Date of decision: 28 May 2026
Summary
A woman was discharged from hospital into a residential care home after a stroke, needing double hoisting, with the Council arranging and funding the placement under the Care Act. The home chosen by the family charged more than the Council’s “usual” rate, and instead of ensuring at least one suitable care home within the personal budget, the Council allowed the resident herself to pay a long‑running “lifestyle” top‑up directly, without any formal top‑up agreement, leading to large, unsustainable extra payments and distress when the fees and liability were later challenged.
What happened
In February 2021, Mrs Y was admitted to hospital following a stroke, having previously lived independently in her own property with no care package.
She then spent time in a rehabilitation hospital, and the health professionals advised she should not return home but instead move into residential care, which her family agreed was the best way forwards.
Mrs Y asked for a particular residential home near her then home, so friends could visit, but that home decided it could not meet her needs because she required double hoisting. The family struggled to find any local residential home willing to accept her, eventually identifying two homes, but due to COVID‑19 restrictions they could visit only one of the options; and since both charged the same, they chose the one they had actually seen, Care Home A, located in a neighbouring authority’s area.
At the end of March 2021, Mrs X (the complainant and daughter‑in‑law) spoke to the Council, which recorded that she confirmed Mrs Y had around £7,000 savings and owned 70% of her property. The Council explained that Mrs Y would not be treated as a self‑funder at that stage and that it would arrange an assessment, care plan and budget to fund either residential or nursing care until a financial assessment was completed, after which Mrs Y’s contribution would be set. The Council further told Mrs X it would pay only its usual residential or nursing rate, not the full cost of Care Home A; the difference would be treated as a top‑up fee payable by a third party, not by Mrs Y herself, although Mrs X later disputed that the top‑up had been properly discussed or clearly explained.
In early April 2021, the Council telephoned Mrs X again noting in its case record that the family were willing to pay the top‑up fee, a stance that Mrs X denied. The Council sent financial information and forms to Mrs X, noting that once Mrs Y’s property was sold she would become a self‑funder.
The assessment completed in early April determined that Mrs Y required a 24‑hour nursing placement, and the Council made a direct allocation through its brokerage system for Care Home A, the home identified by the family, without evidencing any discussion or offer of alternative homes.
On 8 April 2021, Mrs Y signed a “Financial Details for Care Home Contributions” form recording her £7,000 savings, her 70% property ownership and her pension income, and she ticked to agree to a legal charge under a Deferred Payment Scheme. She moved into Care Home A on 12 April 2021.
Mrs X signed an undated “Appendix B — For completion for Local Authority/CCG Residents” forming part of Care Home A’s residency agreement, which specified a weekly resident contribution of £348.93, a ‘lifestyle’ choice supplement of £0, and a Local Authority contribution of £651.07, with explanatory text on what lifestyle supplements might cover.
In June 2021, the Council completed its financial assessment, concluding that Mrs Y’s contribution from 12 April to 4 July 2021 should be £237.27 per week, after which from 5 July 2021 she would be a full‑cost payer.
The deferred payment agreement was not ultimately progressed because Mrs Y’s share of the property was liquidated on sale, towards the end of November 2021.
In February 2024, Mrs Y’s family contacted the Council to say her savings would fall below the £23,250 upper capital limit by June 2024, triggering potential Council subsidy, and the Council requested bank statements, which were only provided at the end of August 2024. In September 2024, the family informed the Council that her savings were now below £23,250, and the Council carried out a retrospective financial assessment that month, setting out what Mrs Y must contribute from 22 July 2024.
In October 2024, Mrs X and the family queried an extra payment that Mrs Y had always made directly to the home; the Council asked whether this was a top‑up, as top‑ups should be paid by a third party, not by the resident herself. The family said there was no top‑up agreement and confirmed that this additional payment had always been made by Mrs Y straight to the home from her bank account.
In early November 2024, the Council spoke with Mrs X’s husband and provided information about third‑party top‑up fees.
By February 2025, the Council sought to clarify the funding by arranging a meeting with Mrs Y’s family and the home to discuss her payments and what they funded. The Council’s understanding at that point was that £826.70 per week was paid by the Council to the home, with Mrs Y paying a weekly client contribution of £253.29 towards that amount (invoiced separately by the Council), on top of a £235.88 Funded Nursing Care (FNC) payment from the ICB/Health, and a £348.93 weekly payment from Mrs Y to the home described by the home as a “lifestyle choice payment,” bringing total weekly costs to £1,411.51.
