It seems local authorities like Option 1 users to sign contracts. If you refuse to sign, can the LA withhold the direct payment?
Hi Josh,
Many thanks for your post. You ask a really interesting question and maybe I can answer this in a couple of ways.
I think it would be viewed as ‘good practise’ for Local Authorities to provide a ‘contract’, such as a Direct Payment Agreement, before paying an SDS budget to someone. This would hopefully set out key elements that would clarify both parties responsibilities, the practical arrangements for making the direct payment, any financial monitoring required and what additional support might be available.
However, if there is something within the Direct Payment Agreement that the supported person or their representative disagreed with, this may need further discussion. If the disagreement was a significant one, this might be a reason for the Local Authority to withhold the direct payment, even temporarily, or make other SDS Options available in the meantime. I guess this all depends on the individual circumstances of the issues at hand.
One of the things that Social Work Scotland have being taking a lead on, is the development of a Model Direct Payment Agreement, to be included within a new SDS Standard - Standard 13. This might be something they have considered as part of this work.
The person to speak to there would be Donna Murray and I’ll connect Donna to this post as well.
I hope that helps but do come back if there’s anything further you wanted to add.
Many thanks,
Mark
@DonnaMurray
Many thanks Mark. I guess you are right that legislation and guidance does not cover all necessary arrangements covering all circumstances, so some kind of further written agreement is necessary. I’m not sure this has to be a contract, though. Contracts typically involve an exchange between equals. What is the DP user giving to the local authority in return for the direct payment? The parties are unequal, people with assessed needs are often not in a position to negotiate, they are not in a position to check the contract itself is compliant, they can’t afford a lawyer to look at the contract, they may be desperate for support so will sign any random nonsense a local authority cares to write. Prior to signing the contract, has there been a meeting of minds?
In other contexts where a public authority has a duty to an individual, are contracts involved? Do parents sign contracts regarding their child’s education? My son has a Co-ordinated Support Plan which specifies how his educational needs are to be met. This is a negotiated agreement, but it’s not a contract, especially not one where they present a fully drafted final document and say ‘sign here or your son gets nothing’, as is the case with a Direct Payment. Admittedly, as you say, another option could be offered, but that undermines the principle that we should be able to choose one of the four options, and often Option 1 is the only one that will meet an individual’s assessed needs. The remedy in the case of education is not for breach of contract, but recourse to the First Tier Tribunal. If the LA failed to pay a direct payment to someone with eligible needs, the recourse would not be to the Sheriff Court for breach of contract, it would be to the Court of Session for Judicial Review. It is a matter of public law, not private contract law.
The Statutory Guidance mentions ‘contract’ 35 times. 34 of these clearly do not refer to contracts made between a service user and a local authority. The one that potentially might do is this:
“Where Local Authorities or Health and Social Care Partnerships have concerns about underspend of allocated budgets, these should be reconciled in line with local contractual arrangements only after efforts have been made to establish – with the supported person, unpaid carer and the social worker – the reasons for the underspend.”
However this is ambiguous. It appears in the section on under Budgeting, Charging, Commissioning and Procurement, and applies to SDS generally, not just Option 1. It seems far more likely that this is again referring to contracts made with service providers and the like, and not to contracts made between a DP user and the Local Authority. My interpretation is reinforced two paragraphs later:
“All unspent funds in Direct Payment accounts should be returned to the Local Authority or Health and Social Care Partnerships in the usual way. It is acknowledged that Local Authorities or Health and Social Care Partnerships may have made local arrangements with providers about reconciling unspent funds, and this SDS guidance is not intended to cut across those arrangements.”
This seems not to be referring to DP users returning unspent funds, but to unspent funds held by service providers. If it is referring to DP accounts as well, then the word used is ‘arrangements’ not ‘contracts’, and these are two very different things. It seems that LAs sometimes appeal to the ‘contract’ they have made the service user sign when seeking to recoup DP money, and in doing so are potentially acting outside their powers.
So it seems that contracts between LAs and service users are not mentioned once in the lengthy Statutory Guidance. I may be wrong about this, please let me know if you can find something. Does this not strike you as odd, considering the ubuquity and practical significance of such contracts? I would be very grateful if SDS Scotland and/or @DonnaMurray could shed some light on this.
