Direct Payments
Amendment
In August 2024, Section 1, What is a Direct Payment? was amended to include information about promoting Direct Payments and the information and advice that should be provided. Section 8, Reviewing a Direct Payment was also amended to include information about its purpose.
A Direct Payment is a method of managing some or all of a personal budget. Instead of arranging services, the Local Authority makes regular financial payments to the person/carer so that they can arrange their own Care and Support/Support. This allows them to choose how to use the money to meet the needs that the Local Authority has agreed to meet (either under its duty or powers).
Direct Payments can be paid directly to the person needing the Care and Support (or carer needing Support) or to another person who they nominate. If a person with Care and Support needs lacks capacity, the Direct Payments can be paid to an authorised person (see section 6 below).
Direct Payments will usually be paid net of any contribution the person/carer has been assessed to pay towards the cost of their Care and Support/Support. The person/carer is expected to pay their contribution into the Direct Payment account alongside the Local Authority payment and these funds together will make up the personal budget. However, in some cases, the Local Authority may decide to make a Direct Payment of the gross amount of the personal budget; in this case the person’s/carer’s contribution must be paid back to them. As part of arranging a Direct Payment, local authorities must be clear about whether the payments will be made on a gross basis or a net basis.
The Local Authority is expected to promote the use of Direct Payments, as they provide the maximum level of choice and control. Information and advice about Direct Payments must be provided and the option to use Direct Payments offered.
The following is a list of information that should be provided:
- When a Direct Payment can/cannot be provided;
- How a Direct Payment can/cannot be used;
- Who can/cannot manage a Direct Payment;
- The process of arranging a Direct Payment;
- How often a Direct Payment is normally paid;
- How any assessed financial contributions should be made;
- Where prepaid cards are available, how they work; and
- How Direct Payments are monitored and reviewed.
If the person intends to employ a Personal Assistant (PA), they must be also supported to access specialist advice about employer responsibilities. If a PA will be providing live-in care, they will have additional legal rights to breaks and holidays that must be accounted for in any contingency planning and Care and Support Planning sign off process.
Anyone with capacity to request a Direct Payment must be provided with a Direct Payment, so long as:
- Where there is a person nominated to receive the payments, that nominated person agrees; and
- Whoever will be receiving the payment is capable of managing it (either on their own or with available help); and
- The Local Authority is satisfied that a Direct Payment is an appropriate way to meet the needs in question (see below); and
- The Local Authority is not prohibited from making a Direct Payment (see below).
So long as the above circumstances apply, a Direct Payment can be used to provide after-care services under Section 117 of the Mental Health Act 1983.
Where a Direct Payment is made for a person already in receipt of a Health Direct Payment (under the National Health Service Act 2006), the Local Authority must take reasonable steps to co-ordinate the systems, processes and requirements which it applies or imposes with a view to minimising the administrative or other burdens which they place on the person. It is suggested in the Care and Support statutory guidance that the bodies should consider whether one could act as the lead organisation that oversees the overall budget and monitors the Direct Payments.
The Local Authority must not provide a Direct Payment to meet the needs of anyone who is subject to a requirement, license or order that requires them to undertake drug or alcohol rehabilitation, behaviour therapy or testing.
All Direct Payments are subject to certain conditions, these are:
- The Direct Payment will only be used to pay for arrangements which meet the needs that the Local Authority has agreed to meet;
- The Direct Payment will not be used to pay a prohibited person to meet the needs;
- Where a person lacks capacity to make decisions about Direct Payments themselves, the authorised person will notify the Local Authority if the person gains this capacity; and
- Appropriate checks of carer’s criminal records will be carried out.
The Local Authority is permitted to attach other conditions to a Direct Payment if it considers it appropriate to do so. These include:
- Prohibiting a named individual from providing care;
- That certain information must be provided to the Local Authority to enable effective monitoring of the use of the Direct Payment.
Although the Local Authority can prohibit a named individual from providing care using the Direct Payment, it cannot tell the person who they should be using to provide care.
Ordinarily, a Direct Payment must not be used to pay for Care and Support being provided to the person by a relative living in the same household, including:
- A spouse, civil partner or partner co-habiting;
- A parent, step-parent or parent-in-law;
- A son/daughter, son/daughter-in-law or stepson/stepdaughter;
- A brother/sister or brother/sister-in-law;
- An Aunt or Uncle; or
- A Grandparent; or
- Anyone living with a listed relative as spouse, civil partner or partner co-habiting.
However, where the Local Authority consisders it necessary, it can authorise the use of a Direct Payment to pay any of the above people in relation to:
- Meeting the care needs of the person;
- Administrative and management support or services to enable the person receiving the Direct Payment to comply with legal obligations in respect of it; or
- Administrative and management support or services to enable the person receiving the Direct Payment to monitor the receipt and use of the Direct Payment.
Shobna has a learning disability and needs varying amounts of Care and Support throughout the day. Much is provided informally by her mother but she requires regular breaks. Shobna receives a Direct Payment but has not been able to recruit a Personal Assistant who understands her cultural needs. This means that her mother has not been getting a break and is very tired. Shobna's Aunt lives in the same household and is willing to provide some Care and Support to her so that her mother can have the break she needs. The Local Authority authorises her to become a Personal Assistant for Shobna.
Under the Care Act a Direct Payment cannot be used to pay for a long term care home placement.
For the purposes of the Act long term means either:
- A permanent placement; or
- A short term placement (including respite) that exceeds 4 consecutive weeks in any 12 month period (see below).
