Direct Payments Guidance

The Health & Social Care Act 2001 places a duty on local authorities to make cash payments for community care direct to individuals who need services and who request direct payments. 

Direct Payments is one of a number of options available to disabled adults and children assessed as being in need of care services. The local authority makes the payment instead of arranging the services it has assessed the person as needing and the person then uses the payment to secure relevant services. In the case of children aged under 16 the parent or carer usually arranges the services for the child.

Direct payments are able to bring about improvements in the quality of life of people who would like to manage support for their children themselves. They promote independence, aid social inclusion and offer choices and control over the way care services are delivered.

Disabled people who meet the eligibility criteria are able to purchase personal and/or domiciliary care, day care/services and short break/respite residential care, with the assistance of a Support Agency.

The local authority and the Direct Payments Support Agency make information available and accessible and in a variety of formats.

In order to be eligible for a direct payment, a person must:

• Be aged 16 or over and disabled and be eligible for care services following a Community Care Assessment (for people aged over 18, or a Children in Need assessment if aged 16 or 17); or
• Have Parental Responsibility for a disabled child and provide or intend to provide a substantial amount of care on a regular basis for the child. The child must have had a Children in Need assessment and be eligible for services; or
• Be a carer aged 16 or over of a person aged 18 or over where the local authority is satisfied that the person being cared for is eligible but not necessarily receiving community care services. The direct payment is for services to the carer, not the cared for person. The carer should have had a Carers Assessment and be eligible for services; and
• Be willing (for children the parent must be willing) to go onto the scheme; and
• Be able (for children the parent must be able) to manage direct payments.

Direct payments can be made for any care service except for permanent residential care, so local authorities can and should offer direct payments to children or carers who have been assessed as being in need of services under the Children Act 1989 or the Carers and Disabled Children Act 2000. Direct payments must be offered as an option following an assessment of the individual's needs.

Users of direct payments must be willing to go onto the scheme or in the case of children, the parents/carers must be willing. Some families may not want to take on the responsibilities of direct payments, particularly those involved with provision of domiciliary or personal care i.e. taking on responsibilities for employees, ensuring that quality services are received etc. They should not be coerced onto the scheme by the local authority or some other third party. The direct payment user/family must understand what is involved before undertaking direct payments and it will be the role of the Support Agency and the Direct Payments Assessment Panel to ensure this happens.

Users of direct payments or in the case of children, the parents/carers must be able to manage them, with or without assistance.

If the local authority decides someone is not able to manage direct payments this decision must be made involving the person, with evidence for this decision and presented at the Direct Payments Assessment Panel. The person may need to access advocacy services.

Generally parents will be able to manage their child's direct payments, but the Assessment Panel may wish to check, if for example the parent has learning disabilities or mental health problems, whether this is the case and whether they can manage with additional support.

In assessing whether or not a person would be able to manage direct payments, the following questions could be asked:

• Does the person understand the nature of direct payments?
• Can the person express preferences between different types of service?
• Does the person currently take other important decisions for her/himself?
• Will the person be able to keep necessary records?
• Does the person understand the legal responsibilities of being an employer and can s/he cope with them?
• Will the person be able to ensure that their child receives services paid for?
• Does the person have a fluctuating or deteriorating condition that may affect his/her ability to manage on an ongoing basis?

If the answer to the first two questions is "No" the person is unlikely to be able to manage direct payments. "No" to the rest may indicate that the person may be able to manage with appropriate support. Forms of assistance available are detailed below.

Potential users and their families will need sufficient time to consider the responsibilities and the positives about direct payments prior to making a decision to apply to join the scheme. The Support Agency will offer support and advice at this time.

In addition, in order to join East Riding of Yorkshire Direct Payments Scheme, parents must:

• Be willing to sign an agreement with the local authority that clearly states the responsibilities of the local authority and the parent/carer.
• Be willing to open a separate Bank Account for direct payments

Staff must offer information about direct payments at assessment stage and as an option for service delivery at the point of care planning, this applies to adult and Children's Social Care.

The legislation allows direct payments to be used for the purchase of most care services as defined within current community care, child care and carers' legislation and regulations except permanent residential care. This includes domiciliary assistance, day care, short breaks, small adaptations, one off carer services etc. The service/s to be purchased will be as detailed in the child's child in need plan.

