1 MANCHESTER CITY COUNCIL REPORT FOR RESOLUTION REPORT TO: The Executive DATE: 25 June 2008 SUBJECT: Adoption Financial Support REPORT OF: Director of Children s Services PURPOSE OF REPORT: To recommend the implementation of a Means Test in order to ensure a fair and equitable distribution of adoption financial support. RECOMMENDATIONS To introduce to the Department for Children, Schools and Families a Means Test when considering an award of adoption financial support. FINANCIAL CONSEQUENCES FOR THE REVENUE BUDGET None. FINANCIAL CONSEQUENCES FOR THE CAPTAL BUDGET None. CONTACT OFFICERS Sandra Edwards, (Acting) Principal Manager, Family Placement Service, Tel: Ciaran Rafferty, Service Lead for Corporate Parenting and Placements, Tel: BACKGROUND DOCUMENTS Adoption Support Services Regulations 2005 WARDS AFFECTED All IMPLICATIONS FOR Anti-Poverty Equal Opportunities Environment Employment
2 1. Introduction. a) The Adoption Support Services Regulations 2005 require local authorities, when considering placing a child for adoption, to identify a range of support services available to meet the needs of the child in consideration of placement and the prospective adoptive family. b) Financial Support is one element of a range of adoption support that must be assessed prior to placement of the child. Any proposal for the payment of financial support should form part of the Adoption Support Plan. c) Financial support can also be requested by families who have already adopted to ensure the placement can continue (Regulation 8 (1)). d) Financial support can be paid as an ongoing allowance, which is reviewed annually, as a single payment or a series of payments. e) The Regulations allow conditions to be attached to the payment of financial support, for example, timescales can be agreed or the purpose stipulated for which and payment of financial support should be utilised. 2. Eligibility. Financial Support is payable only in the following circumstances: - (Regulation 8 (2)). a) Where the financial support is necessary to ensure that the adoptive parent can look after the child. b) Where the child needs special care, which requires greater expenditure of resources by reason of illness, disability, emotional or behavioural difficulties or the continuing consequences of past abuse or neglect. c) Where it is necessary to make any special arrangements to facilitate the placement or the adoption by reason of: - - The age and ethnic origin of the child; or - The desirability of the child being placed with the same adoptive parent as his brother or sister (whether full or half blood) or with a child with whom he/ she previously shared a home. d) Where support is to meet recurring costs in respect of travel for the purpose of visit between the child and a related person. e) Where it is appropriate to make a contribution to the following kinds of expenditure: -
3 f) Expenditure of legal costs, including fees payable to a court in relation to an adoption; g) Expenditure for the purpose of introducing an adoptive child to his/her adoptive parent; h) Expenditure necessary for the purpose of accommodating and maintaining the child, including the provision of furniture, domestic equipment, alterations to and adaptations of the home, provision of means of transport and provision of clothing, toys and other items necessary for the purpose of looking after the child. Note: Benefits and Tax Credits In all cases, it is important that the adoptive family is claiming all benefits and tax credits to which they are entitled. Financial support for adoption cannot duplicate any other payment made to the adoptive parents. 3. Children already adopted. a) Financial support can be paid to the adoptive parents approved by Manchester, who live in Manchester post adoption, when the longterm success of the adoption may be in doubt without the provision of financial support. If however the carers live outside the Manchester City boundaries this responsibility only continues for 3 years after the making of an adoption order. b) Financial support can be paid to adoptive parents who live in Manchester but whose child was placed by an Adoption Agency other than Manchester City Council. However the placing authority retains responsibility for assessing and providing financial support for three years from the date the Order was made. c) The child and adoptive parents who apply for financial support post adoption must fulfil the eligibility criteria and must complete a financial means test. d) The responsibility after three years falls to the local authority in whose area the adoptive carers reside unless financial support beyond three years was agreed at the time of placement. In these circumstances it remains the responsibility of the placing authority. e) In most circumstances financial support for a child already adopted will be paid as a single lump sum, (for example to facilitate therapy) unless the expenditure is to meet any needs that are likely to be recurring in which case the financial support can be paid in instalments, or as an ongoing allowance. Key Issues 1) Currently, if prospective adoptive carers wish to make an application to be considered for Adoption Financial Support, and meet the Eligibility Criteria they are requested to provide information about their income and expenditure.