Other workers had suggested to the family that the £348.93 might actually be a third‑party top‑up, but the family stressed it had never been agreed as such and had always been paid by Mrs Y since April 2021, using proceeds from the property sale.
The Council contacted the home and obtained in February 2024 a copy of Mrs Y’s original funding agreement, with the home confirming its lowest acceptable room rate was £1,300 per week, less FNC of £235.88, meaning it required £1,064.12 from the Council and Mrs Y combined. In March 2025, the Council advised the family that it was funding £826.70 per week (using the neighbouring authority’s rate, since its own maximum for nursing placements was £780), which left a shortfall requiring a weekly top‑up of £237.42 that it could not fund, warning that a change of placement might be necessary.
In complaint correspondence, the Council acknowledged that it had not offered alternative accommodation beyond Care Home A, which the family had already identified, and that it had failed to follow the proper process for top‑up payments. It offered to reimburse top‑up fees for 12 April 2021 to 25 November 2021, totalling £11,365.15, proposing to use most of this (£9,398.16) to clear Mrs Y’s outstanding debt to the Council and to pay the remaining £1,966.99 directly to Mrs Y, plus £300 to Mrs X for time and trouble in pursuing the complaint.
Mrs Y was allocated a social worker to explore alternative care homes, though this work was paused pending the Ombudsman’s outcome. The Council also recorded that, under the Care Act 2014, Mrs Y was an ordinary resident of a different local authority, by virtue of having funded her care privately, and it started discussions with that neighbouring authority, while continuing to commission her current placement to maintain continuity of care during the dispute.
What was found
The Ombudsman accepted the Council’s contemporaneous evidence that, in March 2021, it had discussed funding with Mrs X and had explained its usual rates, the possibility of a top‑up fee payable by a third party, Mrs Y’s savings, the 12‑week property disregard and the deferred payment mechanism; on the balance of probabilities the Ombudsman considered this information was given, even though Mrs X disputed some details. However, the Ombudsman found clear fault because the Council did not ensure that Mrs Y had a genuine choice of accommodation, including at least one available and suitable care home within her personal budget that did not require any top‑up; no alternative placement within budget was ever offered.
A further fault was the absence of a formalised top‑up agreement for the period April to July 2021, during which Mrs Y was not yet able to be regarded as a full‑cost payer but was still paying extra sums to the home; top‑ups must be governed by written agreements and paid by third parties or the resident – the latter only during a disregard period or under proper deferred arrangements, not informally by the resident from capital.
The Ombudsman noted that Mrs Y had paid substantial amounts in top‑up‑type fees over several years, leaving her position now unsustainable and her long‑term placement at risk, creating injustice in the form of financial insecurity, uncertainty and distress.
Because of the passage of time, the Ombudsman could not determine whether, if the Council had complied with the choice‑of‑accommodation rules, a different care home without a top‑up would have been identified or accepted by Mrs Y; the family had struggled to find any home, and it was not possible to say on the balance of probabilities that she would have chosen a different home to avoid top‑ups. In view of that uncertainty and the fact that care had been provided and there was a reasonable expectation of contributing towards care costs, the Ombudsman did not require full reimbursement of all top‑ups since April 2021, instead accepting the Council’s offer to reimburse a defined period, partially offset debt, and pay a modest time‑and‑trouble sum.
The Ombudsman required the Council to apologise to Mrs X for failing to offer Mrs Y a non‑top‑up care home within budget, and for the resulting distress and uncertainty, and to contact Mrs X to agree how to reimburse the top‑up fees for April–November 2021 and the £300 complaint payment, as outlined in its complaint response. The Council was also directed to remind relevant staff of their duty to ensure service users have a genuine choice of accommodation, including at least one available and suitable home within the personal budget without a top‑up, and to provide evidence to the Ombudsman that it had completed these actions.
Financially, the Ombudsman endorsed the Council’s existing offer: reimbursement of £11,365.15 in historic top‑ups for a specific period, allocation of £9,398.16 to clear Mrs Y’s arrears, £1,966.99 to Mrs Y directly, and £300 to Mrs X for time and trouble, with the possibility of a repayment plan if any further outstanding fees remained. No wider waiver of care fees was ordered, and compensation was limited to these targeted financial remedies plus the apology and practice reminder, which together were considered sufficient redress.
