Summary: Mrs D complained about the Council’s decision to request repayment of direct payments paid on behalf of her son, Mr X. We found the Council was at fault because it took over a year to raise concerns about how direct payments were spent and issue an invoice. This delay led to avoidable, unauthorised spending and caused distress and uncertainty. To remedy this injustice, the Council has agreed to apologise and reduce the invoice. It will also take action to ensure direct payments are properly monitored in future.

The complaint

1. Mrs D complains about the Council’s unfair request to repay direct payments. She says all expenses were to meet her son’s (Mr X) assessed care and support needs. Previous similar payments were not questioned, and inadequate guidance was provided about what was allowed under the Council’s policy.
2. She says this has caused significant distress and frustration.
3. Mr X is represented by his mother, Mrs D, in making this complaint.

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The Ombudsman’s role and powers

4. 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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
5. We may investigate a complaint on behalf of someone who has died or who cannot authorise someone to act for them. The complaint may be made by:

• their personal representative (if they have one), or
• someone we consider to be suitable.

(Local Government Act 1974, section 26A(2), as amended)

6. When considering complaints we make findings based on the balance of probabilities. This means that we look at the available relevant evidence and decide what was more likely to have happened.

7. We consider whether there was fault in the way an organisation made its decision. If there was no fault in how the organisation made its decision, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
8. If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(1), as amended)

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What I have and have not investigated

9. I have investigated Mr X’s complaint about direct payments made between December 2022 and May 2024. Since bringing the complaint about this to the Ombudsman in January 2025, Mrs D has raised another complaint about inadequate direct payments made since May 2024. During the course of my investigation, the Council has issued is final response. If Mrs D is dissatisfied with this outcome, she may consider asking the Ombudsman to investigate.

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How I considered this complaint

10. I considered evidence provided by Mrs D and the Council, as well as relevant law, policy and guidance.
11. Mrs D and the Council had an opportunity to comment on my draft decision. I considered any comments before making a final decision.

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What I found

Relevant law, guidance and policy

Care and support plans

12. The Care Act 2014 gives councils a legal responsibility to provide a care and support plan (or a support plan for a carer). The care and support plan should consider what needs the person has, what they want to achieve, what they can do by themselves or with existing support and what care and support may be available in the local area. 

Personal budgets

13. The support plan must include a personal budget, which is the money the council has worked out it will cost to arrange the necessary care and support for that person.

Direct payments

14. Direct payments are monetary payments made to individuals who ask for one to meet some or all their eligible care and support needs. They provide independence, choice, and control by enabling people to commission their own care and support to meet their eligible needs.
15. Councils must be satisfied the direct payment is used to meet the needs in the support plan and therefore should have monitoring systems in place. They must review the direct payments within the initial six months and then annually.
16. The guidance states, ‘a direct payment is designed to be used flexibly and innovatively and there should be no unreasonable restriction placed on the use of the payment, as long as it is being used to meet eligible care and support needs’. This accords with personalisation principles.

Direct payment agreement

17. The Council’s standard direct payment agreement includes the following obligations on the person managing the arrangement.

• The Council will make direct payments to enable the purchasing of goods and services to meet the assessed care needs, as set out in the care and support plan.
• The recipient will use the payment solely to purchase community care services in fulfillment of the outcomes identified in the assessment/care and support plan.
• The recipient agrees to repay the direct payment, or any part of it, if the Council is satisfied it has not been used to meet the outcomes identified.
• The recipient agrees to the Council adjusting future payments to take account of, and recover, any overpaid or otherwise unused monies that are identified.
• Reviews will be carried out, usually on an annual basis.