4 2) If a recommendation is made by the Adoption and Permanence Panel for financial support, the applicants income and expenditure is scrutinised by the Agency Decision Maker and Adoption and Permanence Panel Advisor and a decision is made whether Adoption Financial Support should be awarded. 3) These decisions are not currently formula based or means tested. Adoption Support Regulations state that local authorities must act reasonably in making their decisions and can be challenged about decisions that are unfair or unreasonable. As a department without an evidence based assessment process we are vulnerable to challenge. 4) The Adoption Support Service regulation (15) 2005 requires the local authority to consider: - a) The adoptive parent s financial resources (including significant income from investments but not the value of their home) including any tax credit or benefit which would be available to them if a child is placed; and b) The amount required by the adoptive parents in respect of reasonable outgoings and commitments e.g. housing, living expenses. c) The financial needs and resources of the child. Financial needs include everyday financial needs, as well as special needs and expenses relating to the child s individual circumstances. The child s financial resources which can include any trust fund or capital investment. 5) Adoption Support Service Regulation 173(b) states that the local authority must provide information to applicants where an assessment relates to his/ her need for financial support, the basis upon which financial support is determined. 6) Under current arrangements The Council could, if challenged, struggle to demonstrate an evidenced based, equitable and transparent process for assessing and evaluating adoption financial support. Conclusions and recommendation 1. The Department for Children, Schools and Families have developed a model means test for Adoption Financial Support. The model proposed is intended to deliver a standard approach to arriving at adoption support (if not always a standard payment in different local authorities). It does however ensure that prospective carers are treated equitably.
5 2. There is no automatic entitlement to financial support and adopters are legally obliged to provide full details of their income and expenditure to the local authority when asking to be assessed for financial support, and, at the obligatory annual reviews. If any prospective adoptive carer is not prepared to provide the required supporting evidence their application should not be considered. 3. It is recommended that Manchester City Council adopt the Department for Children, School and Families recommended Means test Model. Internal Audit Section have been consulted and they have considered alternative means test models and consider the DCSF model to be most effective. The majority of colleague Authorities apply this model and this would standardise our practice in line with other North West local authorities. 4. It is recommended that the new means test model is not applied retrospectively or to applications currently under consideration. The impact of the new model is likely to be revenue cost neutral within a more transparent framework. A Go Live date will be agreed and the model will be applied by officers in Children s Services with the assistance of the Revenue and Benefits Service. Appendices: - 1) Standardised Means Test Model 2) Adoption Support Financial Model Means Test Application 3) Assessment for Financial Support in Adoption
6 Appendix (1) Standardised Means Test Model for Adoption Financial Support Introduction 1. The Department for Children, Schools and Families has developed a model Means Test for adoption and special guardianship financial support. The model has been tested with various local authorities and modifications made as a result. 2. The model proposed is intended to deliver a standard approach to arriving at adoption support or special guardianship support payments (if not always a standard payment), so that adopters and special guardians are treated equitably within the context of what is affordable within existing local authority budgets. Guidance on using means test model 3. The model is based on disposable income, and so provides a thorough analysis of the family s financial situation. Key principles of the test are set out in this section. 4. The regulations on adoption and special guardianship support services 1 set out that there must be no reward element in financial payments other than transitional provision for foster carers adopting or becoming special guardians for a child whom they are currently caring. 5. The overall approach used in the test is a snapshot of the family s current circumstances. If the adopted child is already living with the prospective adopters or adoptive parents, then the child should not be included in the calculations. 6. If a family is in receipt of Income Support, it is recommended that the local authority pay the family the applicable maximum payment without assessing their income/expenditure in this test. The figure paid to the family should not include any deductions for child benefit. 7. Financial support paid to adoptive parents under the regulations cannot duplicate (or be a substitute for) any payment to which the adopters or