Conditions for the refusal or withdrawal of a DP are already set out in legislation (sections 15 and 16 of the 2013 Act) and regulations (section 6 of the 2014 regulations). Contracts should not, and need not, I suggest, tread on their toes. The regulations do not say that one reason a LA can terminate a DP is because they have breached their contract with the LA, or that refusal to sign a contract means they can withhold the DP.
I think this may well be wrong. All the lawful reasons for withholding a a Direct Payment are exhaustively given in primary and secondary legislation.
The 2013 Act:
“16 Misuse of direct payment: recovery
(1)Subsection (2) applies where—
(a)a local authority makes a direct payment to a person, and
(b)the authority considers—
(i)that the direct payment has been used (wholly or partly) for some purpose other than to secure the provision of the support to which it relates, or
(ii)that there has been a contravention of provision made by regulations under section 15 in relation to the direct payment.
(2)The authority may require the person to repay a sum equal to—
(a)the direct payment, or
(b)such part of the direct payment as the authority considers appropriate.”
The 2014 Regulations:
"6.—(1) A local authority may terminate a direct payment if—
(a)a direct payment user becomes ineligible to receive direct payments;
(b)the direct payment has been used (wholly or partly) for some purpose other than to secure the provision of the support to which it relates;
(c)the local authority considers on reasonable grounds that the direct payment user has breached the criminal law or a civil law obligation in relation to the support to which the direct payment relates; or
(d)the direct payment has been used (wholly or partly) to secure the provision of support by a family member other than in circumstances where the family member is permitted to provide support by regulation 8 (as read with regulation 9).
(2) Before terminating a direct payment, the local authority must notify the direct payment user of—
(a)the reason why it has decided to terminate the direct payment; and
(b)the date with effect from which the direct payment will be terminated.
(3) In determining the date with effect from which the direct payment will be terminated, the local authority must take into account—
(a)any contractual obligations entered into by the direct payment user; and
(b)the time that will be required to put in place alternative arrangements to provide the support to which the direct payment relates.
(4) The local authority must give the notification required by paragraph (2) in writing and, if necessary, in such other form as is appropriate to the needs of the person to whom it is given."
I suppose the LA might want to argue that if a service user has, in fact, signed a contract with the LA, then s6(1)(c) and 6(3)(a) apply, but I doubt they’d get very far with that - it’s pretty clear to me that’s not the intention of the legislation. There is nothing in here which suggests service users have to sign any contracts with the LA in order to receive the DP.
But I’m happy to be persuaded otherwise.
I have now just informed my local authority that:
-
I do not intend to comply with their demand that I repay any funds in excess of the 12 week contingency as it is unreasonable, appears to have no lawful basis, and is applied as a blanket policy
-
The agreement was signed under duress
-
The agreement likely has little or no legal force
-
It is out of date because the outcomes have changed
I’m not totally convinced I am right, but let’s see what happens.
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Best of luck. Keep us updated!
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I wonder if local authorities are confusing Direct Payment users with suppliers of services?
The vast majority of social care is delivered by means of local authorities contracting with service providers. The service provider gets money, the local authority gets a service.
Are local authorities thinking in these terms when it comes to Option 1?
Quick question on the underspend, if I may. Midlothian pay into the account every three months on the basis of a financial return - meaning that they can adjust the amount they pay each time. So, how you’ve said about an excess over 12 weeks, that wouldn’t be possible here. How are other councils doing this?
I haven’t come across that before, and I’m not sure what you mean by ‘financial return’. Could you explain further?
Moray Council calculated the DP on the basis of how much it would cost to employ someone for x amount of hours per week. So the amount stays the same from week to week. The 12 week contingency is a sensible idea so I’m happy to go along with it, but again they try to impose this on people in the ‘DP agreement’. Also their stern demand that any funds in excess of the 12 week period must be repaid is literally impossible to do because then I would have to maintain exactly 12 x the weekly amount in the account at all times, not a penny less or more, and never be able to pay the support worker!
Hi Josh,
So; the calculation of funding seems the same - an amount equivalent to a number of hours for a PA. So, let’s say that’s £1,000 a month just for ease. And for ease again, SDS option 1 started on 1 January.
