient –
(a) in a hospital or similar institution under the NHS Act of 1977, the NHS Act of 1978 or the NHS Act of 1990; or
(b) in a hospital or other similar institution maintained or administered by the Defence Council.
(2) For the purposes of paragraph (1)(a) a person shall only be regarded as not being maintained free of charge in a hospital or similar institution during any period when his accommodation and services are provided under section 65 of the NHS Act of 1977 or section 58 of, or paragraph 14 of Schedule 7A to, the NHS Act of 1978, or paragraph 14 of Schedule 2 to the NHS Act of 1990.”
64. In the light of White and Botchett (referred to in paragraph 7 above), it is clear that a nursing home can amount to a “hospital” for the purposes of regulation 8 and that a person who has severe learning difficulties and is consequently receiving nursing care is “undergoing medical or other treatment” for the purposes of that regulation. The terms have to be construed in a way that is consistent with the definitions in section 128 of the 1977 Act. It is also common ground before us that the words “under the NHS Act of 1977”, in paragraph (1)(a), qualify the words “maintained free of charge while undergoing medical or other treatment as an in-patient” rather than describing the “hospital or similar institution”.
65. Ms Schwehr, however, submitted that the claimants were not “maintained” in the nursing homes because the health authority paid only for the nursing costs and the claimants were charged and (through their benefits) paid for their accommodation. She submitted that regulation 8 as well as regulation 9 is concerned with accommodation. For this proposition, she relied upon the decision of Mr Commissioner Howell QC in CIS/3325/2000, in which he held that, for income support purposes, a person is not “maintained free of charge” in a nursing home unless his accommodation and basic necessities for everyday living are being paid for. She was obliged to concede that, because the claimants were legally incompetent, as the health authority well knew, they could acquire liabilities only under the doctrine of necessaries. She also conceded that the implication of the claimants having responsibility for paying for accommodation would be that it would effectively fall on them, rather then the health authority, to consider from time to time whether the accommodation still represented value for money.
66. Mr Coppel did not accept that the health authority was paying only nursing costs, given the relatively small proportion of the fees that could be met by the claimants from their social security benefits even if the care component of DLA was payable but, in any event, he submitted that the object of both regulation 8 and regulation 9 was to prevent overlap between the provision of actual care through public funds and the provision of the care component of DLA through which a claimant may purchase care. It would be odd, he suggested, if regulation 8 did not apply where nursing costs were met, even if accommodation costs were not. Nonetheless, he doubted whether the claimants were maintained “free of charge” within the meaning of regulation 8.
67. In our judgment, Ms Schwehr’s submission fails on two grounds.
68. The first is that, as Mr Coppel submitted, the assessment of the charges was a sham. There was no attempt to calculate the cost of services other than nursing, and it is admitted that the charges were related only to what it was thought that the claimants would receive by way of benefits on the assumption that they had no resources.
69. But there is a more fundamental objection to Ms Schwehr’s analysis. We do not consider that the health authority was entitled to pass responsibility for the payment for the accommodation to the claimants in the way that she suggested.
70. In our judgment, the legislation does not contemplate accommodation costs being separated from nursing costs. Given the definition of “hospital” in the 1977 Act, being maintained in a hospital necessarily involves being provided with medical or nursing care, just as the provision of accommodation under Part III of the 1948 Act necessarily involves the provision of the “care and attention” the person’s need for which justifies the provision of the accommodation. It is only when a need for treatment (including nursing services) or other care requires the claimant to be in special accommodation that regulations 8 and 9 bite. The regulations are therefore concerned with contributions from public funds to the global cost of accommodation and care. As Mr Commissioner Howell held in CIS/3325/2000, a person is being maintained free of charge while undergoing medical or other treatment as an in-patient only if his accommodation and basic necessities are being provided free of charge as well as the medical or other treatment (paragraphs 37 to 8). It follows that, as Mr Coppel submitted, the real question in this case is whether a claimant can be regarded as maintained “free of charge” when only part of the overall cost of his accommodation and nursing is met from public funds.
71. Where regulation 9 is in issue, provision by a public authority of part of the package of accommodation and care is enough to bring a person within the scope of the regulation. That is made clear by the use of the phrase “wholly or partly” in subparagraph (1)(b) and also by the specific exclusion in paragraph (6) of such items as domiciliary services and, now, services provided pursuant to the 1977 Act, which would otherwise be unnecessary.
