Where, if anywhere, is the authority for reclaiming surplus funds?

I’m just at this moment trying to find the lawful basis that a Local Authority can reclaim surplus DP simply because it’s a surplus. Simply having a surplus in the account, as far as I can tell, isn’t a reason. It’s just not a thing. They might be able to reclaim it after a DP is terminated, or if funds are spent unlawfully, but as far as I can tell they can’t just grab it back because there’s a surplus. I’ve looked in legislation, regulations and statutory guidance.

This is an astoundingly simple question at the very heart of how a direct payment operates. It should be really easy to answer. As far as I can tell, the answer is ‘No such authority exists’.

I may well have missed something, if so, please point me in the right direction!

EDIT: to be clear, while there may be nothing in legislation or guidance obligating direct payment users to repay an underspend, it looks like local authorities can provide for recovery of underspend in the contracts they make with direct payment users. If that’s the case, this worries me. I looked at my contract and it makes very little sense and seems unreasonable to me. People need to know that local authorties can’t contract their way out of statutory obligations and general public law principles.

From the statutory guidance: https://www.gov.scot/binaries/content/documents/govscot/publications/advice-and-guidance/2022/11/statutory-guidance-accompany-social-care-self-directed-support-scotland-act-2013-2/documents/social-care-self-directed-support-scotland-act-2013-statutory-guidance/social-care-self-directed-support-scotland-act-2013-statutory-guidance/govscot%3Adocument/social-care-self-directed-support-scotland-act-2013-statutory-guidance.pdf

"Underspent Budgets and Seeking Repayment

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.107
To ensure reconciliation is done accurately and transparently, providers and Direct Payment holders
should keep a record of decisions made (for example, deployment of staff, additional costs incurred)
with a transparent and clear link to individual care plans (or adult carer support plans or young carer
statements).
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.

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.
The authority should also consider how to recover unspent budget if the recipient dies, including the
possibility that before their death the supported person might have incurred liabilities or received
services which should legitimately be paid for using the budget. There may also be occasions where
additional funding is required to settle liabilities in full.
In addition, the 2013 Act enables the authority to require some or all of the money they have paid out to
be repaid if the authority is not satisfied that it has been used to secure the support to which it relates.
The authority may also require repayment if the person has not met any condition which the authority
has properly imposed or have been imposed by the regulations. The authority should take into account
hardship considerations in deciding whether to seek repayments."

From the 2013 Act Social Care (Self-directed Support) (Scotland) Act 2013

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.

Also from the 2013 Act

15Power to make further provision about direct payments
(1)The Scottish Ministers may by regulations make further provision about direct payments.
(2)Regulations under subsection (1) may in particular make provision for or in connection with—
(a)specifying descriptions of person who are ineligible to receive direct payments,
(b)specifying circumstances in which a local authority is not to be required under section 5, 7 or 8 to give a person the opportunity to choose—
(i)Option 1 of the options for self-directed support, and
(ii)so far as relating to that option, Option 4,
(c)specifying the circumstances in which a local authority may require a person to contribute to a direct payment,
(d)enabling a local authority to assess or reassess a person’s ability to contribute to the cost of securing the support to which a direct payment relates,
(e)specifying the ways in which direct payments may be paid or repaid,
(f)specifying circumstances in which a local authority may, must or may not terminate the making of a direct payment,
(g)specifying circumstances in which a local authority may pay all or part of a direct payment to a person other than the person to whom the direct payment relates,
(h)specifying descriptions of person to whom direct payments may not be made under paragraph (g),
(i)specifying descriptions of person who are prohibited from providing support to which a direct payment relates other than in such circumstances as are specified,
(j)specifying conditions which must be satisfied by persons before they may provide support to which a direct payment relates.

From the regulations (found here The Self-directed Support (Direct Payments) (Scotland) Regulations 2014)

Circumstances where a direct payment may be terminated
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.

And this from the framework of standards:

“12.16 The need for partnerships to manage organisations’ budgets and
ensure money is spent appropriately should be balanced with their duty
to give flexibility of spend to supported people and carers. Any change to
a person’s budget should have a sound rationale which is clearly
communicated to them according to their preferences; which could be
via their worker. Any recoupment from a person’s budget should not be
undertaken without consultation with the person, and potentially a review
or reassessment.