The 4 consecutive weeks threshold is always met when a single stay in a care home exceeds 4 weeks.
In all other cases, when calculating the length of the stay, any previous stays within the last 4 weeks must be added together. Where the period between stays has been more than 4 weeks, the previous stay should be disregarded.
The 4 consecutive week threshold is met when the person has stayed for 2 or more periods separated by less than 4 weeks that when accumulated add up to 4 weeks.
In this situation the person cannot use a Direct Payment to purchase a short stay in a care home until 12 months have passed since the start of the 4 week period. However, they can still access a care home placement if it is paid for by means other than a Direct Payment.
Case examples from statutory guidance
Mrs. H has one week in a care home every 6 weeks. Because each week in a care home is more than 4 weeks a part, they are not added together. The cumulative total is only one week and the 4-week limit is never reached.
Peter has 3 weeks in a care home, 2 weeks at home and then another week in a care home. The 2 episodes of time in a care home are less than 4 weeks apart and so they are added together making 4 weeks in total. Peter cannot use his direct payments to purchase any more care home services within a 12-month period.
Under the Regulations, there are a small number of local authorities for whom the 4 consecutive week rule does not apply.
A person who lacks capacity to request or manage a Direct Payment can still receive one under the Care Act so long as the person making the request for the Direct Payment is either:
- A person authorised under the Mental Capacity Act to make decisions relating to the person's Care and Support (e.g. a Deputy or a Lasting Power of Attorney); or
- A person approved by someone authorised under the Mental Capacity Act to make decisions relating to Care and Support; or
- Where there is no authorised person under the Mental Capacity Act, the Local Authority considers the person making the request to be suitable.
For the Local Authority to consider a person suitable to receive and manage a Direct Payment, it must be satisfied that the person will act in the best interests of the person receiving Care and Support when arranging support and services.
Before arranging a Direct Payment for a person who lacks capacity the Local Authority must make a Best Interests decision (or be satisfied that a person authorised by the Mental Capacity Act has made a Best Interests Decision) that the Direct Payment is an appropriate way of meeting the person’s needs.
The person becomes incapacitated
If a person with Care and Support needs who was receiving a Direct Payment loses the capacity to make decisions about it, the Local Authority may decide to terminate the agreement but should only do so if:
- The change in capacity is permanent; and
- There is no other suitable person willing and able to receive and manage the Direct Payment.
The person has fluctuating capacity
For the purposes of Direct Payments, a person whose capacity fluctuates is treated the same as a person who lacks capacity. This is because it is important that during the times they lack capacity there is a suitable or authorised person to receive and manage the Direct Payments.
However, during periods where the person has capacity the authorised or suitable person should ensure that they have allowed the person to manage the Direct Payments themselves.
The person gains capacity
Where a person lacks capacity to make decisions about the Direct Payment themselves, and Direct Payments are being made to an authorised person, it is a condition of the Direct Payment that the authorised person must notify the Local Authority if the person gains this capacity. In those circumstances, the Local Authority should discuss whether the person wishes the Direct Payments to continue and make the appropriate arrangements.
The Local Authority is required to satisfy itself that the Direct Payment is being used to meet the Care and Support/Support needs in the Care and Support/Support Plan. This monitoring should be proportionate to the needs being met and the risks of mismanagement. Where the individual receiving the Direct Payment has been successfully managing it for an extended period, consideration should be given to reducing the amount of monitoring to the lowest level.
Under the Care Act a Direct Payment must be reviewed no later than 6 months after the date that it began. Following this it must be reviewed not less than once every 12 months.
The Direct Payment review must include:
- The person receiving Care and Support;
- Any carer the person has;
- The person to whom the payments are being made (if this is not the person receiving Care and Support or the carer);
- Any person who is providing administrative or management support;
- Anybody the person asks the Local Authority to involve; or
- In the case of a person who lacks capacity, anybody authorised by the Mental Capacity Act to make decisions about Care and Support provided to the person (a Deputy of Power of Attorney); or
- Where no authorised person exists, anybody the Local Authority deems to be interested in their welfare.
The purpose of the review is to confirm:
- How well the process of receiving payments is working;
- How well the Direct Payment is being managed (including whether any conditions attached to it are being met);
- Whether the records required by the Local Authority are being maintained by the individual receiving and managing the Direct Payment;
- Whether information is being provided to the Local Authority as required;
- Whether the Direct Payment is being used as anticipated;
- Whether the Direct Payment is supporting the person/carer to meet the outcomes in their Care and Support Plan/Support Plan.
Any monitoring or review of a Direct Payment must also make sure that the person is meeting any legal requirements they have that are related to employment law.
The Local Authority must take all reasonable steps to reach agreement with all of the above people involved as to the outcome of a Direct Payment review.
The Local Authority may use its discretion to end the Direct Payment if:
- It is no longer satisfied that it is an appropriate way to meet needs;
- A breach of condition has occurred.
A person in receipt of Direct Payment (whether this is the person/carer or their nominated or authorised person) can request to terminate the agreement at any time, and the Local Authority must make alternative arrangements to manage the Direct Payment or their personal budget.
The Local Authority may require the Direct Payment to be repaid if it has been used for purposes other than making arrangements to meet the needs that the Local Authority has agreed to meet, or where one of more conditions have not been complied with. The sum to be repaid may be recovered as a debt under s. 69 of the Care Act 2014.
Last Updated: February 12, 2024
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