72. The structure of regulation 8 is different but, in our judgment, the same result obtains. Paragraph (1) of regulation 8 applies only if a person is maintained “free of charge” but paragraph (2) has the effect that a person is always to be regarded as maintained free of charge when maintained in a hospital or similar institution under the 1977 Act unless he is a private patient in a National Health Service hospital or the only element of maintenance is the provision of goods and services for which charges may be levied under paragraph 14 of Schedule 2 to the National Health Service and Community Care Act 1990. Thus, as was held in paragraph 11 of R(IS) 7/92, it is plain that, where regulation 8 is capable of applying, a person is “maintained” in a hospital or similar institution for the purposes of paragraph (2) if any part of the overall cost of accommodation and nursing is met under the 1977 Act. In such a case, if the claimant is maintained in a care home by a health authority to the extent of the provision of nursing services, he must be regarded as being maintained free of charge, notwithstanding that he in fact pays charges for other services.
73. However, we agree with Mr Commissioner Howell’s conclusion in CIS/3325/2000 that the amount of National Health Service provision may be too slight to bring regulation 8 into play, although our analysis is somewhat different from his. The facts of that case were quite similar to those in the present case but there were two important differences. First, in CIS/3325/2000 the health authority did perform an assessment of each patient “to determine the most suitable arrangements for each of them on discharge when the hospital was in the process of being closed” and were assumed to have approved or at least acquiesced in the arrangements following transfer to a home (paragraph 41). No such assessment was made in the cases before us. A second, but related, distinction is that, although the claimants in CIS/3325/2000 were described as being significantly disabled by their learning difficulties (paragraphs 6 to 9), the care provided at the expense of the relevant health authority after they had been transferred to the home was very limited (paragraph 42). The home in that case was described as “a nursing home” but the description of the arrangements under which the claimants were placed there suggests that the claimants were provided with the accommodation under arrangements made pursuant to Part III of the 1948 Act by the relevant local authority and that the health authority merely covered, through payments to the local authority under section 28A of the 1977 Act, the costs of incidental or ancillary nursing care. Such care is of the sort that the Court of Appeal held in Coughlan could (prior to the Health and Social Care Act 2001) properly be provided by a local authority and is now provided in circumstances falling short of a requirement triggering the Secretary of State’s duty under section 3 of the 1977 Act to provide accommodation out of National Health Service funds.
74. Either the claimants in that case were judged to be less in need of nursing services than the claimants in the cases before us or else the eligibility criteria for health care in the area covered by the local authority in CIS/3325/2000 were different from those in the area covered by the local authority in these appeals. Social security adjudicating authorities are, of course, not entitled to question clinical judgments by health authorities or to rule on the lawfulness of such criteria.
75. The implication of the provision of accommodation by the local authority in CIS/3325/2000 was that the claimants’ needs for accommodation arose out of their needs for non-nursing “care and attention” and not, as in the cases before us, out of their needs for nursing care. Had DLA been in issue in CIS/3325/2000, the case would have fallen under regulation 9 rather than regulations 8 and 12A. The provision of nursing care can no longer be made by a local authority as a result of section 49 of the 2001 Act, but it seems to us that the same result obtains if a health authority provides such incidental or ancillary nursing care under sections 3 and 23 of the 1977 Act (as, indeed, appears initially to have been the case in CIS/3325/2000 itself). Regulation 8 does not apply if the amount of nursing care provided is consistent with the accommodation being provided under Part III of the 1948 Act. It does however apply where the amount of nursing care provided implies a duty on a health authority to make accommodation available under section 3(1)(a) or (b) of the 1977 Act.
76. Perhaps because it appears not to be mentioned in circulars issued by the Department of Health, it seems often to be overlooked that, where a person requires accommodation because of his or her need for nursing services (rather than because of a need for “care and attention” to which any nursing services required are merely incidental or ancillary), it is the duty of the National Health Service to make such accommodation available under section 3 of the 1977 Act, either directly or by making arrangements under section 23 to place a person in a nursing home. That is because the implication of Coughlan, White and Botchett is that the accommodation that is required in those circumstances falls within the scope of section 3(1)(a) or (b) of the 1977 Act. A local authority has no power to provide such accommodation due to the effect of section 21(8) of the 1948 Act. Of course, a person who is entitled to services may choose not to take advantage of the National Health Service and instead to pay for his accommodation and nursing from his own resources or with help from a relative or friend. However, that must be a matter of choice, exercised by someone competent to make the relevant decision.
