Ombudsman says Norfolk council must apologise after accusing man of gifting money to avoid care costs

The Local Government and Social Care Ombudsman has ruled that Norfolk County Council must apologise, pay compensation and repeat an assessment after wrongly concluding a man had given away funds to avoid paying his own care costs.

The ombudsman found the council was at fault for not checking the circumstances of gifts the man — identified in the ruling as Mr Y — made to his adult children before deciding he should meet the full cost of long-term residential care. The council had been told Mr Y transferred £34,000 to each child in October 2022, leaving him with roughly £10,000 in personal assets; it therefore concluded he was above the means threshold for public support. The regulator ordered the council to apologise and pay £300 each to Mr Y and one of his sons, referred to as Mr X, and to start the financial assessment process again.

The dispute began while Mr Y was in hospital in October 2023. He and his wife ticked "No" on a form asking whether he had given away money or capital investments. A social worker later recorded that he had handed sums to his children in October 2022 and the council then decided he required residential care and would need to pay the full cost. One of the children, Mr X, appealed to the council, saying the payments were made before any decline in his father’s mobility and that previous assessments in 2010 and 2022 had not found a need for formal care.

In its decision the ombudsman said councils should not automatically assume a deliberate deprivation of assets and must explore the reasons behind transfers before drawing conclusions. "There may be valid reasons someone no longer has an asset and a council should ensure it fully explores the circumstances before drawing conclusions," the ruling said. The ombudsman also noted guidance that people are free to spend their income and assets as they see fit, including making gifts to family and friends.

Under current means-testing rules in England, people with savings above £23,250 must meet the full cost of permanent, temporary respite or nursing home care. The ombudsman’s ruling highlights the practical and legal challenges councils face in distinguishing between legitimate spending and transfers intended to avoid care costs.

Norfolk County Council said it accepted the ruling. A council spokesman said the authority had paid £300 to the family for "distress and inconvenience" and had agreed to repeat the assessment process in line with statutory guidance. The spokesman added that the council had provided additional training for finance staff and reviewed its policies "to ensure decisions are transparent and follow guidelines" and said the council remained "committed to supporting and caring for our residents with fairness and respect."

The case comes amid wider pressure on social care funding. Local authorities across England are dealing with rising costs as the population ages and some councils have raised council tax to help meet adult social care budgets. Norfolk increased its council tax by 4.99% in 2025, with 2 percentage points earmarked for adult social care, while reporting a budget shortfall of £44.7 million for 2025–26.

The ruling was published more than a year after the new Labour government abandoned plans to introduce a cap on an individual's lifetime care costs. The decision, announced by Chancellor Rachel Reeves, scrapped a proposal that would have capped lifetime social care costs at £86,000 — a pledge previously endorsed by Health and Social Care Secretary Wes Streeting when the party campaigned for government. Supporters of a cap had argued it would protect people from crippling bills; opponents cited cost and implementation concerns for local government funding.

Mr X told the council in his appeal that his own income was affected during the COVID-19 pandemic and he took out a loan of about £35,000; the money from his father was used to repay part of that loan and to repay people who had assisted him. The ombudsman said the council should have made enquiries with the family about such circumstances before determining that assets had been deliberately depleted to avoid care charges.

The ombudsman’s finding requires the council to re-run its financial assessment of Mr Y under the correct procedures. The regulator’s report did not order the council to alter any historic care charging decisions beyond the payments and reassessment it specified.

The case underlines the importance of careful, documented enquiries by councils when large transfers are reported during eligibility assessments for social care support, and it reflects continuing tensions around how to fund adult social care in England without unfairly penalising families who transfer assets for legitimate reasons.