CHAPTER TWO – FUNDING CONSIDERATIONS
Key differences for young adults transitioning
Once a young person turns 16, they are able to claim benefits in their own right. The nature of the benefits may also change, for example from the Disability Living Allowance to the Personal Independence Payment. Universal credit also becomes available in some cases. Child benefit and Child tax credit are only payable after the age of 16 years if they remain in full time education, and are not in receipt of Universal credit.
However the receipt of some types of benefit, for example universal credit, can lead to the young person being means assessed for aspects of their care as they move into adult services. The Care and Support (Charging and Assessment of Resources) Regulations 2014 set out the regime for assessment. In addition, if the young person lacks capacity to manage their benefits, then a parent or carer, (in some cases the local authority), can apply to the Department of Work and Pensions to become the appointee, and deal with benefits on their behalf.
For some young people, if they lack mental capacity to manage their property and affairs, and if the level of funds justify the intervention, it will be preferable for a financial deputy to be appointed by an application to the Court of Protection. This can be a family member or a professional, for example a solicitor. Once appointed, the deputy can manage the estate in accordance with the young person’s best interests, and with the oversight of the Office of the Public Guardian.
Whilst the cost of residential care becomes means tested and therefore liable to contributions, there are also other sources of funding available from the age of 18, in the form of NHS Continuing Healthcare (CHC) for relevant cases. This is fully funded care by the NHS and only available to those that meet the criteria of having a “primary health need”. The National Framework on NHS Continuing Care defines CHC as care to meet needs arising as a result of disability, accident or illness. The package of care includes health and social care services, and sometimes accommodation if that is part of the patients needs, as set out in the Framework. Therefore access to CHC funding removes the young person from the means tested scheme of local authority care, and provides free care under NHS funding. It is only available however from the age of 18 years.
In addition, the local authority may look towards the use of direct payments for a young person to manage their personal budget directly, often with a family member nominated to manage the fund. These are governed by the Care Act 2014 s. 31 and the Care and Support (Direct Payments) Regulations 2014, and are available to all over 16 year olds other than those dealing with drug or alcohol dependency as listed in Schedule 1 to the regulations. If a direct payment is requested and the person concerned meets the criteria, then the local authority is obliged to deal with funding in that way. The regulations set out the conditions attached to direct payments and the terms under which it can be paid. Direct payments can form part of the EHC plan, which should confirm the personal budget, pursuant to the CFA 2014 s.49.
One complex area in relation to the funding of care arises when a young person has been placed out of area, and then transitions to adult social care whilst in that out of area placement, or moves again. This can occur in social care or educational settings, and also as part of discharges from repeated detentions under the Mental Health Act 1983. In these cases, disputes often arise between the local authorities as to which authority should be responsible for the costs of care.
Moving between areas – Ordinary Residence
Ordinary residence disputes arise between local authorities in the context of young people placed out of their original area due to the need for specialist care that may only be available at a distance from their home. It is a concept that spans children and adult social care and is therefore of importance in transitions cases. Ordinary residence is a statutory concept, distinct (but similar) to habitual residence used to decide residence in international dispute cases. Taken at its most simplistic level, ordinary residence considered which local authority is responsible for a young person’s care needs, and therefore the costs of that care.
The classic test for “ordinary residence” is set out in Shah v London Borough of Barnet  1 All ER 226
“unless … it can be shown that the statutory framework or the legal context in which the words are used requires a different meaning I unhesitatingly subscribe to the view that “ordinarily resident” refers to a man’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or long duration.”
In relation to children, their ordinary residence usually follows that of the parent. They are unable to make voluntary or settled decisions for themselves. Equally, adults who lack the capacity to make decisions about residence and accommodation, will be unable to make voluntary or settled decisions for themselves, and therefore Shah becomes of limited relevance.
The Children Act 1989 s.105 sets out what is commonly referred to as the “deeming” provisions for those age under 18 years;
s.105 CA 1989
(6) In determining the “ordinary residence” of a child for any purpose of this Act, there shall be disregarded any period in which he lives in any place—
(a) which is a school or other institution;
(b) in accordance with the requirements of a supervision order under this Act
(ba) in accordance with the requirements of a youth rehabilitation order under Part 1 of the Criminal Justice and Immigration Act 2008; or
(c) while he is being provided with accommodation by or on behalf of a local authority.
Therefore the ordinary residence of a child is usually that of a parent or carer with whom they were residing before they moved into care. This is often the area in which the trigger events arose for a removal to care, s.31(8) CA 1989.
Once the young person reaches the age of 18 years, the Care Act 2014 contains similar “deeming” provisions;
s.39 Care Act 2014
Where a person’s ordinary residence is
(1) Where an adult has needs for care and support which can be met only if the adult is living in accommodation of a type specified in regulations, and the adult is living in accommodation in England of a type so specified, the adult is to be treated for the purposes of this Part as ordinarily resident—
(a) in the area in which the adult was ordinarily resident immediately before the adult began to live in accommodation of a type specified in the regulations, or
(b) if the adult was of no settled residence immediately before the adult began to live in accommodation of a type so specified, in the area in which the adult was present at that time.