7 special guardians would be entitled under the tax and benefit system. It is recommended that local authorities only include benefits that are currently being paid to members of the household. If there are other benefits to which the household would be entitled, this should be pointed out to the adopters or special guardian. A reassessment after 6 months could then be made which would capture all of the new benefits being received. This could be the case where, for example, a child has recently been placed with the adopters, and they have not yet claimed child tax credit. 8. The test is currently worked out on a monthly basis. The Adoption Support Services Regulations 2005 (SI 2005/691) available at Projected Family Income Section 1i Pay 9. This section includes basic net monthly pay, before any deductions for savings schemes, social clubs, accommodation/food and loans. However, the income figure used should exclude any payments into pension funds. 10. Where one (or both) of the adoptive parents is self-employed, the only income that should be considered is drawings as this is the equivalent of pay from an employer. Any profit from the business sitting in a bank account (and thereby not being reinvested) should be taken into account as capital under section 1iv: other sources of income. 11. If one (or both) of the adoptive parents receives overtime, fees, bonus/commission and/or gratuities on a regular basis (for example annual bonuses) should be included as part of the monthly payment (i.e. if the payments are annual, these should be divided by 12 to give the monthly amount and is to be included in the basic net monthly pay section). Section 1ii Benefits and Pensions (Parents) 12. Where the adoptive parents receive individual benefits (i.e. those that are not calculated on a household basis) these should be included in the income section. If the benefit payments are currently received weekly, then multiply by 52 and divide by 12 to give the monthly figure. Benefits to be entered in this section are: Employer s sick pay (after compulsory deductions) Incapacity Benefit Statutory Maternity, Paternity and/or Adoption Pay and/or Maternity Allowance Bereavement Benefit Working Tax Credit (if paid directly and not as part of pay and excluding any childcare element)
8 All pension payments received Other Benefits 13. In relation to working tax credit, an employed person currently receives working tax credit within pay from his employer. If this is the case, the amount will be included in the basic net monthly section. All those who receive working tax credit will receive an award notice, which sets out how much they will receive. This award notice will provide the information needed for this section of the test. 14. Where a childcare element is paid as part of the working tax credit, this should be disregarded from the income section. The existence of this type of credit needs to be considered when completing the expenditure section on childcare. 15. Any other benefits received by the parents, for example help with costs associated with disability or mobility, should be recorded in the other benefits section. Section 1iii Benefits (Family/Children) 16. Where benefits are received by the family/household, as opposed to being paid directly to the parents, they should be recorded in this section. This is primarily for benefits that are calculated on the basis of household composition. Benefits to be included in this section are: Income Support Jobseeker s Allowance Child Tax Credit per household Child Benefit for each child, excluding the child/children who are the subject of this assessment application 17. If a member of the household receives Income Support or Jobseeker s Allowance, the amount per household should be recorded here. (See paragraph 6). 18. Benefits to be included in this section are Child Tax Credits received for each child. All those in receipt of Child Tax Credit will receive an award notice setting out how much they will receive. 19. Housing Benefit should be excluded from this section, as it is disregarded for the purposes of the expenditure section. Section 1iv Other Sources of Income 20. Where the family receives income from boarders/lodgers, this should be calculated on a weekly basis (then multiplied by 52 and divided by 12 to give a monthly amount). To calculate the weekly income, all payments for board and lodgings must be added together, a 20 disregard allowance is applied and then 50% of any excess over 20 for each person is
9 deducted. This has to be calculated for Income Support Purposes. (See example below) Boarder/Lodger 1 Weekly Payment 55 Deduct 20 (Disregard Allowance) Deduct 50% of remainder Income from Boarder/Lodger Boarder/Lodger 2 Weekly Payment 60 Deduct 20 (Disregard Allowance) Deduct 50% of remainder - 20 Income from Boarder/Lodger Where the family receive income from rent on an unfurnished property, this should be calculated on the following basis: Monthly Income received in rent after the deduction of any costs. Deductions can be made for: Interest payments on the mortgage (but not mortgage capital payments) Repairs Council Tax (if paid by the family being assessed) Agents Fees Insurance (Buildings) 22. If income is received from furnished properties, the same calculation applies as above, but an extra 10% can be deducted from the monthly rent received, as a wear and tear allowance. 23. The approach used in paragraphs 20 and 21 is consistent with that used for calculating income from property for the purposes of income tax. If the person who is the subject of the assessment has completed a recent tax return, local authorities may ask to see a copy of this. The tax return should have the information needed for this section of the test. 24. Other income to take into consideration includes maintenance payments received for any child in the household and existing adoption or special guardian allowances (including enhancements for special needs) paid for any child. This latter may be paid where, for example, the family have adopted or become a special guardian for a child with a different authority and therefore receive a separate allowance. Section 1v Income relating to the child/children being adopted or becoming a special guardian child 25. This section relates to the child/children being adopted or becoming a special guardian child only. Any regular interest on capital and/or income in which the child/children has a legal interest and entitlement should be