Points to note for councils, professionals, people using services and their carers, advocacy groups and members of the public
This report is a bit of a mess, in terms of the legal framework to which it is supposed to be faithful.
A council responsible for commissioning residential nursing care must ensure that at least one suitable care home is available and offered within the person’s personal budget, rather than assuming that a family‑identified home above the personal budget should be commissioned. This woman never ceased to be fully contracted for by the Council, regardless of her property sale, so she was never actually able to pay a self-funded top up, and she was never able to be regarded as having chosen to live out of area, for the purpose of identifying her council of ordinary residence, after Birmingham COULD potentially have ceased to fund her, if she’d had capacity or an authorised representative to continue to pay contractual fees to the home. The HOME should not have been using a resident agreement when accepting a Council placement client, especially not one which purported to seek agreement to paying a ‘resident contribution’ for a future point when the individual was no longer state funded. None of this is brought out in this report.
Choice‑of‑accommodation rules do not legitimise a situation where the only option in practice is an out‑of‑area home at a fee above the authority’s purported usual rate or its purported maximum personal budget, with a long‑term shortfall being met informally by the resident herself. Community care law treats that as a failure to provide genuine choice; a lawful offer must include at least one available, suitable home that meets assessed needs, at a rate the council regards as sufficient and sustainable, and any top‑up should sit transparently on top of that lawful core offer rather than being the mechanism by which basic needs are met. The only situation in which a person can self-fund a top up is during the 12 week disregard or during a deferred payment agreement, and the latter was not made, in this matter.
Under community care law, any “additional payment” must be governed by a proper written agreement, clearly distinguishing the council’s personal budget (the cost to the authority of meeting needs) from extras that reflect wants rather than needs, with top‑ups paid by third parties or under a properly structured deferred payment, not by the resident’s capital in an unstructured way that risks unsustainable depletion, duplication of charges through the concept of tariff income, and confusion about liability. Birmingham’s failure in this regard obscured the fact that the woman was expected to pay a self-funding fee from the start, even though she was never a self-funder, but a full cost payer, and even then, potentially one whose capacity may have meant that she could not STOP being a full cost payer and move ON to being a self-funder even after her property was sold!
When a person starts as council‑funded and later becomes a fully PROPERLY self-funding person (in a neighbouring authority) following sale of a property and then undergoes depletion of capital, public law principles still require clarity and fairness in financial assessment.
Where a person’s savings drop below the upper capital limit, the relevant Council’s charging and commissioning duties engage and need to be implemented promptly, with up‑to‑date financial assessment and a clear recalculation of the personal budget showing the Council’s share and the client’s contribution. The relevant Council is the one where one is ordinarily resident, but if the original Council has never stopped funding the client as a full cost payer, then there has been no evidence of take-up of ordinary residence elsewhere. The fact that after a property sale, one stays on in a neighbouring authority means that one is making oneself consensually and voluntarily ordinarily resident there, and a client starting off out of area from their original home area should always have been warned of this: there is clear case law that the Ombudsman’s investigator seemingly overlooked, that would have made the responsibility REMAIN as Birmingham’s for want of proper advice and information beforehand (even if this woman had ever started to self-fund).
We can see that the reason the Council made an offer of partial reimbursement to November 2021, is because that was the date when the property was sold, and there no longer needed to be a funding agreement in place in the Council’s NAME. At THIS point, the status of the woman should have gone from full cost payer to self-funder, in theory.
At that point, the £349 odd per week that she had been expected to pay as a full cost payer
a) legitimately, if the person had moved under council arrangements to be a full cost payer on a deferred payment arrangement, (which could have been put in place by the original funding Council and then discharged when the property was sold)
b) that same fee, ongoing, per week, after the property was sold
was the lifestyle choice payment that she was regarded as being ABLE to make a contract to pay, in advance of it being NEEDED.
This shows how carefully a Council must be policed with regard to withdrawing from funding, formally, when the disregard comes to an end. That is possible where the person doesn’t want a DPA and has capacity to contract. But incapacity to contract as well as lack of liquid assets to pay the fee, would mean that the Council needed to carry on, albeit at full cost, until the property was sold) and then and only then withdraw if there was a deputy or attorney to carry on paying.
But it also clarifies what the Competition and Markets Authority Guidance is aiming to stop happening: it opines that it is fundamentally unfair for clients entering homes as self-funders, to be required to sign agreements saying that they agree that they WILL pay an extra fee, on TOP of what is paid by a statutory authority, if the day ever comes when the person ceases to be a self-funder.
