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London Borough of Hillingdon (20 001 443)

Category : Adult care services > Direct payments

Decision : Upheld

Decision date : 16 Jul 2021

The Ombudsman's final decision:

Summary: Mrs X complained on behalf of her mother, Mrs Y, that the Council stopped Mrs Y’s direct payments too early. That resulted in Mrs Y receiving invoices from HMRC and PayPacket, the third-party company who processed the payments to her carer. The Ombudsman found fault causing injustice when the Council failed to maintain proper oversight of Mrs Y’s direct payment.

The complaint

  1. Mrs X complained on behalf of her mother, Mrs Y, that the Council stopped Mrs Y’s direct payments too early. That resulted in Mrs Y receiving invoices from HMRC and PayPacket, the third-party company who processed the payments to her carer. That caused stress and anxiety for Mrs X and Mrs Y.
  2. Mrs X said the dispute over payments should be between the Council and PayPacket.

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The Ombudsman’s role and powers

  1. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
  2. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

  1. As part of the investigation, I have considered the following:
    • The complaint and the documents provided by the complainant.
    • Documents provided by the Council and its comments in response to my enquiries.
    • Care and Support (Direct Payments) Regulations 2014.
    • Care and Support Statutory Guidance (updated 21 April 2021).
  2. Mrs X and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

Guidance and Regulations

  1. Direct payments are a means of paying someone’s personal budget to them so they can arrange and pay for their own care. They are intended to give people independence, choice, and control over how their needs are met.
  2. Councils will produce a personal budget to calculate a person’s direct payment allowance. When doing so, councils should consider recruitment costs, national insurance contributions, and any other costs incurred to meet a person’s needs with the direct payment. This should be included in the personal budget.
  3. A person can use direct payments to employ a personal assistant to provide their care. They then become an employer with responsibility for tax, national insurance, holiday pay, sick pay, and redundancy. Councils must be sure a person can manage the direct payment and should take all reasonable steps to help and support them. Some councils use support agencies to provide this service.
  4. Direct payments can be made to the person needing care and support, or a nominated person acting on their behalf. Councils should give a nominated person information and advice about managing the payment, so they understand their obligations to act in the best interests of the person needing care and support.
  5. Councils must be satisfied the direct payment is used to meet a person’s care and support needs, and that the person is meeting their obligations. They should have systems in place to monitor payment use and must review the direct payment within six months of setting it up, and then at least annually thereafter. Councils must also carry out a review if there has been a breach of the conditions of the direct payment.
  6. If someone receiving direct payments is employing people, councils should consider checking a person is meeting their responsibility to pay tax and national insurance to HMRC.
  7. Councils should stop direct payments if the person is no longer capable of managing the payment, or if they fail to comply with payment conditions.