Direct payments may not substitute for permanent residential care. Direct payments may be made for people to purchase short stays in residential accommodation but the regulations specify the maximum period.  For children, a direct payment cannot be made in relation to the provision of residential accommodation for a disabled child for a period in excess of 28 days in one care block, and in any period of 12 months for periods in excess of 120 days in total. The time limit is imposed to avoid inappropriate use of residential accommodation and reflects the time limits set out in the amended regulation 13 of the Arrangements for Placement of Children (General) Regulations 1991.

Children living in permanent residential care may not access direct payments to purchase this care but they can use direct payments to try independent living and purchase relevant services prior to leaving long-term care.

Domiciliary assistance includes preparation of meals or snacks, performing household tasks and laundry etc. Personal assistance includes assistance in getting up and/or going to bed, routine administration of prescribed medication, ensuring the person gets to college/day centre etc.

Where appropriate the child may have a mix of direct payments and services provided by the local authority.

The Act does not currently authorise any other body, for example Health or Housing, to make direct payments, but where for example a health authority may make financial provision towards a package of care the local authority may use these funds to make direct payments.

The parents of the disabled child will generally choose and employ their own personal assistants. This may include purchase of care from independent home care agencies if this is what they wish. Children may already receive home care services from an agency arranged by the local authority - under the direct payments scheme the family will negotiate directly with the agency to receive the service at a time suitable for them and the agency will be responsible to the service user and family and not to the local authority.

Families should be encouraged to think flexibly about how to use their direct payment. An example might be a child who goes into local authority residential care (because this is what is offered) whilst the rest of the family goes on holiday. Options with direct payments could include choosing a residential care home at the holiday resort, paying for someone to look after the child in their own home whilst the family is away, paying for someone to accompany the child so they too can go on holiday with the rest of the family etc.

Parents will need to be aware that Care Standard regulations may apply. If the child stays in the person's home for more than 2 hours a day, that person will be subject to childminding regulations if the child is under 8 years of age. A child receiving direct payments to access a short break is not regarded as looked after (unless other conditions apply) and is therefore not required to access the short break with registered foster carers. A child accessing respite care in excess of 28 days (and this may be in one block) may become subject to Private Fostering Regulations. People employed as personal assistants are not subject to domiciliary care standards (unless employed via a domiciliary care agency). If in doubt, check with Commission for Social Care Inspection locally or nationally.

In the East Riding of Yorkshire, the local authority has agreed to operate, free of charge, a Disclosure and Barring Service (DBS) check service for employees of direct payment users working with children. This applies to parents of disabled children and also to disabled parents who may employ staff to assist them in their parenting role.

Parents may claim direct payments in respect of their disabled child until they reach the age of 18, but Section 15 includes details on how disabled young people aged 16 and 17 can access direct payments in their own right as part of the transition to adulthood.

Although direct payments can be used for small aids, we have not promoted this in East Riding of Yorkshire. This is mainly because our Occupational Therapists can get required equipment quickly and more cost effectively with no real need to use direct payments.

Direct payments may not be used for permanent residential or nursing care (see above).

Regulations prevent people using direct payments to secure services from their partner (other member of married or unmarried couple) or a close relative living in the same household. A close relative is in this context a parent, parent-in-law, aunt, uncle, grandparent, son, daughter, son-in-law, daughter-in-law, stepson or daughter, brother, sister or the spouse or partner of any of these. In addition, direct payments cannot be used to purchase services from a close relative living elsewhere or from someone else living in the same household as the direct payment recipient. This isn't intended to prevent people using their direct payment to employ a live-in assistant provided that person is not someone already excluded as above. The restrictions are meant to apply where a relationship is personal rather than contractual, and to ensure that the person does not transfer dependence from local authority services to family members, instead of living independently.

If the only way to secure relevant services is by employing someone in an excluded category, the local authority can make an exception - see Section 13 on Exceptional Circumstances.

It is acknowledged that for many people, unused to employing staff, direct payments could become a burden rather than a positive choice, so support is available to those direct payment users who want and/or need support. Many parents have said that they have enough on their plate without getting involved in PAYE etc and this could be a disincentive to direct payments for many people.

The East Riding of Yorkshire has contracted with the Pendrels Trust to provide a support service to all direct payment users, this is known as the East Riding Direct Payment Support Agency (known as Support Agency for short).