(2) Where, before beginning to live in his or her current accommodation, the adult was living in accommodation of a type so specified (whether or not of the same type as the current accommodation), the reference in subsection (1)(a) to when the adult began to live in accommodation of a type so specified is a reference to the beginning of the period during which the adult has been living in accommodation of one or more of the specified types for consecutive periods.
Therefore, under either the Children Act 1989 or the Care Act 2014, a person placed “out of area” is deemed to remain ordinarily resident in the area of the placing authority. The Care and Support (Ordinary Residence)(Specified Accommodation) Regulations 2014 provide that the deeming provisions apply if the person is accommodation in a care home, shared lives or supported living. In R (Greenwich) v Secretary of State and Bexley  EWHC 2576 (Admin), Charles J held that the deeming provisions should be treated as applying also where a person “should have been” provided with the relevant accommodation. Accordingly, a local authority cannot avoid the effect of the deeming provisions through failure to comply with its statutory duties.
Disputes between local authorities in respect of ordinary residence are referred to the Secretary of State for resolution. There are a number of significant decisions to be aware of, particularly when considering aftercare for a young person following discharge from a Mental Health Act detention, pursuant to MHA 1983 s.117.
In R (on the application of Cornwall Council) v Secretary of State for Health,  UKSC 46 it was held that a man who lacked capacity to decide where he lived was ordinarily resident for the purposes of adult social care in Wiltshire despite having no current links current with the area. This was because it was Wiltshire council who had arranged a foster placement for him while a child, in South Gloucestershire, meaning it retained ordinary residence for the purposes of the Children Act 1989, and that this responsibility continued when he became an adult and fell under the jurisdiction of the then National Assistance Act 1948.
It was irrelevant for ordinary residence purposes that his family was then resident in Cornwall, whom the then health secretary had previously deemed to be responsible for his care, in a determination in 2012.
“……..it follows that PH’s placement in South Gloucestershire by Wiltshire is not to be regarded as bringing about a change in his ordinary residence. Throughout the period until he reached 18 he remained continuously where he was placed by Wiltshire, under an arrangement made and paid for by them. For fiscal and administrative purposes his ordinary residence continued to be in their area, regardless of where they determined that he should live.” (as per Lord Carnwarth, para. 60)
Under section 117(3) MHA 1983 the relevant local authority is determined by the place where the person was ordinarily resident immediately before their detention for treatment. As confirmed by the Care Act guidance this remains the case even if they are discharged for aftercare to a different area, and even if they moved to a third area.
However, the Care Act guidance then goes on to say that if the person is detained again while receiving aftercare in a second or third area, it would be the local authority for this area that would take over responsibility for their aftercare.
In the case of R(Worcestershire County Council) v Secretary of State for Health and Social Care and Swindon Borough Council), the SoS determined that despite the Care Act Guidance, the responsibility should stay with the placing Council, regardless of a further detention. In doing so, he applied the Cornwall decision, and said that the area in which she was “immediately before being first detained” was responsible. In effect, the SoS found that the Government’s guidance was wrong.
This decision has now been considered in subsequent judicial review proceedings in the case of R (Worcestershire County Council) v Secretary of State for Health and Social Care  EWHC 682 (Admin).
“Although any change in the patient’s ordinary residence after discharge will affect the local authority responsible for their social care services, it will not affect the local authority responsible for commissioning the patient’s section 117 after-care. Under section 117 of the 1983 Act, as amended by the Care Act 2014, if a person is ordinarily resident in local authority area (A) immediately before detention under the 1983 Act, and moves on discharge to local authority area (B) and moves again to local authority area (C), local authority (A) will remain responsible for providing or commissioning their after-care. However, if the patient, having become ordinarily resident after discharge in local authority area (B) or (C), is subsequently detained in hospital for treatment again, the local authority in whose area the person was ordinarily resident immediately before their subsequent admission (local authority (B) or (C)) will be responsible for their after-care when they are discharged from hospital.”
This decision is subject to appeal at the time of writing.
Funding and Ordinary Residence disputes
A checklist –
Does the young person have capacity at age 16 to manage their own benefits?
If not, consider an appointee.
Have the local authority provided information on any means testing to be carried out under the Care and Support (Charging and Assessment of Resources) Regulations 2014?
Would the family benefit from signposting to specialist benefits or community care charges advice?
Is there a primary health need (at age 18) that would meet the NHS CHC checklist?
Does the EHC plan properly reference the personal budget and whether any direct payments are to be made?
How is the personal budget to be managed; has there been a request for direct payments, and if so, who is to manage them?
Has the young person been placed out of area in the past? Will they remain out of their original placing authority as an adult?
Is there a previous Mental Health Act admission that gives rise to s.117 duties?
Have there been multiple detentions and moves?