Are all charging policies at risk after R(SH) v Norfolk County Council? Arianna Kelly examines an important ruling.
Following the December 2020 judgment in R(SH) v Norfolk County Council & SSHC  EWHC 3436 (Admin) – in which a claimant successfully challenged a change to Norfolk’s non-residential care charging policy on Article 14 grounds – every local authority in England has received a letter from the charity CASCAIDr raising ‘a concern about likely contravention of an enactment and various rules of law’ in relation to their Care Act charging policies. CASCAIDr suggests that ‘any charging policy that takes all income over and above the MIG [Minimum Income Guarantee] as available for care charges is now very likely to be unlawful, because the Guidance advises against it, and a very good reason is required to justify departure from that Guidance.’
This article explores the Norfolk judgment, and what broader implications it may have on Care Act charging policies generally.
The Norfolk judgment
Mr Justice Griffiths considered a challenge by SH (with her mother acting as her litigation friend) to changes to Norfolk County Council’s Care Act charging policy. Until July 2019, Norfolk had guaranteed that it would not make charges which reduced a person’s income below £189/week for all age groups. A phased reduction of this figure was introduced:
a. From 22 July 2019, it was reduced to £165/ week “for working-age people (e.g. people between 18 and 64)”;
b. From April 2020, it was to be reduced to £151.45/week ‘for everyone aged 18 to State Retirement pension age’; this figure was later adjusted to £154.02. It has not yet been introduced, due to concerns related to the pandemic.
c. From April 2021, it was to be reduced to £132.45 for anyone aged 18-24.
Norfolk had also previously disregarded the income obtained from the PIP daily living component; it proposed to stop doing so.
SH argued that the changes to the charging policy indirectly discriminated against her as a severely disabled person, and breached her rights under the HRA, ECHR and Equality Act 2010. She did not challenge the Care and Support (Charging and Assessment of Resources) Regulations 2014; only the local authority’s policy to implement charging locally.
SH has never had paid employment, and there appeared to be no prospect of her obtaining it in the foreseeable future. SH was on the following benefits (for a total income of £282.05/week):
a. ESA, with the enhanced disability-related premium;
b. PIP, with the enhanced rate daily living component;
c. PIP mobility component at the higher rate.
The cost of her care plan exceeded the cost of her weekly benefits.
The proposed changes would have raised SH’s care charges from £16.88/week (as they stood in April 2020), to £50.53/week by April 2021. SH was to be charged the maximum amount allowed by reference to the Minimum Income Guarantee (MIG) set in Regulation 7 of the Charging Regulations.
SH argued that this change in Norfolk’s policy constituted Article 14 discrimination against her as a severely disabled person. SH was unable to obtain income from employment, and was eligible for various higher-rate benefits; as a result, the changes to the charging policy left her considerably worse-off. By contrast, those who were not receiving higher-rate benefits or whose income derived primarily from employment (and would thus be disregarded) would be either unaffected or significantly less affected by the proposed changes. SH argued that there was no lawful justification for this differential treatment, which she argued unlawfully discriminated against those with severe disabilities.
In considering the relevant legal framework, the court noted relevant guidance on ‘discretion to charge’, and that local authorities have a power rather than an obligation to charge under ss.14 and 17 Care Act 2014. The court emphasised paragraph 8.46 of the statutory guidance:
“8.46 Local authorities should consult people with care and support needs when deciding how to exercise this discretion. In doing this, local authorities should consider how to protect a person’s income. The government considers that it is inconsistent with promoting independent living to assume, without further consideration, that all of a person’s income above the minimum income guarantee (MIG) is available to be taken in charges.
The court applied the four-part test in considering whether Article 14 discrimination had occurred:
a. Ambit: The parties agreed that this claim was within the ambit of a convention right. It fell within Article 1 of Protocol 1 and Article 8 ECHR; the claims under the Equality Act were considered to rise and fall alongside the central claim of discrimination under Article 14, and were not considered closely.
b. Status: The court found that being ‘severely disabled’ was a relevant ‘other status’ for the purposes of considering discrimination. Norfolk accepted that not only ‘disability,’ but degrees of disability, could be relevant statuses. The court found that SH’s ‘severe disability’ prevented her from working, and led to her receiving various enhanced-rate benefits.