Direct payment users can choose one of the following support options:

1. Self-Management, whereby the parent or user will, after provision of information and training from the Support Agency on matters such as recruitment and selection, payroll management etc., totally self manage the direct payment. The user will receive the payment directly into their (separate) Bank Account and manage their own finances/payroll. Access to training and peer support will be available via the Support Agency. The user will be required to make monthly returns to the Support Agency for monitoring purposes, or if they choose not to use the Support Agency will need to be monitored by Care Management.
2. Assisted Management, whereby the Support Agency will provide assistance with recruitment & selection, carry out the payroll function, provide support etc. The direct payment will still be paid into the users separate Bank Account.
3. Third Party or Agency Management, whereby after initial training from the Support Agency the direct payment user may nominate a third party or agency (including partner or relatives) to manage the direct payment on their behalf. Generally families of disabled children are the third parties, but they may seek support from others e.g. an experienced family member etc. This may be a charitable organisation, or a user-controlled trust. The direct payment will be paid into the users separate Bank Account. The third party will make monthly returns to the Support Agency for monitoring purposes.

The Support Agency worker or care management worker will discuss with the service user/parent the nature of their relationship to the Agent and agreements will be set up before the payments begin. The service user must be clear about their role, the role of the agent/third party and the role of the Support Agency, as should the third party. If in doubt, the Support Worker should ask the parent/users permission to discuss matters with the proposed agent - if permission is not forthcoming, it is unlikely direct payments will be made. If the Support Worker is not confident the agent/third party will act in accordance with the users wishes and requirements and/or has an inadequate understanding of the roles/responsibilities (even with Support Agency advice and information) the user may not be accepted onto the scheme. The agent must always act at the direction of the user.

Whichever option is chosen, the service user/parent remains in control of the direct payment, is accountable for the way it is used and responsible for the Bank Account. People may express an opinion over how a service is to be provided and delegate the details to their agent or the Support Agency, but they may overrule any decision made by the agent or the Support Agency. Direct Payments are intended to facilitate independent living, not to switch from dependence on the local authority to dependence on a third party or the Support Agency.

Prior to a service user being accepted onto the scheme, the local authority must be sure (see Section 14, How to Get Direct Payments) that the service user /family will be able to manage with the option they have chosen. If there are any doubts that the user will not remain in control then options of support via the Support Agency will remain the only option under direct payments. If this is not acceptable to the user then direct payments may be refused.

In practice, most direct payment users opt to use the services of the Support Agency to some degree, often with some support from family members at least to begin with. As people gain in confidence they often take over more of the management role themselves.

The Direct Payments Support Agency is intended to act as the main agent for direct payments, and will be the main point of contact for direct payment users.

The Support Agency provides the following service:

• Market the direct payments scheme in partnership with East Riding of Yorkshire Council;
• Training/advice on related matters to scheme users i.e. recruitment & selection, responsibilities as an employer, health & safety aspects etc. This is usually done in the service user's own home;
• Direct provision of services such as recruitment & selection, payroll etc depending on the scheme option chosen by the service user and in partnership with the service user;
• Attendance at and/or provision of information to statutory reviews (co-ordination of reviews remains the responsibility of the local authority;)
• Contact with Care Management teams if the needs of the user change or there are difficulties with direct payments;
• Advice about training personal assistants recruited under the scheme, Care Standards requirements etc;
• Facilitation of direct payment user involvement, ensuring user views are represented on the direct payment steering group;
• Provision of information to enable direct payments users to select their preferred option under the scheme (see above)
• Notify Care Management when a direct payment user is in receipt of their payment and has recruited staff in order that the local authority ceases input;
• Collation of monitoring information.

People will receive a direct payment sufficient to enable them to legally purchase the relevant service to a standard acceptable to the local authority. Rates usually change in April each year and the direct payment procedures include an up to date sheet with current direct payment rates on them.

The direct payment for personal assistance includes an amount to pay personal assistants plus an amount to cover any on-costs. These include National Insurance, Holiday Pay (4 weeks a year), Sickness cover, Statutory Sick Pay (all but 13% can be reclaimed), Employers Liability and Public Liability Insurance, staff recruitment & selection, payroll administration costs, Bank Holiday pay, meetings with personal assistant, phone calls, replacement costs for one week per year staff training, attendance by carers at reviews (a maximum of twice per year), and redundancy pay (to be accrued at the rate of 1 week's pay per employee per year).

