New guidance has been published to help local authorities identify when a resident is deliberately making themselves poorer in order to get more financial support from the council.

The Local Government and Social Care Ombudsman has today issued guidance to councils on the often-complex issue of deprivation of capital decisions.

Deprivation of capital is when someone knowingly reduces their capital for financial benefit.

When councils are carrying out financial assessments to work out how much people should pay for their care, they must sometimes make decisions about whether someone has given away money, or deprived themselves of an asset, with the intention of avoiding charges for care.

The guidance highlights the common issues seen in the complaints the Ombudsman receives. These include assuming all gifts are deprivation of capital, wrongly applying the Personal Expenses Allowance to people who fund their own care, and not keeping proper records of how decisions are reached.

Michael King, Local Government and Social Care Ombudsman said: ‘With increasing pressures on council budgets, and a growing number of people in need of care in this country, we know that decisions about whether people have intentionally deprived themselves of capital can be a difficult – and for the families involved – emotive issue.

‘The guidance we are issuing today sets out how we look at councils’ decisions, and the common areas we find fault where we have been asked to investigate.

‘We hope that by publishing this guidance those practitioners involved in making such decisions can have some clarity about the steps they need to take to ensure the decisions they make are fair and equitable.’

Responding to the publication of the guidance, Cllr David Fothergill, chairman of the Local Government Association’s Community Wellbeing Board, said: 'Adult social care makes up a large proportion of council spending and with decreasing budgets and growing pressures, delivering statutory services have become more and more challenging.

'Councils rightly expect that all those who can afford to contribute financially to their own care actually do so in accordance with national and local charging policies. If people try to avoid paying for their care, this ultimately puts further pressure on the system and the taxpayer, and It is unfair to those who do make the expected financial contribution.

'Councils support further guidance to ensure that work around possible deprivation of capital is handled fairly, accurately and carefully.

'Adult social care services are under enormous financial strain and given councils’ responsibility to protect and spend public resources diligently, they have a duty to act where they suspect deliberate deprivation has taken place.'