c. Analogous comparator: The court considered the case of a less severely disabled person, who was either able to work, or would be receiving a lesser benefit entitlement. ‘The way the Charging Policy is constructed means that, because her needs as a severely disabled person are higher than the needs of a less severely disabled person, the assessable proportion of her income is higher than theirs. Her needs-based benefits are awarded at higher rates (daily living PIP and ESA) and are fully assessed, and their earnings from employment or self-employment are not available to her and other severely disabled people, but are not assessed.’ Norfolk argued that there was no difference in the treatment of the groups, as the charging policy applied to all of them. However, the court considered that the real question was one of disproportionate impact between those individuals who are more or less severely disabled. Norfolk further argued that SH’s higher needs meant that she incurred a higher level of disability-related expenditure (DRE), which would lead to a separate disregard. The court did not accept this argument, finding that DRE was hard to prove, and in any event, there was no requirement to spend the enhanced rate benefits on items which would be recognised as DRE.
d. Justification: Norfolk noted the serious funding issues in relation to social care which had led to the policy change, and stated the following aims as justification for the change to the policy:
i) To apportion the Council’s resources in a fair manner.
ii) To encourage independence.
iii) To have a sustainable charging regime.
iv) To follow the statutory scheme.
Norfolk had consulted on the proposed change, and consultation responses changes had been largely negative. The policy change was accompanied by supportive measures to assist people who had some capacity for remunerated work to find it, or to claim benefits to which they may have an entitlement. Norfolk’s focus was on increasing the percentage of adults with learning disabilities in paid employment, as its rates were below the national average. There was no evidence that the Council had considered the differential impact of the policy between the most severely disabled people and those for whom work may be realistic.
Two passages set out the key findings of the court:
‘The way the Charging Policy is constructed means that, because her needs as a severely disabled person are higher than the needs of a less severely disabled person, the assessable proportion of her income is higher than theirs. Her needs-based benefits are awarded at higher rates (daily living PIP and ESA) and are fully assessed, and their earnings from employment or self-employment are not available to her and other severely disabled people, but are not assessed.’
‘It does not appear that any conscious decision was made to take a higher proportion of the income of the severely disabled (with higher assessable benefits due to their higher needs, and no access to non-assessable earnings), than the proportion taken from the less disabled (with lower assessable benefits, and access to earnings which would not be assessed).’
The court found that ‘the differential impact of the Charging Policy on the severely disabled is manifestly without reasonable foundation. If the same level of charges overall is raised, the Council’s aims of funding and encouraging independence and making its charging regime sustainable will be met to the same extent. These aims do not justify the discrimination in this case or make it proportionate...There is no relationship between the aims identified and the specific discriminatory impact in issue at all. The discrimination is not proportionate to those aims. It is not reasonably linked to them.’ The court specifically noted the statutory guidance at paragraph 8.46, and its caution against including all assessable income. The court concluded that ‘No real effort has been made in argument to justify the discriminatory impact of the Charging Policy on the severely disabled (as opposed to explaining the sums sought to be raised by the Policy overall) by reference to the Council’s stated aims. That impact was a perverse and unintended outcome. The differential impact is not rationally connected to any of the aims relied upon.’
In considering what the broader effects of the Norfolk judgment may be to the charging policies of other local authorities, it is important to emphasise a few key points:
1) The Care Act charging framework (by way of statute, regulations and statutory guidance) defines the scope of local authority discretion to charge. Most benefits are ‘assessable’ income, and certain benefits and all income from employment is ‘disregarded’ income. A local authority has no discretion to make charges against disregarded income and the statutory disregards are beyond the reach of local authority policy. A local authority’s only discretion is to offer further disregards of assessable income.
2) The broader context of the Minimum Income Guarantee (MIG) is also important. The purpose of the MIG, as set out in Annex C of the Statutory Guidance, is to:
a) ‘ensure that a person’s income is not reduced below a specified level after charges have been deducted.’
b) To have a ‘greater consistency between the charging framework and established income protections under the income support rules. We will keep this under review and seek to update the charging framework in line with the roll-out of Personal Independence Payments and updating/repeal of the income support rules.’
c) to promote independence and social inclusion and ensure that they have sufficient funds to meet basic needs such as purchasing food, utility costs or insurance. This must be after any housing costs such as rent and council tax net of any benefits provided to support these costs – and after any disability related expenditure.
3) The MIG aligns the Care Act charging framework with existing income support rules; its intent is to ensure that people who require care and support are not left worse off than people without such needs in paying for the essentials in life, and have discretionary incomes to be spent on basic living items in line with anyone whose income derives from benefits. The MIG for those in the community, the Personal Expenses Allowance (PEA) for those in care homes, and the Disposable Income Allowance (DIA) for those on deferred payment agreements, all make reference to the concept of ensuring that a person has an absolute protected income for the purchase of items unrelated to disability.