The number of hours paid reflects the assessed need of the service user.

Any unanticipated costs that may need to be made, for example, a start up cost or advance payment must be approved by the Team Manager and recovered as soon as possible via deductions from future payments. Very small packages of care will not be expected to have start up costs recovered.

Payments will be made net of any charges that may apply; there are no charges for Children's Social Care or services to carers. Service users will receive payment advice from Assessment & Payments which will give full details of what is being paid into the account, when and the service users contribution if any applies. 

Service users will decide what rate to pay staff, with advice from the Support Agency on minimum wage levels. Service users purchasing their care from independent agencies will pay the rate agreed with the agency, which may or may not include VAT but should be at no higher a rate than that paid by the local authority.

The Children's Disability Team staff will monitor build up of surplus direct payment money and will reclaim on review.

Any extra funding in excess of member agreed levels must be authorised in the same way as for people receiving services i.e. approved by the appropriate manager. The local authority cannot pay twice for a package of care.

In order to access a direct payment the child must have had a Children In Need Single Assessment, a Support Plan and finance agreed by the Children's Specialist Service Resource Panel for Disabled Children.

Providing direct payments does not affect the local authority's responsibility to review a person's care package. Direct payments will therefore be monitored and service users in receipt of these payments will need to demonstrate that they are spending their payment wisely and meeting their assessed needs. Monitoring should focus on whether the person's needs are being met, direct payments are being managed and that the aim of increasing user choice and independence is being met.

Children In Need reviews will follow procedures and time scales for these reviews as per the child care procedures manual unless circumstances change and a review and/or reassessment is needed earlier. It is expected that personal assistants/carers will attend the review and will be paid for doing so. If the care worker is employed by a private provider their manager may wish to attend, however this would be regarded as part of the management task and the local authority would not make payment for managers` attendance. In addition to usual review requirements, care management will need to be satisfied for direct payment users that:

• The Bank balance and financial records agree
• Income agrees with the payment record
• Payments are supported by invoices/wage records and that they are in accordance with assessed needs
• Levels of direct payment are reasonable, and that there are no surpluses or deficits.

The Support Agency or the direct payment user will refer any problems with the direct payment to care management and management of the finances will form part of the review.

Direct payments will not commence until the service user understands (or the parents, if a child is the service user) and agrees to the monitoring and review arrangements, which will be detailed in the signed Agreement between the direct payment user and the local authority.

Monitoring the Direct Payments Scheme as a whole will involve direct payments users, carers, the Children's Disability Team, and the Support Agency if appropriate.

These are set out in the User Guide to Direct Payments and in the agreement between direct payment recipients and the local authority, which should form part of the child's Support Plan.

The direct payment user is responsible for recruitment and selection of their personal assistants, with assistance from the Support Agency if required. This includes all responsibilities as an employer - a payroll facility is available from the Support Agency if the user wishes to use it, however the Support Agency will charge the user for this service.

The recipient must establish a Bank Account specifically for the direct payment and their contribution as defined by the local authority and make statements available on request to the local authority.

Recipients must also maintain a Timesheet & Care Record, which all carers/personal assistants must complete when working and will be provided by the Support Agency.

The direct payment user must ensure they have sufficient care cover to meet their needs and must not fall foul of European Employment Law and the maximum working week of 48 hours (unless the employee signs a waiver).

The direct payment user will be required to provide personal and public liability insurance cover, which can be arranged via the Support Agency or through existing household insurance.

DBS checks are strongly advised. A request should be sent to Personnel, clearly marked as "East Riding" and "Direct Payments". The local authority pays for the check. The parent does not have to have a DBS check but if they refuse to do so the Children's Disability Team should check out why they are refusing (it may be that they have known the person they are employing for a very long time and feel a check is unnecessary) and consider whether not having a check constitutes grounds for being refused a direct payment. A disclaimer form will be signed and reviewed annually.

Without raising anxieties, we need to offer advice to service users about being cautious about potential employees they do not know well, given that a Police check showing no criminal conviction does not in itself mean that someone is suitable to work with children. Service users can be advised on the availability of a checklist on employing safe child care on the GOV.UK website, or given lists of local childminders etc.

