A person provided with residential care services which has been arranged by the local authority will undergo a financial assessment –means test. A person with more than £14,750 in capital or savings will have to pay for care services in full. If they have savings of between £14,750 and £21,000 the local authority contribution will be reduced at the rate of £1.00 for every £250.00 of capital over £14,750. Full local authority support will only be available if there are savings of less than £14,750.

Once savings have been exhausted, the person (or his /her family) requiring care services are forced into a position where they may have to sell the home to continue paying for the charges.

In a financial assessment, most capital is taken into account (e.g.) bank and building society accounts, savings bonds, stocks and share, business assets and a house. Certain capital is excluded (e.g.) any surrender value of a life policies and annuities.

Virtually all income is taken into account including retirement and occupational pensions.

After a financial assessment has been made and the contribution determined, the person requiring residential care services is left with a personal allowance of £19.10 per week £993.20 per annum (2004/05) and reviewed each year. This allowance is for personal expenditure including clothing.

Could you live on £19.10 per week?