10 included here. This could be, for example, a savings account, trust fund, property or other legacy. 26. Payments from Criminal Injuries Compensation Awards and interest received from Government Child Trust Funds should not be included in this section. 27. This section does not record Child Benefit for the adopted or special guardian child, but please consider any other that the child/children will be entitled to. Projected Family Expenditure Section 2i Home Expenditure 28. This section should include mortgage payments, made up of capital and interest, and also including any endowment payments linked to the mortgage. If the family pays rent, the monthly amount actually paid should be recorded here, after any deductions made for housing benefit. The only other outgoing which should be included in this section is council tax paid; this should be the amount paid after the deduction of any council tax benefit received by the household or discount for single adult households or second homes. Section 2ii Other Outgoings 29. Payments to be included in this section are regular monthly repayments on loans for housing improvements or vehicle upgrade. A decision will need to be made in relation to individual circumstances as to whether a loan repayment should be included here. Some loans may have been taken out by the adoptive or special guardian family to meet a new need incurred as a result of the adoption or special guardianship order, e.g. buying a larger car. 30. Other payments to be included in this section are maintenance payments, payments relating to court orders, private pension contributions and national insurance if self-employed or not working. 31. The section for reasonable child care costs will need to be determined on (a) the circumstances of the family in question (e.g. how many hours the parents work); and (b) local costs for child car services. Costs recorded in this section should be those paid after any childcare element paid as part of the parents working tax credit. Section 2iii Core Regular Family Expenditure 32. General household expenditure on items such as food, transport, clothes and recreation should be calculated using the allowance rates below.
11 Family estimated weekly expenditure with effect from 1 April 2007 Couples Aged 18 and Over: Children Aged Between: 0-4 years years years years years years In completing the means test, it is important to calculate the appropriate figure for the family being assessed. For example, for a household with a couple (parents) and 2 dependent children, aged 4 and 7, the core regular family expenditure should be recorded as per week. CALCULATION 33. The appropriate maximum payment will need to be entered for the household, depending on the number and age of the child/children being adopted or becoming special guardian children, and the circumstances of the child, e.g. special needs. 34. The payment structure is linked to the basic fostering allowance. However, in the case of existing foster carers who are receiving a higher level of allowance, there is scope for discretion to pay an allowance equivalent to the higher level fostering allowance so there is no detriment. 35. After the maximum payment has been entered, the box marked amount of payment to adopters or special guardian will show the payment that the test has calculated for adopters or the special guardian. This amount will be calculated on the following basis: Where the family s disposable income is less than 0, the spreadsheet will show the maximum payment allowed. This is because the adopters or special guardian have provided evidence via the disposable income calculation that shows they do not have means to accommodate any further expenditure. Where the family s disposable income is higher than 0, the spreadsheet will calculate a figure that is a percentage of the maximum payment. As the disposable income figure rises above zero, the percentage of the maximum payment of the adopters or special guardian will be tapered at a set rate of 50%. This rate means that for every pound of monthly disposable income a family is found to have, they will have 50 pence deducted from the monthly maximum payment. 36. Payments to adopters will be based on the allowances paid to foster carers, less child benefit. This is done to reflect the fact that adopters can claim such a benefit, but not foster carers. The appropriate amount of
12 child benefit for the child/children who are subject of the assessment should be entered into the spreadsheet. Please note that the maximum payment used to calculate the payment to adopters should not deduct any child benefit the adopters might receive, as the spreadsheet allows the child benefit to be deducted after the payment has been calculated. 37. The final payment shown will be the calculation of the means test minus the child benefit.