What happened

  1. Mrs X first asked the Council to provide direct payments for Mrs Y in 2014.
  2. The Council referred Mrs X to an organisation called DASH, contracted by the Council to provide direct payment support at that time.
  3. As of April 2016, Mrs Y’s personal budget was £314.65 a week. Her assessment, completed in March, confirms the Council gave Mrs Y an allowance of £216.65 a week to employ a personal assistant to provide her care. The assessment confirms the hourly rate for Mrs Y to employ a personal assistant was £10.72 gross.
  4. The direct payment agreement, signed by both Mrs X and Mrs Y on 23 May 2016, confirms Mrs X as the nominated person managing the payment.
  5. The agreement states the Council will:
    • Provide information about the use of direct payments.
    • Ensure regular checks are carried out on the management of direct payments.
    • Provide advice and support and take corrective action where issues occur.
    • Undertake a financial audit annually and recover money due because of ending direct payments.
  6. The agreement also states:
    • The service user cannot use direct payments to employ a partner or close relative unless agreed by the Council.
    • The Council can end direct payments if arrangements do not meet the users’ needs or if the terms and conditions are not met.
  7. The Council stopped direct payments when Mrs X could not find a suitable carer for Mrs Y. It then closed Mrs Y’s support plan from April 2017 because she was receiving private care.
  8. Mrs X asked the Council to restart direct payments at the beginning of 2018. The Council set up the direct payment in February. It sent Mrs Y a support plan letter confirming her weekly payment would be £236.53.
  9. The Council sent an information pack to Mrs X about her direct payment. This confirms the Council can view regular reports of the money spent, as well as the balance held on Mrs Y’s prepaid card. It said that helped monitor activity and identify situations where it needs to discuss a service users’ spending. It also confirmed it is not possible for a prepaid card to be overdrawn, and a service user can only spend money available in the account.
  10. On 20 February, Mrs Y’s social worker (social worker one) noted Mrs X could not find a suitable carer. She intended to give up her job to act as personal assistant with a managed account through a third-party company called PayPacket.
  11. Mrs X, as personal assistant, would send time sheets to PayPacket showing the hours she cared for Mrs Y. PayPacket would pay Mrs X and then claim the money from Mrs Y’s prepaid card. It would also pay HMRC.
  12. Social worker one told Mrs X the Council would start the support plan on 5 March.
  13. Mrs X completed new client set up forms with PayPacket in March 2018. She told PayPacket the hourly rate of pay was £10.72.
  14. An officer (officer one) from the Council’s direct payment team contacted social worker one on 27 March. Mrs X had been calling, but officer one could not give her any information as Mrs X was not the nominated person. Officer one suggested social worker one made Mrs X the nominated person, because Mrs Y was 91 and did not speak English.
  15. Social worker one emailed officer one on 3 April, telling them that Mrs X was Mrs Y’s carer, so did not consider she could also be the nominated person. Social worker one said PayPacket was managing the account. Officer one confirmed Mrs X should not manage the direct payment or discuss it with PayPacket if she was the carer, as that was a conflict of interest. Officer one told social worker one to find a new nominated person. They said the direct payment should not have been set up if Mrs Y lacked capacity to manage it.
  16. Social worker one said PayPacket managed the account and queried whether Mrs Y needed a nominated person. Officer one confirmed PayPacket must have someone to discuss payments with. They said if Mrs Y could not do this she needed an independent person. That could not be Mrs X.
  17. Social worker one told Mrs X about the conflict of interest, and that Mrs Y needed a new nominated person. Mrs X said there was no one else who could do it. Social worker one said the Council would look at a way of Mrs Y managing the account herself.
  18. Social worker one asked officer one for the account number to Mrs Y’s prepaid direct payment card on 6 April. PayPacket needed the account number in order to collect money to pay Mrs X. Officer one said they could only give the account details to Mrs Y, or a new nominated person.
  19. Mrs X chased the Council about the direct payment on 23 and 26 April. She said she had been Mrs Y’s carer for two months without pay.
  20. Social worker one told Mrs X they were trying to find a way to have a nominated person for Mrs Y.
  21. Officer one emailed PayPacket on 2 May, confirming the Council set up the direct payment on 5 March, and asking what information they needed to start collecting payments. PayPacket sent the Council a managed bank account application form.
  22. Mrs X received her first payment from PayPacket in May 2018.
  23. Social worker one left the Council in June 2018.
  24. A new social worker (social worker two) visited Mrs Y in August 2019 as part of an annual review of her care needs. Social worker two noted Mrs Y could not speak English and Mrs X spoke for her. However, Mrs Y had capacity to understand and decide about her care.
