Direct Payments


It has long since been recognised that people would be more likely to be satisfied with the arrangements made for their care if they had more control over the choice of person doing the work, and the timing etc of visits. For many years it was not possible for authorities to give money directly to individuals to purchase their own care. What authorities did instead was give so-called ‘grants’ to voluntary bodies who then gave the money to particular people who needed more control over their care packages, whilst assisting them in the choice, and the employment law responsibilities arising from the job of work which the carer then did.


This sort of scheme was first regularised by the introduction of ‘direct payments’ legislation – the Community Care (Direct Payments) Act 1996, but such ‘brokering’ schemes may still be useful for those families outside eligibility for direct payments, such as those caring for people with very severely impaired mental capacity.


This Act allowed (but did not oblige) authorities to assess a person as needing services, and then give the client a sum of money, net of any charges that the authority would otherwise levy for the service, in order to purchase services of the nature thought to be needed, but from whomsoever the person chooses, and at a level or frequency to suit their fluctuating needs. The scheme was introduced first for younger, disabled people, but has now been extended to those aged over 65.


The Community Care, Services for Carers and Children’s Services (Direct Payments) (England) Regulations 2003, which came into force in April 2003 have altered the discretionary nature of the Direct Payment framework. Authorities now have a duty to make payments to those within a prescribed description, if the person consents. That person could either have had their needs assessed, or be a carer whose needs for carers’ services have been assessed under section 2(1) of the Carers and Disabled Children Act 2000.


The Regulations also govern whether the payment should be made gross or net of a charge, how the person’s financial means should be assessed, and specify circumstances in which the responsible authority may or must terminate the making of direct payments or require repayment of the whole or part of the direct payments.


‘Gross’ payments will be payments which are made at such a rate as the authority estimate to be equivalent to the reasonable cost of securing the provision of the service concerned.


Direct payments will even be available for the purchase of s117 Aftercare services, where payments will only be made gross.


The new regulations also allow direct payments to be made for the purchase of a residential placement, but limited to a maximum of 4 weeks in any 12 month period.


Finally, an important change has been made to previous blanket prohibition on the payment of the money to a close relative for their services. Under the 2003 regulations, a direct payment may be used to secure the services of close relatives, even those living in the same household as the cared for person, if the authority is satisfied that securing the service from such a person is necessary to satisfactorily meet the person’s need for that service.


For the present, before an authority can hand over a direct payment, the authority has to be satisfied about the level of capacity of the person to manage the responsibility for the money and the employment relationship that will be constituted directly between the service user and the care provider, once a contract is made. The test is that the person appears to be ‘capable of managing a direct payment’ ‘by himself or with assistance’. Therefore someone with limited mental capacity might be regarded as incapable of managing, and hence would be excluded from any scheme which the authority decided to operate. However, the scheme enables the authority to look for someone else, who, in conjunction with the client, can be expected to manage, so the concept of a willing assistant in effect extends access to direct payments to people with a learning disability. This is why authorities are still grant-funding voluntary bodies to provide that kind of assistance, but it could be obtained from a willing parent or friend as well. The rules limiting the circumstances in which payment of the money may be made to a close relative for their services, do not apply to the propriety of a close relative being an assistant.


Where a person is so incapacitated that a Receiver has been appointed, under the auspices of the Court of Protection, with a view to managing the person’s property and financial affairs, we do not think that the client in question can possibly be seen as having the capacity to manage a direct payment. Thus although Receivers are entitled to manage money on behalf of the patient, we do not think that a Direct Payment can lawfully be given to a Receiver. This is because the test for capacity to manage the basics of the employer role, in the Direct Payments legislation, is a pre-requisite to entitlement. If someone is eligible for Receivership, they cannot manage their property or affairs and it would be stretching the law to say that they could nevertheless manage the employer role.


Some authorities have embraced direct payments with such enthusiasm that they have lost sight of the need for a minimum level of capacity on the part of the client, and this has got them and the voluntary bodies administering the schemes into legal difficulties. In a Scots case (South Lanarkshire v Smith), a worker ‘employed’ by a person with severe learning disabilities was deemed to be the employee of the voluntary body, because, when it looked at the evidence, the Tribunal concluded that it was impossible to treat the worker as being under the control or direction of the service user. The authority had in effect shoe-horned the client into a direct payment scheme with the worker, who got a great deal of work through the voluntary body in charge of the money. On the facts, therefore, the employee was not employed by the client. A user’s consent is required before a payment can be made, and this inevitably restricts direct payments to people of a certain level of mental capacity.


Being able to give the money to the client, net of whatever charge would otherwise be made (according to the authority’s charging policy and the person’s financial situation) means, of course, that the authority does not have to risk being unpaid by a client, and then having to take the unpalatable step of pursuing the client through the courts. It means that the client has got to put his or her hand in their own pocket or bank account to make up the difference needed, to purchase the service from the private sector.


Of course, the handing over of public money cannot just be done without accountability, and some regulation. Authorities are obliged to monitor the use of the money and have had to set up auditing mechanisms such as quarterly returns; and they require the running of separate bank accounts in the client’s name so as to be able to see that the money is being spent properly. If in doubt, the authority is obliged to terminate the direct payment arrangement and resume responsibility for provision of the care, either directly or through a contract.


The two things that a direct payment cannot be used for are the purchase of services from the council’s own in-house provision arm, and secondly, the purchase of long-term residential care. Councils are not allowed to sell services to the public – although they provide them and then charge for them, that is a different concept in law than direct selling, and that latter activity is forbidden by legislation (the Local Authority Goods and Services Act 1970).


The authority retains a monitoring responsibility under the legislation – it must be satisfied that the need which calls for the provision of the service will be met by the service user’s own arrangements.



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