The trouble is that this woman never STARTED to be a self-funder – even though the home probably thought that the relatives were looking for a private placement. That all came about because of Birmingham’s practice of giving the relatives the job of ‘finding’ a home that suits them and their loved one, instead of doing what every council is obliged to do, which is the care planning for anyone who is entitled to a Council funded placement – along with a social work driven recommendation as to which of any suitable homes it was contracting with, might or might not be the best one to express a preference for, even if both are appropriate, always assuming that there’s at least one on offer, within the budget.
We have to say, therefore, that we think that this is a very weak report, and not well quality controlled in terms of ensuring that the public can learn anything from it, and that other people do not suffer injustice.
In community care law terms, where a person has made a SELF-funded move out of area, even after there’s been a council behind the original placement, that former council must continue to commission suitably and lawfully until any transfer of responsibility is agreed with the receiving authority. Had that been the scenario, then that second authority would have needed to determine for itself whether she needed to be in a care home at all, and then whether what had been her original preference (or her family’s preference) for this home in its own area, had hardened up to a therapeutically assessed need to remain in situ there – in which case it would have been too late to charge a top up at all.
BUT none of this is correct as an analysis here, because she never became a self-funder: she remained a Birmingham Council funded full cost payer because there was never any termination of the Council’s contract at the end of the disregard, and so Birmingham had no HOPE of getting any other authority to take her funding over: there was no break in Birmingham’s responsibility before capital depletion!
This report illustrates how dubious long‑term residential arrangements can become when the basic care cost is effectively capped by reference to an authority’s “maximum rate” and the shortfall is filled by informal payments that have never been analysed as ‘wants’ versus ‘needs’. In this case, the Ombudsman accepted the Council’s narrative about usual rates and the use of a neighbouring authority’s rate, and focused on the absence of an alternative non‑top‑up placement, yet there is no detailed critique of whether either Council’s “maximum nursing rate” was itself a lawful expression of the duty to set a sufficient budget for a woman with double handling hoisting needs, rather than an unlawful cap.
It is not lawful to maintain a fantasy-based usual rate any longer for a Care Act client: the comparison for Choice of Accommodation purposes is based on one’s individual assessment led personal budget, and that is set by reference to sufficiency to meet the identified needs, not by reference to a figure plucked out of thin air or based only on procurement / framework rates. That latter point must be the case because one is entitled to get one’s council to place one with OFF-Framework providers, and not merely those in the local area – so it is clear that the MARKET in question for the question of what is a sufficient rate for meeting that level of need is much wider than the market that the commissioners think that they are managing!
For families and advocates, this decision underlines the importance of insisting on a clear written personal budget that sets out the total weekly cost of meeting assessed needs, the amount the council pays and what, if anything, is a separate top‑up reflecting preference rather than necessity. Public law principles mean that if the documentation does not show how the Council has reasoned from assessment and eligibility to costed provision in the plan, and if “extras” are being described vaguely as lifestyle payments whilst actually covering part of the basic care fee, that arrangement is open to challenge and may result in retrospective reimbursement. It is very easy for top-ups and the concept of ‘choice’ to turn into a collusive bridge as between providers and councils, in that regard, and it is possible for it to be encouraged and even imposed by councils if their local provider market is ignorant of the law.
An interesting contrast exists with additional payments charged by homes providing continuing NHS healthcare patients with primary health need scores on an ICB’s CHC process – whereby the provider must invoice the person or family member separately and thus be able to IDENTIFY what it is that is the justification for the extra payment – making it impossible to duplicate the charge already agreed for the meeting of anything identified as a need for the CHC care plan. This is the theory, at least. The National Framework tries very hard to give the impression that the NHS can forbid additional payments altogether, but of course this is ridiculous – the NHS is not in charge of the agreements that can be made by a CHC client or their family. It can however ask to be satisfied as to what the charge is being made for, in case it is inconsistent with something related to the meeting of needs for which it is responsible. The Competition and Markets Authority has powers to deem contract structures to be unfair, but the same point must in principle apply to its own role if a contract is made by a capacitated self-funder – it is hard to say that it is inherently unfair that a home thinks ahead to a future point for ongoing occupancy, realises the placement will be worth less than a private placement, and seeks to offset that risk by getting the person’s agreement in advance to paying for remaining in a posher than standard room, or for getting something actively superior to that which state funded clients are considered to need. But the point is that they must be ABLE to identify what that superior thing is, beyond personal extras – and our view is that it cannot just be said to be a ‘lifestyle choice’!