13 Appendix (2) Adoption Support Financial Support Model Means Test To be completed by applicants: Part 1. EMPLOYER S DETAILS (if relevant) Employer s Name:.. Address: Employee Reference Number It will greatly assist the application process if you could provide a copy of your latest pay slip. Please refer to the guidance notes. Part 2. STATEMENT OF FINANCIAL CIRCUMSTANCES All figures should be calculated on a monthly basis 1) PROJECTED FAMILY INCOME Monthly Amount Monthly Amount i) Pay You Partner Basic net monthly pay Drawings if self employed Total sub-section 1i ii) Benefits and pensions You Partner Employers sick pay (after compulsory deductions) Incapacity benefit Statutory maternity, paternity and/or adoption pay and/or maternity allowance Bereavement Benefit Working tax credit (if paid directly and not as part of pay and excluding any child care element paid) All pension payments being received Other benefits Total sub-section 1ii iii) Benefits (family/children) Income Support/Jobseeker s Allowance per household
14 Child tax credit per household Child benefit for each child, excluding child/children who are the subject of this assessment application Total sub-section 1iii iv) Other sources of income Income from capital, savings and investments net monthly interest Income from boarders/lodgers (see guidance for details of calculation) Income from unfurnished properties Income from furnished properties Maintenance payments received for any child in household Existing adoption or special guardian allowances (including any enhancements or specific payments for special needs) paid for any child Total sub-section 1iv TOTAL PROJECTED FAMILY INCOME DISREGARD FIRST 20% FAMILY INCOME FOR PURPOSES OF TEST 2) PROJECTED FAMILY EXPENDITURE i) Home Mortgage payments (capital and interest) including any endowment payments linked to mortgage Rent (after any housing benefit payable) Council tax (after any council tax benefit payable) Total sub-section 2i ii) Other outgoings Loan repayments for essential purposes (see guidance notes) Maintenance payments Court orders Private pension contributors National insurance if self employed Reasonable child care costs including nursery fees (after any child care element paid as part of the working tax credit) Total sub-section 2ii iii) Core regular family expenditure Based on 125% income support allowances per household Total sub-section 2iii
15 TOTAL PROJECTED FAMILY EXPENDITURE CALCULATION Total projected net family income (per month): Total projected family expenditure (per month): Disposable income (per month): Local Authority Maximum Payment: ENTER MANUALLY: Amount of payment to adopters Minus child benefit for child/children who are subject of this application ENTER MANUALLY: Final payment to adopters: Part 4. FINANCIAL NEEDS AND RESOURCES OF THE CHILD/REN SUBJECT TO ADOPTION Please give details of the financial needs and resources of the child/ren. Include details of any special needs and expenses, which are likely to be incurred. If you are aware that the child/ren have their own financial resources, such as income from invested capital or trust funds, please give details. These may be relevant in the determination of the allowance. As well as considering everyday financial needs, consideration will be given to any special needs of the child/ren such as special diet, heavy usage of bedding or clothing, attendance at a day nursery due to the need for close supervision and transport costs associated with medical treatment. Continue on a separate sheet if necessary Part 5. ANY OTHER INFORMATION RELATING TO THE CHILD/REN SUBJECT TO ADOPTION (Please tick where appropriate)
16 Appendix (3) Procedure Assessment for Financial Support in Adoption 1) When a child is presented to the Adoption and Permanence Panel for a should be placed for adoption recommendation, the panel will also consider whether the child is eligible under the Adoption Support Services Reg for financial support (ongoing adoption allowances). 2) To be eligible for the support the child must meet one of the following criteria: Where the child needs special care, which requires greater expenditure of resources by reason of illness, disability, emotional or behavioural difficulties or the continuing consequences of past abuse or neglect. Or, where it is necessary to make special arrangements to facilitate the placement or the adoption by reason of: the age and ethnic origin of the child, or the desirability of the child being placed with the same adoptive parents as his brother or sister (whether full or half blood) or with a child with whom, he/she previously shared a home. 3) Panel will make a recommendation taking into account the child s permanence report, the child s medical report and all other factors. The Chair of panel will enter on the child s recommendation form the reason and criteria under which panel are making a recommendation for the payment of financial support. 