If the direct payments user's usual service breaks down, for example because of sickness, the direct payment user/parent should have contingency plans, for example another care worker or the use of agency staff. If they are not able to provide cover then the local authority has a responsibility to arrange services in an emergency.

Difficulties should be minimised if the direct payment user/parent is clear about what their payment may be used for, if monitoring has taken place, if support provided is effective, and if potential difficulties have been discussed and possible solutions worked out in advance.

When difficulties arise, the local authority should ask the following questions:

• Have the person's needs changed? If so, the person needs a reassessment and the level of direct payment reviewed.
• Is the amount of direct payment sufficient to enable the person to secure relevant services? Some costs may not have been taken into account initially and the direct payment may need to be reviewed. As a rule, however, direct payments should never cost more than the service would if purchased by the local authority. An exception to this rule might be if more expensive services were purchased in the short term with a view to dispensing with services in the long-term e.g. intensive rehabilitation costs.
• Is the person (or parent in the case of a disabled child) still able to manage direct payments? Additional support may be needed
• Does the person wish to continue receiving direct payments? If not, it may be due to insufficient support and the Support Agency should provide more input. If the person does not wish to receive direct payments then they should switch to directly provided services.
• Has all the money been spent on the service for which it was intended? If not, then repayment may be sought. If the service user or parent does not understand fully what the money should be spent on even with support and continues to spend improperly then they should be removed from the direct payment scheme and revert to services being provided by the local authority.
• Have services for which the user paid been provided? If not, the user must seek a refund from the provider.
• Has the money been spent wisely? If not, more support may be needed in order to enable the user to manage, or the local authority may decide the user is unable to manage and revert to services directly provided.
• If there are any difficulties of potentially abusive or criminal nature suspected e.g. family member misappropriating the direct payment money, paid carer abusing the child etc then care management should consider relevant action under child protection procedures.

An additional review may need to be called to resolve difficulties.

If full control of the payment does not pass to the user or parent in the case of a disabled child then the local authority may be liable for the actions of the user. Users and carers will be given clear advice about their responsibilities, which will be outlined in the contract signed between local authority and direct payment user.

The local authority may seek repayment if it is satisfied that the money has not been used to purchase the assessed services or if the user has not met the conditions imposed by the authority and laid down in the contract between service user and local authority.

The decision to seek repayment will be made on the basis of money being spent on things other than which it should have been or simply not spent at all, not on the basis of honest mistakes. The local authority will be clear with service users when repayment would be appropriate and service users must be well informed about their responsibilities. In considering unspent money, the local authority will also consider whether the service user has built up surplus to cover PAYE quarterly.

In addition, surplus money remaining unspent when all needs have been met will be reclaimed.

Discontinuation of direct payments may be considered under some or all of the following circumstances:

• When the service user or family no longer wishes to continue
• When the child reaches the age of 18 and is themselves either not willing or able to continue with direct payments
• If the person no longer falls within the eligibility criteria for some other reason
• If the person no longer requires care services e.g. goes into permanent residential care
• The death of the recipient
• If the recipient or parent is suspected of misusing their direct payment (in this circumstance audit may need to be informed).

A decision made by the local authority to discontinue must be discussed with the service user and their carers, and other options followed e.g. additional support from the Support Agency.

If direct payments discontinue, sufficient notice must be given to enable the local authority to arrange direct services - if this is not possible then services must be provided as soon as the direct payment ceases. Sufficient notice should also be given where to do so would not be detrimental to the service user, to ensure contractual employment obligations (e.g. notice) are met.

If the service user wishes to discontinue direct payments, he/she must notify the Children's Disability Team who will inform Assessments & Payments and recommence local authority provision of services following any reassessment necessary.

In order not to penalise service users from using direct payments due to unusual circumstances, there is provision for additional funding or funding to be used for exceptional circumstances if this is the only way the service user can receive direct payments. Examples of this might be that due to the physical location or condition of the service user, the only personal assistance available is from an exempt person i.e. relative. In childcare a clear distinction has been made that although a child's siblings and aunt, for example might be employed if there are no other options, the child's parents will not be employed as a care worker. Another example may be that the only personal assistance available is from someone living some distance away that would only be prepared to be employed in this capacity if travel costs could be made. The child may have such exceptional needs that the only people who could provide the service cost more than would usually be paid.