77. In that light, it can be seen that regulation 8(2) of the 1991 Regulations and what have become known as the “full-out words” in regulation 2(2) of the Social Security (Hospital In-Patients) Regulations 1975 have the effect that a person is not entitled to payment of DLA or to income support (other than the “pocket money” element of income support) in circumstances where he is entitled to be provided with accommodation and care under the National Health Service. By virtue of section 1(2) of the 1977 Act, a health authority is not entitled to levy a charge, and is not entitled to cause a care home to levy a charge, for services that it is bound to provide under section 3 and chooses to provide through arrangements under section 23. A primary purpose of regulation 8(2) of the 1991 Regulations and the “full-out words” in regulation 2(2) of the 1975 Regulations is therefore clear. Those provisions ensure that DLA and income support cannot be regarded as resources out of which a claimant can “voluntarily” pay for accommodation and care that should be funded by health authorities and they therefore ensure that health authorities do not try to evade their responsibilities at the expense of the benefit system.
78. Of course, if no care is provided by the National Health Service or if the only care is provided at the claimant’s home, regulation 8 does not bite because the claimant is not “maintained … in a hospital or similar institution under the NHS Act of 1977”; but, if some nursing services are provided by the National Health Service to a claimant in a care home and if the claimant’s nursing needs are more than merely incidental and ancillary to other care needs, regulation 8 does bite. Part of the rationale is presumably, as Mr Coppel submits, the avoidance of double provision from public funds. As regards income support, it is also presumably not considered appropriate to meet through a benefit of last resort the cost of services that the claimant is not receiving from the National Health Service only because either he has declined to take full advantage of the National Health Service or else the services are outside its scope.
79. We acknowledge that the consequence of our approach to regulation 8 is that there may be some difficult decisions to be made where benefits are being claimed by people who are paying full care home fees but are receiving nursing services funded by the National Health Service. The statutory distinction between nursing homes and residential care homes drawn in the Registered Homes Act 1984 and which formerly provided helpful guidance to decision-makers has now been swept away by the Care Standards Act 2000. Instead, decision-makers must apply the Coughlan test and consider whether the nursing care provided to the claimant is merely incidental and ancillary to other care. If it is, regulation 8 will not apply and, due to the effect of regulations 9(6)(f) and 10(8)(b), neither will regulation 9. If the nursing care provided is not merely incidental and ancillary to other care, regulation 8 will apply and so will regulation 12A.
80. However, in specific cases making that judgment may not be quite as hard as it appears at first sight because the decision-maker will often be able to infer the existence of an assessment by a health authority upon which reliance can then be placed. While a person can be regarded as self-funding in relation to accommodation that might be provided under Part III of the 1948 Act if either he has decided not to avail himself of the right to be accommodated or because his means are such that he would have to meet the entire cost of the accommodation, in relation to accommodation that is required due to a person’s need for nursing care, a person can be regarded as self-funding only if he has chosen not to avail himself of the right to free accommodation under the National Health Service. (The payment of “top-up fees” for extra services does not make a person self-funding.) Therefore, if a claimant is only paying for accommodation because he has been told that he must, there is likely to have been a National Health Service assessment to the effect that the claimant is not eligible for free accommodation – and consequently regulation 8 will not apply. However, the facts of this case show that it cannot always be taken for granted that such an assessment has been made.
81. In the present cases, the claimants were clearly regarded by the health authority as needing accommodation in connection with their nursing needs before they moved to the care homes, because they had been accommodated in National Health Service hospitals. The health authority did not subsequently assess them as no longer requiring such accommodation. The claimants apparently had no means of their own and neither they nor their relatives chose to provide accommodation out of their own resources. In those circumstances, the health authority had a duty to arrange for accommodation to be provided free of charge by virtue of section 3(1)(a) of the 1977 Act. If, contrary to our view, that duty did not arise as a result of section 3(1)(a), then it arose under section 3(1)(b).
82. For the reasons we have given, it follows that the claimants have not been entitled to payment of the care component of DLA while they have been living in their nursing homes. The basis of this disentitlement is however regulation 8 of the 1991 Regulations, rather than regulation 9 as primarily relied upon by the Secretary of State.
83. As regulation 8 applies, regulation 12A must also apply to disentitle the claimants from payment of the mobility component, unless they are entitled to transitional protection under regulation 12B(4). The first two claimants have the advantage of such transitional protection and payment of the mobility component therefore continues in their cases. For those claimants, our decisions are to the same practical effect as the decisions previously made by the Secretary of State and it is therefore unnecessary for us to consider whether revision or supersession is required or whether the effective date should be in March 2001, rather than April and March 1997, which the Secretary of State said was the effective date of the decisions under appeal.
84. On the other hand, the disentitling provisions of regulation 12A do not apply to the third claimant, and it follows that the Secretary of State erred in deciding that payment of the mobility component should start from 3 January 2002. He remained disentitled from payment of either component of DLA from the time he moved into the nursing home.
85. For these reasons, we make the decisions set out in paragraph 1 above.
86. Our reasoning obviously has implications for the claimants’ entitlement to income support and the Secretary of State will no doubt pass this decision to the appropriate office.
