Primary users:

The Chief Executive Unitary Councils

Copy to:

Directors of Social Work
Chief Social Work Officers
Directors of Finance
Holders of the SWSG Guidance Package

Dear Colleague

I. NATIONAL ASSISTANCE (ASSESSMENT OF RESOURCES) AMENDMENT REGULATIONS 1996

II. NATIONAL ASSISTANCE (SUMS FOR PERSONAL REQUIREMENTS) REGULATIONS 1996

Summary

1. This Circular:

I. encloses, for local authority users detailed above, amendment regulations to the National Assistance (Assessment of Resources) Regulations 1992 which local authorities are required to apply from 8 April to the financial assessment of adults placed in residential and nursing home accommodation. A full version of the guidance, including consequential amendments following the latest amendments regulation is also enclosed. Also enclosed is a copy of amendment regulations which came into effect in December 1995 concerning the treatment of reversionary interest, addressed at paragraph 13 of this Circular and paragraph 7.017 of the Guidance.

II. encloses, for local authority/users, a copy of the revised personal expenses allowance (PEA) Regulations and includes details of the allowance which applies from 8 April.

Previous guidance

2. Circular SW4/1995 concerning PEA is cancelled with effect from 8 April 1996.

I. NATIONAL ASSISTANCE (ASSESSMENT OF RESOURCES) AMENDMENT REGULATIONS 1996

Background to the Changes

Changes to Capital Limits

3. From 8 April 1996, both the lower and upper capital limits will be increased. The lower limit will increase from £3,000 to £10,000 and the upper limit will increase from £8,000 to £16,000 for all residents. The method of calculating the weekly tariff income between the upper and lower limits will remain at the same rate namely, £1 for every complete £250 or part of £250 between £10,000 and £16,000. It is proposed that these new limits will also be applied to the calculation of Income Support entitlement for permanent residents.

4. Local authorities should apply the new capital limits when assessing all residents who approach them to make accommodation arrangements, whether permanent or temporary, from 8 April. Authorities should also apply the new limits from the same date when re-assessing all existing residents for whom they have made accommodation arrangements based on the capital they have on that day.

Residents with Property

5. Where the local authority has placed a charge on a resident’s property before 8 April they should:

5.1 carry out, or arrange, a valuation of the property to establish its current market value;

5.2 calculate the resident’s remaining interest in the property by deducting 10% for expenses of sale and the amount of the outstanding charge from the current market value of the property;

5.3 once the resident’s remaining interest, together with any other capital assets is calculated to have reached £16,000, the resident will no longer be liable to pay the full charge, and their contribution should be assessed according to the charging regulations. The charge on the property should not increase further once the resident’s remaining total capital assets have fallen to £10,000.

Income Support

6. Local authorities should be aware that these new capital limits also apply to the assessment of Income Support for people living permanently in a residential care or nursing home which provides both board and personal care. The concession will also apply to Abbeyfield Society homes.

Temporary Residence

7. Where a person is only temporarily resident the general £3,000 and £8,000 limits will continue to apply to claims for Income Support. This may mean that, where a temporary resident has capital of above £8,000 but not more than £16,000, there will be no Income Support entitlement to take into account when calculating the resident’s contribution towards the cost of his or her accommodation.

8. For the first 8 weeks of the resident’s stay the local authority can decide what is a reasonable amount to charge (see paragraph 3.005 of the Guidance). After 8 weeks, or where the local authority decide to assess a charge from the beginning of the stay, the local authority must apply the £10,000 and £16,000 limits.

Housing Benefit

9. Where the resident is in:

9.1 a local authority home which does not provide board, or

9.2 in an independent sector home with preserved rights to claim Housing Benefit (HB), or

9.3 an unregistered Abbeyfield home.

The £10,000 and £16,000 limits will apply for the assessment of Housing Benefit.

Disregard of 50 Per Cent of Occupational Pensions

10. From 8 April 1996 local authorities will be required to ignore 50 per cent of any occupational pension paid to a resident who has a spouse who is not living in the same residential care or nursing home. The requirement to ignore 50 per cent of the occupational pension will apply where the resident is passing at least 50 per cent of that pension to his or her spouse for the spouse’s maintenance.