1 January - Midlothian pay in £6000 to the account (based on 3 months of ‘pay’ as well as 3 months contingency, to cover tax, NI, pension, etc)
31 March - DP user is to send financial audit information (bank statements, receipts, etc) to the council
1 April - Midlothian pay in a variable amount to bring the account back up to £6000
Therefore, although up to three months contingency could build up, it’s mathematically impossible for more - as if the account hadn’t spent anything, no more gets added in.
I see, so at the end of every three months you should have roughly £3000 in the account. Is that right?
But what if you spend lets say £1000 of the contingency on meeting the agreed outcomes as well, so you only have £2000 in the account after three months. What happens then? Presumably they won’t top it back up to £6000 will they?
I would assume not, although I haven’t tried it. I suspect this is where the Direct Payment Agreement, and a baseless demand to seek approval of all spend, comes in.
And yes - in that example, the council would expect to top up £3000, to bring the account back to £6000. But that’s the most they’d top up, they’ll be hoping to see an underspend and get away with topping up less.
Yes exactly. So that means to get the full value of the DP to meet eligible needs, on the last day of the three month period, you would have to have spent exactly £3000. Is that right?
And how would you plan ahead and save for, say, an annual week of relatively expensive respite?
You’re right on the £3,000 spend per three months part.
And on the example of respite - this is where the council’s position of ‘requiring’ permission before spend comes into play. I suppose they would claim to offer suitable budgeting arrangements if they have agreed to that respite arrangement.
So much choice, flexibility and self-direction…
OK, so every month, unless you hit exactly the £3000 target spend on exactly the right day, you lose some of your direct payment entitlement. So they’re not actually paying you the full direct payment and are therefore failing to meet the assessed needs of the service user. That’s one argument.
Second argument. Midlothian’s approach in your case is essentially automatic recovery every three months of unspent funds. This is expressly at odds with the statutory guidance p57:
Seeking repayment of direct payment funds
Depending on the circumstances surrounding any decision to terminate a direct payment, the authority may need to decide if it is appropriate and proportionate to seek recovery of unspent funds. Any such effort should include the social worker and should not be undertaken without clear communication and discussion with the supported person and/or their representatives, and potentially a review or reassessment which can consider whether any part of the unspent resource can help achieve their outcomes in a different way.
It’s clear from this passage that in the case of direct payments, forced recovery of funds that are in a functioning, lawful and ongoing arrangement, is actually not provided for in law. They can recover funds if you misspend them, die or the DP otherwise comes to an end, but not otherwise.
So, you have at least two counts of unlawfulness it seems to me, if you want to challenge the arrangement you are under. Have you tried simply requesting they change the arrangements. You could assume the best and say something like:
"Dear Midlothian Controlfreaks
Thank you very much for helping me manage my direct payment by offering a system which automatically recovers unspent funds and saves you the trouble of requesting funds and me the trouble of returning them. However I did not actually ask for this arrangement, and it would suit me better to have a traditional direct payment in which you pay me the full annual budget every year and I will manage it myself from there. I look forward to your agreement with this new arrangement within ten working days.
Yours sincerely
MidlothianGuy"
‘a well-established principle of law, that if a person or public body is entrusted by the legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties. They cannot enter into any contract or take any action incompatible with the due exercise of their powers or the discharge of their duties.’
Lord Birkenhead Birkdale District Electric Supply Co. Ltd v Southport Corporation [1926] AC 355
Josh, you are a star! So far this hasn’t actually been a problem for me, but funnily enough I submit my next ‘financial return’ this week - so I’ll throw this in. Midlothian already dislike me enough as it is, what’s the harm in adding to their list 
Out of interest, I just looked at their Direct Payment Agreement (not to be signed) and noted this line:
Payments will normally be made 13-weekly in advance into the assigned bank account. If excess funds accrue the Council may require these to be repaid to Social Work Services either by cheque or by deduction from future payments.
Even this doesn’t suggest this sort of automatic clawback should take place!
Yes. Absurdly, they might take their own policy as more authoritative than primary legislation.
EDIT: this sounds a bit glib and rude about local authorities. What I mean is that professionals, in my experience, even quite good ones, tend to follow what the local policy is and what their manager says without any real knowledge of law and statutory guidance.
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