Personal care wrangle must be resolved

ONE of Alex Salmond's first acts as First Minister was to announce he was reopening the question of the refusal by the Department of Works and Pensions (DWP) to transfer to Scotland a sum equal to the attendance allowance previously received by self-funders in care homes, who are now receiving free personal care.

The DWP and the Treasury justified their refusal to transfer these funds on the basis of DWP rules. However, our research has identified a precedent where the DWP chose to breach this rule. This completely shifts the ground for the forthcoming discussion with the DWP and the Treasury and raises fundamental constitutional issues over relationships between the UK's different governments.

Attendance allowance is a benefit paid by the DWP for those who need help with personal care. As a social security benefit, attendance allowance is, in England, Scotland and Wales, a reserved responsibility of the DWP. In Northern Ireland, responsibility for social security is devolved.

Responsibility for care for the elderly in Scotland is a devolved issue and, in 2002, the then-Executive used its devolved powers to introduce free personal care in Scotland. As a result, self-funders in care homes ceased to be eligible for attendance allowance when they became eligible for free personal care. The Executive initially assumed it would receive from the DWP an amount equivalent to the attendance allowance foregone and, as a result, some 23 million would become available to help fund the new policy.

However, after discussions with the DWP and the Treasury, the Executive informed local authorities that, under DWP rules, "if a self-funder wishes to take up free personal care, their entitlement to attendance allowance will cease". In light of this, the DWP refused to transfer attendance allowance funding and the then-Executive concluded there was no benefit in taking the issue further.

We have now uncovered an example, called the "Boyd loophole", where the DWP breached the same rule used to refuse the Executive request.

In 2003, the UK government transferred administration of the residential allowance - paid to residents of private and voluntary care homes - from the DWP to local authorities. This produced a difficulty for handling a group of people known to the DWP as "Boyd loophole" cases.

These were defined as people who funded their own care through a range of social security benefits, sometimes topped up by relatives. With the abolition of the residential allowance, these cases would no longer have sufficient DWP support to maintain themselves in care homes and would have to be taken over by local authorities. It was estimated there were about 4,550 Boyd cases, of which about 75 per cent were aged 60 or over. Transfers were made from the DWP to local authorities in England and Wales and to the Scottish Executive to cover the costs to local authorities of taking on these cases.

It is clear from official documents that the amount transferred included an explicit amount for the attendance allowance and other DWP disability benefits which the Boyd loophole cases would no longer be eligible for as they would now be supported by local authorities.

The DWP's handling of the Boyd loophole group is inconsistent with the rule used to justify its refusal to transfer attendance allowance to the Executive in the case of free personal care.

This has a number of serious implications. First, it raises the question of why the previous Executive made no use of this case, when it allowed its claim for the transfer of attendance allowance funding to be dismissed.

The Executive should have been aware of the Boyd loophole as it was being resolved at the same time and resulted in the transfer of funds to the Executive.

Secondly, the new Executive can no longer be fobbed off by a supposed DWP rule when the DWP can choose whether the rule applies. Clearly, any impartial consideration of the facts would be likely to lead to payment of attendance allowance transfer to Scotland, with accumulated arrears.

This raises a third issue: who should make the ultimate decision? To leave the decision with DWP would be unsatisfactory: it would be judge and jury in its own case.

Mr Salmond has suggested convening the Joint Ministerial Committee on devolution: this body is meant to resolve disputes between the different governments of the UK, but has rarely met. It is difficult to see how such a body could provide a way of reaching satisfactory resolution in cases where the interests of the different parties are fundamentally opposed. Another difficulty with this committee is that its proceedings are confidential: so justice will certainly not be seen to be done, whatever the outcome.

A final outcome is likely to be a highlighting of the need for a more satisfactory method of resolving intergovernmental disputes. Such a method would have to be seen to be impartial and open. How this can be achieved, without a move towards a more formally federal structure, is not clear.

• Margaret and Jim Cuthbert are economists.