Those decisions outside the remit of the Team Manager should be referred to the Service Manager for Children's Commissioning and Specialist Services, who will make a decision on whether additional supplements should be paid or whether an exempt person may be employed etc. It should be noted that the legislation requires that the cost of services purchased by direct payments should normally be no more expensive than would otherwise have been provided by the local authority. However, good practice would dictate that people should not be effectively prevented from receiving the same service under direct payments as they would have received from local authority provision.

Any circumstance falling outside of this guidance should be referred to the Manager for decision.

If new service users meet the eligibility criteria for direct payments they (or the parents if a child is the service user) must be offered direct payments as an option for service provision at the care planning stage. The direct payment information leaflet should be offered during the assessment period. Existing service users should be reminded of the direct payment option at review. Information about direct payments should be provided by the Disabled Children's Team social worker, and NOT the Direct Payment Support Agency at this stage.

In order to access direct payments, service users should have had a Children In Need Single Assessment or reassessment, and a Support Plan should have been prepared, with costings - this is endorsed at the Children's Specialist Services Resource Panel.

The social worker from the Disabled Children's Team will complete/review the Support Plan if necessary, identifying the way the user intends to meet their needs. The social worker will also complete the DBS check from and send it to personnel, if this is what the parent/s wish.

Successful applicants who intend to use personal assistants are then provided with training and advice by the Support Agency, given time to recruit staff and set up their Bank Account etc. People intending to use direct payments for day care and/or residential care will be given assistance if needed in organising this. When they are ready to receive their direct payment the social worker will notify Assessments & Payments and the first payment will be made and the service currently being provided by the local authority, if any, will cease.

Ongoing monitoring and review will then commence as detailed above.

In the interim period between assessment and receipt of the direct payment the local authority should provide any existing services in the usual way.

Information about direct payments is now available in leaflet form, as is information about all council services.

Where this meets their interests, disabled young people of 16 and 17 are able to take advantage of the flexibility of direct payments. This will enable them to make more decisions for themselves and have more control of their lives. Direct payments to this age group can only be used to purchase the services the young person has been identified as needing, not those services identified to support other members of the person's family.

In considering direct payments for 16 or 17 year olds, there should be a balance between the wishes and feelings of the young person and the views of the parents. The overriding requirement is that the intervention of the local authority whether by providing a service or a direct payment, should promote and safeguard the welfare of the young person. If there is a difference of views between parents and children, providing the young person has sufficient understanding to make an informed decision, precedence should be given to the young person's views.

A young person using direct payments would be entering into contracts to meet their assessed needs and these contracts are enforceable for 16 and 17 year olds, also the responsibilities of employers set out in employment legislation apply regardless of the employer's age. Thus the young person and their family would need to understand that the young person is legally old enough to enter such contracts.

The Transition Plan, initiated in Year 9 of the young person's school career is a key document relevant to many agencies since it should plan coherently for the young person's transition to adult life. It should inform decisions made about direct payments.

Where direct payments may be offered to all carers assessed as needing support under the Act, except those specified in the regulations, it is unlikely that there will be many situations where such an arrangement would be the best option for a young carer aged 16 or 17 receiving services. The facility is there to allow for flexibility in that small number of cases where a young person chooses to undertake a substantial caring role and where the local authority supports that decision. For example, a young person may choose to care for a close relative rather than have someone else do it

Disabled people who are parents can receive direct payments under both community care legislation and the Children Act 1989 to assist them in their parenting role. This means that direct payments can be used to meet all the social care needs of them and their families that arise from their disability. The needs of the disabled person and their family must be looked at holistically and the assessment process needs to be streamlined and co-ordinated within adults and Children's Social Care and include relevant other agencies e.g. health and education. The child of a disabled parent may be in need but not necessarily in need of protection. Section 17 of the Children Act lays out the responsibilities of councils to provide services to children in need and families to safeguard and promote their welfare, and support that assists disabled parents to bring up their children is often the most effective way of promoting the children's` welfare.

In the East Riding a decision has been made that, child protection issues aside, disabled parents CAN and SHOULD parent their own children with any support required provided under adult community care legislation. Only if the child's needs cannot be met, even with support, should child care management teams be brought in and the child assessed to determine if s/he is a "child in need" under the Children Act 1989.