4) The Agency decision maker will consider the recommendation, background information and criteria, and make a decision to approve financial support or not. 5) The child s social worker must notify Family Placement (Adoption) if financial support has been agreed for the child. 6) The allocated family finder from the Adoption Team will search for a family who can meet the identified needs of the child.
17 7) When a family is identified and a matching meeting has taken place, the supervising social worker and social worker will visit to provide details of the child, give the CPR and any other information that is available (e.g. psychology report, medical etc.) 8) If the family, after thorough consideration, decide they wish to progress with the match, the supervising social worker for the family will visit to discuss financial support. 9) Although it has already been agreed that the child may need additional financial support, prospective adoptive carers are also required to complete a means test financial assessment. Carers will be required to provide wage slips, mortgage statements, bank statements etc. to verify income and outgoings. The supervising social worker will complete form Financial Assessment. 10) Prospective adopters are legally required to provide full details of their income and expenditure to the local authority, both when financial support is being considered and at the obligatory annual review. If prospective adopters refuse to provide the required documentation, they will not be considered for adoption financial support. 11) Once the financial assessment form is completed the supervising social worker will forward it to the Revenue and Benefits Section for the financial means test assessment to be carried out. 12) The means test will take into account: The adoptive parent s financial resources (including significant income from investments, but not the value of their home) including any tax credit or benefit which would be available to them if the child was placed. The amount required by the adoptive carers in respect of reasonable outgoings and commitments e.g. housing and transport costs and daily living expenses (but excluding outgoings in respect of the child.) The financial needs (e.g. because of special diet or need for replacement bedding) and the child s financial resources (e.g. trust fund).
18 13) The Revenue and Benefits Section will undertake the means test assessment using the DCSF model. They will notify the social worker for the child and the supervising social worker of the amount of financial support awarded (if any). 14) The supervising social worker for the family, with input from the social worker for the child, will complete the Adoption Support Plan, which will include the amount awarded for financial support by the DCSF means test. 15) The prospective adoptive carers will consider this Adoption Support Plan. If the carers agree, the Adoption Support Plan, along with the CPR, F form, and Adoptive Placement Plan should be presented to the Adoption and Permanence Panel for a match and recommendation of financial support at the recommended rate. 16) The agency decision maker will then make a decision regarding the presented Match and Support Plan including financial support. 17) The prospective adopters must be notified in writing by the child s social worker and the Agency decision maker s decision. They must also be informed and agree to any time limits placed on the award of financial support, and be informed and agree to the requirement to complete an annual financial review which will be means tested. 18) The prospective adopters must also be informed and agree to the conditions that they must inform the local authority if: They change address The child dies The child ceases full time education The child ceases to have a home with them The child reaches the age of 18, unless they continue in full time education. The prospective adoptive carers must also agree to inform the local authority if their financial circumstances improve or the financial resources or needs of the child change.