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CHAPTER 5 ATTITUDES TOWARDS THE PRINCIPLE OF DEFERRED PAYMENT AGREEMENTS
Introduction
5.1 As well as specifically asking local authority representatives, care home residents' relatives and the 2 groups of community-based older people about DPAs, interviews and focus groups were also used to seek views on the principle of deferring payments for care home fees. The following section presents an account of these views.
Views of local authority representatives
5.2 Local authority representatives demonstrated mixed views on the use of DPAs. Most agreed with the principle of deferred payments but several local authority representatives offered negative comments. The negative comments were in line with those offered in the earlier Scottish Executive surveys.
5.3 Many of the local authority representatives said that they thought that extending resident choice around the issue of whether or not to sell their home to pay for a care home place was a good thing. Many noted that families often have very legitimate reasons as to why they wish to retain the property, whether this be to accommodate other family members, or to allow the care home residents themselves to return to the home etc. However, some local authority representatives argued that the retention of a property could be a burden to residents.
5.4 Several interviewees did not see the advantage that it afforded some groups of older people, particularly low-income groups. They believed that, for this group, it would be in the interests of care home residents to realise their asset, to afford them a higher standard of living. They noted that the personal expense allowance for home care residents was relatively small, and that capital released from the property could be used to augment this.
5.5 A few interviewees highlighted the disadvantage to the local authority of residents deferring payments, as this means that the local authority must pay for the fees in the intervening period. It was noted by 2 local authority representatives that, if the council had more than a handful of DPAs, this would place a significant strain on budgets. One interviewee thought that the annual allocation distributed to local authorities from the Scottish Executive to support the scheme to be relatively small, and that the allocation could be exhausted by only a small number of residents choosing to set up a DPA. For this reason, the authority in question had done little by way of informing residents about DPAs for fear of the budgetary pressures that this would create if they received a considerable response from care home residents.
5.6 As indicated earlier, councils had differing views on the most appropriate vehicle for allowing residents to defer payments. Within the 14 councils included in the main research and subsequent fieldwork that was carried out, we found only 4 local authorities which had set up, and were operating, DPAs in the manner outlined in the guidance given by the Scottish Executive, namely a legal agreement between the resident and the council. Amongst these 4 authorities, however, representatives offered a range of views about DPAs. One council representative was positive about DPAs in the sense that it afforded residents more choice, both in terms of how they funded the place itself, but also in terms of what type of care home place they could choose. Another council representative was positive about DPAs in the sense that the 2 parties were brought together in a meaningful dialogue that had to result in a mutual agreement between both parties. However, the other 2 local authority representatives argued that DPAs offered little perceivable benefits over Charging Orders, and that the legality and formality of the process could act as a deterrent, putting some people off from applying
5.7 Other local authorities preferred to allow residents to defer payments through the use of applying Charging Orders on residents' properties because it had benefits to residents. Amongst the advantages of Charging Orders over DPAs, according to the local authorities, were:
- No need for the resident to engage a solicitor to act on their behalf
- No associated up-front legal costs
- No need to employ a surveyor to value the property
- No legal requirement to maintain the property for the duration of the agreement
- No lengthy application process or paperwork requirements
5.8 Several of the local authorities interviewed reported that the associated set up costs of DPAs meant that many of their residents were precluded from applying for one. As well as the costs of engaging their own solicitor, some clients faced charges from the local authority as well, as some charge a fee for their legal input in setting up the agreement. Amongst the 4 authorities with DPAs in place, these varied from a small fee for setting up the standard security to fees of £500. Charging Orders, however, allowed the local authority to offer residents the possibility of deferring care home fees, without expensive set-up costs. Similarly, many local authorities spoke of the stress the relatives of care home residents experienced around the period of arranging a care home place for their relative. They believed that the processes involved in setting up a DPA merely added to what was already a stressful time.
5.9 However, it should be noted that some councils who offered Charging Orders, rather than DPAs, appeared to offer them only on a short term basis. In these cases, 'interim funding' was offered to residents until they sold their property. The expectation amongst these local authorities was that this arrangements would be short term, as opposed to continuing until the death of the care home resident.
5.10 Several of the local authority representatives interviewed believed that, as well as the advantages noted above, Charging Orders offered many of the same benefits to care home residents that DPAs do; namely, the ability to defer care home payments, interest free, until the sale of the property. Whilst legislation relating to Charging Orders does allow local authorities to charge a reasonable sum of interest to any fees outstanding, with only one exception, the local authorities that took part in the research did not use this discretionary power. Similarly, just as DPAs allow care home residents and their families to rent out the property for the duration of the agreement, the majority of local authorities interviewed said that residents who have a Charging Order in place could also rent out the property.
5.11 Many of the local authorities, therefore, fully endorsed the principle behind DPAs, i.e. affording residents the ability to defer the cost of their care home place, and extending the choices available to residents. However, there were mixed views as to whether DPAs themselves were the most appropriate vehicle available to do so.
Views of care home residents and their families
5.12 Relatives of care home residents who agreed to be interviewed as part of this research project were overwhelmingly supportive of the principle behind DPAs but, once more, not necessarily the actual DPA mechanism. The following highlights some of the reasons given by interviewees as to why they wished to defer selling their relative's home:
- To allow another family member to continue living in the home
- To retain the home for the sake of the care home resident themselves
- To delay the requirement to clear the house and go through the process of selling the house, as they had only recently done this with respect to another property
- To keep the house in the family
5.13 Relatives, therefore, had various reasons for retaining their relative's property and deferring paying for the care home fees. The experience of securing an arrangement that would allow them to do this was quite varied, and not always positive. However, this does not detract from the fact that there are many circumstances that may lead to a family preferring to defer care home fees rather than immediately disposing of the property.
Views of older people in the community
5.14 The principle of deferring care home payments was also discussed with the 2 groups of community-based older people, to assess its appeal.
5.15 Participants said that they thought that the ability to retain their property was an important one. For some, they thought that allowing someone to retain his or her house was important psychologically and some said that they felt that the health of some of their friends had deteriorated rapidly when they entered the care home. Participants reported that they thought this was largely to do with giving up hope, and feeling they had nothing to live for. A few of the participants said that they would find it comforting to know that they still had their home, and a link to the outside community.
5.16 Others were particularly interested in the ability to rent out the property, a feature of DPAs. Several of the participants said that they were worried about the impact that care home costs would have on the amount they would be able to leave their families. The ability to rent out their property, and offset the amount of debt accruing against it, was therefore an appealing proposition to the participants.
Summary
5.17 Whilst most of the local authority representatives were supportive of the principle of allowing care home residents to defer paying for their care home place, concerns were noted about the resource implications of this for local authorities by some of the representatives that took part in the research.
5.18 Many of the local authority representatives thought that the most appropriate vehicle for allowing care home residents to defer payments was not DPAs, but Charging Orders, and many, but not all, local authorities have been offering this option to residents for several years.
5.20 The research found that there are various reasons why it may be in the best interest of a resident and their family to retain their home and defer paying for the care home place. Families were deeply supportive of the principle of deferring payments, as were the community-based older people's groups.
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