Local authorities have spent the past two years coping with changes to charges for residential and home care services. “Preserved rights” for people in residential care have been abolished and the “residential allowance” is also being scrapped.
In April the government introduced Fairer Charging, which included guidance on calculating home care charges. But charging for both residential and home care could be thrown into chaos this autumn.
The problem stems from the introduction of pension credit. This benefit has two elements – a guarantee credit (for those aged 60 or more) similar in some respects to income support, and a savings credit (for those 65 or older) to reward people with modest savings and works pensions. Income support for people aged 60 or more is being abolished, yet most local authority charging systems are based on income support rates and rules.
Local authorities have been left in limbo for more than a year while the Department of Health decides what guidance should be given about pension credit.
Most local authority financial assessment forms will have to be redrafted. The change may even mean separate assessment forms for home care recipients under 60, who can still get income support, and over-60s. There is no savings limit for pension credit either, which could result in a pensioner with a low income and £20,000 savings qualifying for guarantee credit yet still asked to pay full cost for their home care.
Local authorities also need to be aware of the political implications if they include some of the pension credit – especially the savings credit – in their home care assessment.
The government has gone to great pains to ensure extra pension credit paid to a claimant is not clawed back elsewhere. Housing benefit is being amended, for example, so a person receiving savings credit does not suffer a cut. Local authorities will be criticised if similar disregards are not brought in for home care charges. Yet, if savings credit is disregarded as income, it creates a poverty trap for people with an income just above savings credit entitlement, where payment of home care charges will make the recipient worse off than people on savings credit.
Pension credit will also be paid to people in residential care. A consultation paper has just been issued by the DoH to local authorities about how this extra income should be treated when calculating the resident’s contribution to their charge. The suggestion is that the first £4.50 of any savings credit received is to be ignored. Those with works pensions that put them above the savings credit limit will also be able to keep an extra £4.50 a week of that pension for themselves. The consultation is simply too late for many local authorities, which needed to upgrade computer systems, change publicity materials and assessment forms and reassess residents’ contributions.
If the government is serious about ensuring that pensioners benefit from having saved or earned a works pension, it must properly address the needs of those who are in residential care or receiving home care.
Gary Vaux is head of money advice, Hertfordshire Council. He is unable to answer queries by post or telephone. If you have a question to be answered please write to him c/o Community Care.