  25. Another officer (officer two) in the Council’s direct payments team then reviewed Mrs Y’s direct payment. Officer two was concerned Mrs X was the carer and managing Mrs Y’s account. They noted at first the direct payment card was in Mrs X’s name until the Council realised she was the paid carer. It had then made Mrs Y the card holder so Mrs X could continue to be the paid carer. Officer two noted Mrs Y should not have the card in her name if she cannot understand or manage her direct payment. Officer two alerted the social work team of the conflict of interest and asked them to review the case. Officer two emailed social worker two in September to say Mrs X had not sent any paperwork to the Council since 2018 to show how Mrs Y’s direct payment was used. Mrs X sent time sheets direct to PayPacket and officer two was concerned Mrs Y did not verify them.
  26. In September, a social work team manager told social worker two to complete their review and suggest the Council put a commissioned package of care in place. If Mrs Y did not agree, the manager suggested a meeting to consider grounds to end the direct payment.
  27. On 29 October, social worker two told Mrs X that Mrs Y needed a new nominated person, or she would have to consider a package of care commissioned by the Council.
  28. Mrs X asked the Council for a commissioned service on 4 November because Mrs Y had deteriorated, and Mrs X was struggling to manage her care. The Council approved a commissioned service on 22 November, ending the direct payment.
  29. Mrs X sent her last time sheet to PayPacket at the end of November. PayPacket paid Mrs X but when it tried to collect the money from the direct payment account there was not enough money left. PayPacket could not recover what it paid to Mrs X and could not pay HMRC the tax and national insurance due for that period.
  30. In March 2020, the Council noticed Mrs X had been claiming the wrong hourly rate of pay from PayPacket since May 2018. She claimed £10.72 an hour instead of £9.46. The Council calculated Mrs X received £2,477.30 more than she should. It sent Mrs Y an invoice asking her to repay the money.
  31. Mrs X complained to the Council on 6 April. She said Mrs Y also received invoices from HMRC, for £614.44, and PayPacket, for £1,278.14. Mrs X said the Council stopped the direct payments too early and that caused the shortfall. She said it was not the fault of Mrs Y and it was up to the Council to resolve the issue.
  32. The Council responded on 14 May. It said:
    • It is against direct payment policy for the paid carer to also be the card holder and manage the direct payment, as this is a conflict of interest.
    • Mrs Y’s social worker explored PayPacket managing the account instead, or Mrs Y managing the payments, but did not put either option in place.
    • Neither the social work team nor the direct payments team picked up on the issue.
    • It noticed the issue after a review in August 2019. It stopped direct payments and put a commissioned service in place in November 2019.
    • The direct payment agreement, signed by Mrs X and Mrs Y, confirms the hourly rate of pay is £10.72. That includes money for taxes and is not the amount the carer receives. It apologised that was not clear. It also accepted the forms sent to PayPacket do not state the hourly rate includes taxes.
    • It assumed DASH, who previously managed the service, told Mrs X and Mrs Y about the hourly rate.
    • It will update the wording on the support plan and direct payment agreements in future, so the issue does not recur. It will also have a meeting with new service users to explain this.
  33. The Council ended by saying it was partly to blame for the issues, as the correct rate of pay was not clear, and it should have picked up on it sooner. However, it said Mrs X was also responsible because she was managing the payments on Mrs Y’s behalf as well as being her carer. The Council offered to waive the money it had asked Mrs Y to repay, but said she was still liable to repay money owed to PayPacket and HMRC.
  34. Mrs Y was not happy with the Council’s response and wrote back to the Council on 15 May. She continued to say the Council ended Mrs Y’s direct payments early. She said the outstanding money should be resolved between the Council and PayPacket, who managed the service.
  35. The Council sent its final complaint response on 18 June. It said:
    • PayPacket do not offer a fully managed service. It accepted Mrs Y’s social worker was not aware of that and should have followed it up.
    • It paid all money due to Mrs Y for her direct payments. Because Mrs X claimed the wrong hourly rate there was not enough money left in the account when PayPacket tried to collect the final payment.
    • Mrs Y could repay the money from her direct payment income, or Mrs X could repay the money from the overpayment she received.
    • It can liaise with PayPacket about a repayment plan but cannot help with the money owed to HMRC as that is an employment matter the Council is not a party to.
    • Its offer to waive the money owed to it was a fair and reasonable compromise.
  36. Mrs X brought her complaint to the Ombudsman on 10 July 2020.