87. As we pointed out during the course of the oral hearing, there are a number of aspects of this case which have disturbed us. We feel bound to refer to the following, in particular.
88. As we indicated at the outset of this decision, the two protagonists in relation to the main issue in this case were the DWP and the health authority in its capacity as local National Health Service fund manager for the Department of Health. Although we have identified a number of ways in which benefit claimants have or may have in fact suffered detriment as the result of the financial arrangements put into place, we were informed (and we accept) that the intention was that the claimants would not be financially affected at all by the arrangements, the primary purpose behind them being to reduce the expenditure on the National Health Service fund at the expense of the DWP. The main issue evolved into a spat between two limbs of Government as to which should bear the costs of accommodation and care in relation to a number of severely disabled people.
89. A theme that runs throughout this decision is that the legislation provides for a rational system for the State to pay for the care of those who need it, and the proper relationship between the benefits system and the National Health Service. The legislation is clear and so are the principles behind it. Whilst the benefit system may properly be required to bear part of the cost of local authority provision of accommodation and care under Part III of the 1948 Act, it is not obliged or empowered to pay any of the legitimate costs of the National Health Service. To determine whether specific needs fall to be catered for by the National Health Service or by the local authority and the benefits system, there must be a proper assessment of those needs. Whilst in the cases before us the nursing needs of the three claimants were obviously such that they required accommodation – as the health authority accepted – on transfer from long-stay hospital, no assessment was formally made. Moreover, although before us the health authority frankly accepted that it had a continuing responsibility for the claimants (which it clearly did), rather than simply bearing that responsibility the health authority seems to have regarded it as legitimate to make every effort to minimise its proper liabilities under the 1977 Act by seeking to transfer them to the budget of another limb of Government through a wholly artificial scheme. Even if the scheme had been successful, there would have been no apparent advantage to the taxpayer and no sensible advantage to patients. On the contrary, devising schemes and forcing the DWP to respond to them merely results in a waste of public resources. Schemes have failed in White, in Botchett and in this case. Those responsible for National Health Service funds could perhaps consider whether devising and defending such schemes is the most effective use of public money.
90. If the only concern of such schemes is that they waste public funds in determining which part of the public purse should bear certain costs, that would be one thing. But, although the intention was not adversely to affect any benefit claimant, it seems to us that some claimants were financially disadvantaged by the scheme.
91. We were told that, overall, some 70 claimants of income support were involved in these arrangements between this specific local authority and this specific health authority. (There was no evidence as to whether such schemes were widespread, or whether the scheme which was the subject of this case was unique). On the evidence before us, it appears that at least £120 per week more was paid to each claimant in income support than should have been during the years before the residential allowance was abolished and in addition some claimants were overpaid the mobility component of disability living allowance. If this is correct, then in total, something approaching half a million pounds a year of benefit was overpaid. However, despite the size of the overpayment, the general body of taxpayers was not much affected because that which was lost by the benefit system was gained by the National Health Service. Most claimants gained a small amount. All the claimants entitled to income support kept about £2 per week each (the difference between the “pocket money” allowed to those in hospital and the sum allowed for personal expenses for those accommodated under Part III of the 1948 Act). Some claimants gained the mobility component of DLA. But the balance of the half a million pound figure is simply the extent to which the health authority manipulated costs from their own budget to that of the DWP.
92. However, we were told that three or four of the patients who transferred from the National Health Service hospital to nursing homes were not entitled to income support due to their capital resources but were charged the same amount as those who were. It seems to us that they may have lost a considerable amount of money as a result of the health authority’s scheme. If, apart from their resources, their circumstances were otherwise the same as those of the claimants in the cases before us (as we understand was the case), then it appears that they were induced to pay about £120 per week out of their resources for health services they were entitled to have free of charge.
93. On the other hand, if (contrary to our understanding) those residents’ needs for accommodation did not arise out of needs for nursing care, it may be that they were not charged enough because the statutory means-test under section 22 of the 1948 Act was not applied and the cost of the accommodation, including non-nursing care, was not recovered. In this event, the public purse has suffered a loss. Either the accommodation should have been offered free or the cost should have been recovered. We can see no statutory basis for recovering a part of the cost as was apparently done in respect of these residents.
94. Those patients who were not entitled to income support were not before us. But what we were told about them underscores the importance of there being proper assessments of need in respect of each patient, and funding arrangements based upon that assessment. That is what the statutory scheme requires, in our respectful view with good cause. That is what was not done in the cases before us. We trust that the example of these cases will encourage those responsible for the public funding of people with care needs to look more closely at their particular responsibilities.