11. This requirement applies to occupational pensions only. It also does not apply to unmarried couples or divorcees. If a resident ceases to make at least 50 per cent of the occupational pension available, the disregard no longer applies. Further advice is at paragraph 8.024A of the Guidance

12. Where the resident is in receipt of a personal pension or payments from a retirement annuity contract, or where there is an unmarried partner, LAs continue to have discretion to vary the Personal Expenses Allowance in special circumstances. This discretion could be used to allow the resident to support his or her spouse or partner. Each individual’s circumstances should be looked at to consider whether it is reasonable to use the discretion in his or her favour. Advice is detailed at paragraph 5.005 of the Guidance.

Disregard of Charitable Payments

13. The disregard on certain charitable and voluntary payments is increased from £10 to £20 from 8 April. Details are in paragraphs 8.053-8.055 of the Guidance.

Reversionary Interest - Property Which has been Rented Out

14. A Court of Appeal decision on the Income Support (IS) regulations gave a new interpretation of the definition of reversionary interest. The Court of Appeal determined that where an IS claimant owned property which had been rented out, the value of that property had to be disregarded, ie ignored as an asset for IS purposes. DSS amended the IS regulations from 2 October 1995 to maintain the original policy intention to allow the value of rented property to be taken into account. This Department’s view was that the decision was persuasive rather than mandatory. To clarify the situation beyond any doubt, however, the National Assistance (Assessment of Resources) Regulations 1992 have been amended in line with the IS amendment. Advice on the treatment of property which has been rented out is included in the amendment in paragraph 7.017 of the Guidance.

Payments in Respect of Adult Dependants

15. Paragraph 8.042A of the Guidance gives details of the treatment of adult dependency increases payable with certain benefits. The list of benefits has been expanded to include War Pensions.

Assuming Notional Income in Respect of Personal Pension

16. In line with a change in Income Support regulations on assuming notional income, where a person aged 60 or over fails to make an application to receive income from a personal pension scheme the local authority should assume a notional income in respect of the personal pension. Notional income should not be assumed for anyone under 60 who has chosen not to receive such income. The Benefits Agency will approach the pension provider for details of the notional income when Income Support is involved and the local authority should use their liaison arrangements with the Benefits Agency to receive the figure from them. Exceptionally, the local authority may need to approach the pension provider direct. More details of this change are contained in paragraph 8.069A in the annexed Guidance pages.

II. NATIONAL ASSISTANCE (SUMS FOR PERSONAL REQUIREMENTS) REGULATIONS 1996

Action

2. The instructions and guidance in this part of this circular replace those in circular SW4/95 which should be destroyed.

Background to the changes

Legal Basis

3. The amounts that local authorities allow in their charging assessments for personal expenses (PEA) for people placed in residential accommodation are prescribed in regulations under section 22(4) and (4A) of the National Assistance Act 1948. These amounts are usually increased each April at the same time Social Security benefits are uprated. The amount allowed for personal expenses in the local authority charging assessment is the same as the amount awarded in the Income Support assessment for residents in residential accommodation who have preserved rights.

4. The standard PEA amount is specified each year in the National Assistance (Sums for Personal Requirements) Regulations and is same for each resident whether they are placed in a local authority or independent sector home. A copy of the National Assistance (Sums for Personal Requirements) Regulations 1996 is enclosed with this circular.

New PEA Amount from 8 April 1996

5. The new PEA prescribed amount of £13.75 comes into force on 8 April 1996. It applies to everyone in residential care or nursing home care receiving help from local authorities to meet the costs.

6. People who entered residential care or nursing homes before 1 April 1993 and who therefore have preserved rights to the higher levels of Income Support (instead of receiving local authority support) will receive the same amount of personal expenses from the Benefits Agency.

New Therapeutic Earnings Limit

7. Regulations have been made under the Social Security Act 1975 to increase to £45.50 from 8 April 1996 the amount of the net earnings from permitted work which can be received without loss of benefit by people in receipt of Incapacity Benefit or Severe Disablement Allowance. This applies where work is undertaken under medical supervision as part of the person’s treatment while in hospital or elsewhere on the advice of a doctor.

SW Circular Cancelled

8. This circular cancels SW4/95 with effect from 8 April 1996.

Contact Point

9. Please direct any enquiries about this Circular to Mr Trevor Hall, Social Work Services Group, Room 44, James Craig Walk, Edinburgh, EH1 3BA (Tel 0131 244 5455).

To holders of the SWSG Circulars and Guidance Package, this circular should be placed in Section F2 of the volume containing "F: Community Care (Sections 1-2)" circulars.

Yours faithfully

GAVIN ANDERSON