The Norfolk judgment is about discrimination as to the proportion of income people are required to pay for their care due to whether their income derives from included or disregarded sources, and the overall amount of their benefit income over and above the MIG. The MIG (which relates only to assessable income, rather than disregarded income) is the same for any person subject to Care Act charges, and service users are left with the same absolute income from assessable sources. Two issues are play in the judgment’s consideration of the differential impact in the change in Norfolk’s policy:
a. Due to the higher assessable incomes of those entitled to higher-rate benefits, they will likely pay a higher percentage of their income, as the amount protected by the MIG represents a smaller proportion of that income;
b. Some individuals will have income which is not assessable, and therefore is not liable to being paid to the local authority. CASCAIDr’s letter offers the example of two people with equal income and care plans of equal cost, with one person having income primarily from earnings and one from benefits. The person whose income is primarily from employment would be left with considerably more income than the person whose income derives from benefits.
There are a number of reasons to consider that the judgment may have a narrower application than is argued by CASCAIDr, which suggests that any policy assessing all income above the MIG is likely unlawful:
1) Norfolk had not historically charged the maximum amount allowable pursuant to the MIG and relevant disregards. It had offered an absolute protection for income higher than that set in the Charging Regulations, and had disregarded PIP. The Article 14 challenge – which looked heavily to the justification for these actions – arose following these changes revoking this more generous charging policy, not to a standing policy charging the maximum amount allowed under the Care Act framework.
2) The justification Norfolk was asked to provide related to why it had made a specific decision to raise further revenue via charges overwhelmingly on people who were ‘severely disabled’ and in receipt of higher-rate benefits, and not on other service users. On the facts of the case, Norfolk appeared not to have actually considered the impact of its decision, and the differential manner in which the changes to its charging policy would affect people based on their benefit incomes. The judgment did not find that differential treatment could never be justified – only that it was not justified on the facts of the case.
3) There are fundamental constraints on how a local authority can raise revenue by means of charges, over which the local authority has no discretion. In considering whether to raise additional revenue (including whether to do so primarily from people with higher-rate benefits), a local authority only has discretion to treat income from employment in an analogous manner to income received from benefits by disregarding all assessable income alongside disregarded income – effectively forgoing any form of income-based charging.
4) Further, care and support under the Care Act 2014 is, as a general matter, a means-tested service. State funding only partially finances care. While s.14 creates a ‘power’ rather than a duty to charge, local authorities are, in reality, obliged to raise a substantial portion of funds for care by charging people out of their income and capital. It would appear to be extremely unlikely that local authorities could discharge Care Act responsibilities without assessing charges on income.
5) The judgment did not closely explore the differences in the nature of assessable and disregarded income; nor did it consider whether the correct ‘analogous comparator’ should in fact be a person whose income derives entirely from benefits but has no needs for care and support, rather than a person with care needs whose income derived largely from employment. Eligibility for higher-rate benefits is typically based on a person’s level of need for care and support and the extra costs incurred as a result of those needs; people in receipt of higher-rate have greater assessable income because it is anticipated that they will need that income to ensure their needs are met.
6) The judgment heavily emphasises paragraph 8.46 of the statutory guidance, which states that the government ‘considers that it is inconsistent with promoting independent living to assume, without further consideration, that all of a person’s income above the minimum income guarantee (MIG) is available to be taken in charges’. However, this passage is guidance not to charge the maximum amount ‘without further consideration;’ it is not a bar to making the maximum charge if that consideration has been given. The guidance also suggests that there are several ways in which a local authority could consider leaving people with greater ‘disposable income’ than what is required by the MIG:
local authorities have flexibility within this framework; for example, they may choose to disregard additional sources of income, set maximum charges, or charge a person a percentage of their disposable income.
The Norfolk judgment is a significant one in introducing the concept of an Article 14-protected ‘other status’ for individuals on higher-rate benefits; any local authority considering its own charging policy will need to give the judgment careful consideration and be alive to how different groups may be affected be a putatively ‘neutral’ policy.
However, it is also a judgment which turns on the specific facts and circumstances before the court. The court’s finding that Norfolk had not had appropriate justification in altering its charging policy in a manner which disproportionately impacted on people who were ‘severely disabled’ is not one which would necessarily be replicated simply by the existence of a long-standing policy levying the maximum charges, if statutory guidance had been followed, and decision-makers had appropriately considered the impacts of their actions and potential alternatives.