Response to my enquiries

  1. The Council told me a company called DASH used to manage Mrs Y’s direct payment. DASH gave information and support about budgeting, payroll, recruitment, and tax.
  2. Mrs Y’s hourly rate for a personal assistant was £10.72. DASH should have explained it was not the amount the personal assistant would receive, and they must budget for tax and national insurance.
  3. The Council issued Mrs X with a prepaid card for Mrs Y’s direct payments. It then loaded money onto the card every four weeks. Mrs X told PayPacket to pay her at a rate of £10.72 an hour and did not budget for other liabilities. That meant there was not enough money left on the card when PayPacket tried to collect the last payment.
  4. The Council accepted it did not clearly explain the rate of £10.72. It will make sure this is clearer in future. It therefore agreed to write off the money Mrs Y owed to it, on the basis she settled the amounts due to PayPacket and HMRC.
  5. The Council said it did not stop Mrs Y’s direct payments early, causing the invoice from PayPacket. The issue was Mrs X told PayPacket to pay the wrong hourly rate, meaning there was not enough money left.
  6. The Council also said Mrs X worked as Mrs Y’s personal assistant and managed the direct payment without telling the Council, which breaches the agreement. It is the Council’s position the contract is between Mrs Y and a third party, not the Council.

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Analysis

  1. Mrs Y’s personal budget confirms she has a gross hourly rate of £10.72 for a personal assistant. However, the Council did not explain or break down that figure. There is no mention of tax, national insurance, or any other responsibilities. That was fault. The Council rightly accepted it did not provide enough information and it took suitable steps to improve this part of its service.
  2. The direct payment agreement does not say the nominated person cannot also act as the personal assistant, so I can understand why Mrs X was not at first aware. However, the agreement does say close family members should not be the care provider, unless agreed by the Council.
  3. The Council told me Mrs X worked as the personal assistant and managed the direct payment without telling it. That is not correct. Mrs X told Mrs Y’s social worker about her plan to be the personal assistant.
  4. The Council’s direct payment team, and social worker one, were aware of the conflict of interest in 2018 before Mrs X received any payments. However, I have not seen evidence they took suitable steps. They did not find a new nominated person, and it appears Mrs Y’s direct payment card was put in her name despite the Council being aware she could not manage the payment.
  5. The direct payment team reviewed Mrs Y’s payment in August 2019. The Council set up the direct payment in March 2018. It should carry out a review within six months and then yearly. On the evidence seen, it took the Council 17 months to carry out a review. That is too long and was fault.
  6. The direct payment team picked up on the conflict again when it reviewed the account in August 2019. This should not have happened in the first place. The Council knew Mrs Y did not speak English and could not manage the account. The situation which arose could have been avoided if the Council had overseen the direct payment correctly. If it could not find someone else to be the nominated person, it should have considered other options, such as ending the direct payment. That eventually happened, but not until about 17 months later. That was too long.
  7. The direct payment team raised concerns about Mrs X managing the account in September 2019. That included concerns about not sending paperwork on use of the direct payment, and about Mrs Y potentially being unaware of what time sheets Mrs X sent to PayPacket. The Council eventually ended the direct payment in November but did not follow up on any of the concerns. That was fault. It owed a duty to Mrs Y. It should have checked to make sure the direct payment was being used correctly, that Mrs Y got the care she needed, and to ensure she was not exploited.
  8. The information pack the Council sends to service users confirms it can view reports of their spending. It could, and should, have been monitoring the spending from Mrs Y’s prepaid card. It should have been aware the hourly rate Mrs X claimed was wrong.
  9. Because the direct payment account cannot be overdrawn, the last payment PayPacket requested was declined when there was not enough money in the account. On the evidence seen, that was the only time a payment was declined. On that basis, I do not consider the Council was owed any money by Mrs Y. The allowance for a personal assistant may have been exceeded, but the account was not in arrears. Mrs X did overpay herself. That was unfortunate. Mrs X benefitted from the unclear information the Council gave. However, I have not seen evidence Mrs Y owed or was liable to repay that money. The Council agreed to waive the invoice of £2,477.30. That was the right thing to do. Mrs Y did not benefit, and the fault was the Council’s, not Mrs Y’s.
  10. The Council is at fault because it did not provide enough information about the direct payment amount or how it should be managed. It is also at fault for not initially acting on the conflict of interest, and for delays carrying out a review. When the Council did look to address the conflict in August 2019, it did not follow up on concerns about how the payment was managed through PayPacket.

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Injustice

  1. The Council agreed to waive the fee it tried to recover from Mrs Y. That remedied some of the injustice. I have considered whether there is any remaining injustice the Council should remedy.
  2. The Council was aware Mrs Y could not manage her direct payment. It should not have let the conflict arise and should have taken action sooner. If the Council had maintained correct oversight, the monies owing to PayPacket and HMRC would not have occurred. Both amounts can be traced back to the Council’s fault.
  3. The payment demands from HMRC and PayPacket caused Mrs Y avoidable distress which the Council should remedy by settling both in full.

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Agreed action

  1. Within four weeks of my final decision, the Council will:
  2. Apologise to Mrs Y and settle the outstanding amounts due to both PayPacket and HMRC.
  3. Consider the learning that can be taken from the complaint to aid staff training on how direct payments are managed.

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Final decision

  1. I have completed my investigation. There was fault causing injustice when the Council failed to maintain proper oversight of Mrs Y’s direct payment.

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Investigator's decision on behalf of the Ombudsman

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