The Ombudsman describes the £348.93 per week (of which the Council was unaware for 3 years!) as a lifestyle payment – but it was described in the agreement as a resident contribution, with an additional payment of £0. We think that the home was calling personal extras, additional payments, and the contribution was a contingent agreement for the shortfall between a state funded contract and what it had been getting from a self-funder, before capital depletion. Frustratingly, the investigator doesn’t bother to set out what the Resident ‘Agreement’ actually itemised as potential reasons for charging an ‘additional payment’…
A personal payment to a care home for a non–disregard or non–DPA person being funded by a council, as opposed to privately, would generally ONLY be appropriate only where the reason for the payment is a personal extra, such as wine, lottery tickets, hairdressing, chiropody, etc. There is no reason it should not then come out of the person’s personal allowance or capital. When a person is Council funded, their assets remain their own, and they are entitled to spend their money on having comforts and pleasures. Their spending of this nature will effectively be ignored in financial assessment, putting them into apparent debt to the council, and thus deplete their disregarded below lower threshold savings – (here, they had gone anyway) – unless the person agitates for an enlarged personal expenses allowance on the basis of it being needed for wellbeing, as opposed to pure pleasure.
An additional payment, we think, is best seen as something that is a want, And which is superior to the standard offering being funded by the STATE, but which is inseverable from the room itself, such as the furniture, the view, the size of the space, or the luxury aspect of the room or service, NOT just a personal extra. We are unclear ourselves whether it could ever extend to extra levels of care, because contracts and the Care Act leave the idea of what is needed to a professional judgment, rather than a minimum standard or ratio of care worker or daily input, since everyone IS different.
Here, the home’s lowest acceptable room rate and the way the Council and home structured the funding suggest that the “lifestyle” label may have been used to mask a basic shortfall between the Council’s (maybe BOTH councils’!) inappropriately capped contribution and the actual cost of adequate nursing care. This matters because if a payment is, in substance, meeting essential care needs, it cannot lawfully be treated as an optional top‑up, and community care law would support a public law challenge that seeks reclassification of those sums as part of the personal budget, with corresponding remedies.
A more thorough public law analysis would ask whether Mrs Y’s capital was effectively being used to bridge a gap created by an unlawful cap on the council’s budget, and whether any part of the council’s claimed debt represented charges that should never have been raised at all if the personal budget had been lawfully set and if top‑ups had been confined to genuine extras.
Taken together, these gaps show that while the Ombudsman has rightly condemned the lack of a non‑top‑up choice and the absence of a formal top‑up agreement, the analysis does not fully reflect community care law’s insistence on a reasoned, evidence‑based nexus between assessment, eligibility, personal budget sufficiency and charging. A better job would have focused on the Greenwich v Bexley litigation regarding the need for the first council making the placement out of area to be squeaky clean with regard to advice and information as to the consequences of selling the property rather than having a deferred payment arrangement, if the preferred home is out of area. It was only that degree of prior transparency that assisted Greenwich to being upheld in regarding their client as having become Bexley’s responsibility through a private placement that the family were determined to make notwithstanding the ordinary residence implications.
A more rigorous application of these principles could have led to stronger findings about the lawfulness of the council’s internal caps, the mis‑labelling of payments that were functionally part of the core care cost, and the need to review and possibly write off debt that arose from arrangements that were themselves legally flawed, rather than merely offering partial reimbursement for a limited period.
What happened here was an assumption that if a family had chosen a home which was more expensive, then there was no NEED to find others, which is of course wholly the wrong way around.
We think that councils should build into their processes an explicit check, when setting up or reviewing residential or nursing placements, that any additional payments are genuinely for enhancements beyond the minimum necessary to meet eligible needs, and that the person or family has been clearly advised that these payments are voluntary and may cease without invalidating the core placement. Community care law would expect such enhancements to be clearly separated from the cost necessary to prevent significant impact on wellbeing, so that the council can still offer a lawful within‑budget placement if top‑ups become unsustainable, rather than suggesting that the person must move because their preference can no longer funded through a top-up.
Please use the following link if you want to read the original Local Government and Social Care Ombudsman’s Birmingham City Council (25 005 975) report. If you are affected by the issues in this report, please consider asking a free, one-off question, anonymously, at a level of principle, here. Our experts’ response will give you an opinion which may then help you and the broader community, when posted.
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