What happened

18. Below is a summary of the key events leading to this investigation. It is not an exhaustive chronology of every exchange between parties. Where necessary, I have expanded on some of these events in the “Analysis” section of this decision statement.
19. Mr X has care and support needs. Since 2022, he lived in his own property, supported by a team of carers providing 24-hour care and support. This included assistance with daily care needs and taking Mr X to appointments and activities. Prior to this, Mr X lived in residential care.
20. This arrangement was managed by Mrs D and funded by a direct payment. Mrs D signed an agreement that stated she understood the terms and conditions of the direct payments scheme and that if she failed to comply, she may be required to return all or part of the money received. Mr X’s father, Mr D subsequently signed the agreement because Mrs D was providing some care herself. This was not allowed under the direct payments scheme.
21. Direct payments started in December 2023. Mr and Mrs D asked the Council on several occasions whether direct payment could be spent on specific items. The Council advised them accordingly.
22. A review was held in March 2023. This did not highlight any issues with the direct payments.
23. In June 2023, Mr D submitted invoices and accounts, including a breakdown of what the direct payments had been spent on. The Council did not raise any concerns with him about how the money was being spent. Because of this, Mr X assumed what he was doing was correct and in accordance with the rules.
24. In January 2024, Mr and Mrs X attended a meeting with the Council. Because of issues that are not relevant to my investigation, it was agreed to end direct payments. Instead, the Council would make the necessary care arrangements.
25. It took several months to wind up the employment arrangements linked to the direct payments. The Council increased the direct payment to reflect the costs associated with redundancy payments and tax obligations.
26. Upon further scrutiny of the accounts submitted by Mr D, the Council identified several items of unauthorised expenditure. They included IT equipment and software, blinds and using a particular payroll company.
27. In September 2024, Mr D received an invoice from the Council for £11,600.
28. In response, Mr D paid £5000 from funds remaining in the direct payment account, leaving an outstanding balance of £5400. Mr D told the Council he intended using this money to pay for day care that was not being provided by the Council, but was included in Mr X’s care plan. I have not investigated this matter for the reason I have explained above.
29. Mrs D complained to the Council in November 2024. She said the Council’s decision to seek recovery of unused direct payment was unfair because all money spent had been to meet costs associated with Mr D’s assessed care and support needs.

The Council’s position

30. In response to both Mrs D’s complaint and the Ombudsman’s enquiries, the Council said:

• both Mr and Mrs D signed agreements setting out their obligations;
• staff explained at the start of the arrangement what was allowed under the scheme;
• The Council repeatedly told Mr and Mrs D they could not use a particular payroll company, but they did so anyway;
• sufficient funds were available to pay for support workers and on-costs;
• it did not agree to several items before they were purchased; and
• it did not agree to pay for several expenses including payroll, a laptop for support workers, sanitary bin service, software, printer, boiler safety, blinds and privacy glass.

Analysis

31. This complaint raised three areas of potential fault by the Council. My findings are set out below.

Delay in notifying Mrs D there was a problem with the direct payments

32. The case records show Mr D forwarded direct payments accounts and invoices in June 2023. In doing so, he complied with his obligation to provide full transparency about how public funds were being spent.
33. These accounts were not looked at for four months. In October 2023, the direct payments team highlighted some discrepancies with the social work team. But the Council decided not to act because, “the package is ok for the moment”. Mr X was told he would be contacted if there were any queries. He heard nothing further and assumed his spending had been accepted by the Council. I consider this was a reasonable assumption for him to make.
34. The direct payment ended in May 2024. It was only once all outstanding outgoings were settled, including tax and employment costs, did the Council conduct a thorough audit of the accounts submitted by Mr D.
35. The Council has a responsibility to keep direct payments accounts under review. This is to prevent what happened in this case
36. The Council failed to properly monitor the accounts and missed the opportunity to address the unauthorised spending in June 2023. This was fault.

Inadequate guidance

37. Mrs D says the Council failed to provide adequate advice and support at the beginning of the arrangement. I disagree. Based on the case records I have seen, including the agreement she signed, the policy available on the Council’s website and letters she was sent, I am satisfied it was clear that direct payments could only be spent on items specified in Mr D’s care and support plan.
38. She was also told permission had to be sought for any additional spending. Both Mr and Mrs D made such requests on several occasions, both before and during the period payments were being made. For this reason, I am also satisfied they knew there were restrictions on spending.
39. The Council was not at fault.

Unauthorised use direct payments

40. Whilst there was fault with the significant delay in addressing the unauthorised spending, I do not criticise the decision itself.
41. Clearly, there was no deliberate misuse of public funds for personal gain and I accept the direct payments were spent for the benefit of Mr X.
42. But what was covered by the scheme was for the Council, not Mr and Mrs D to determine. Wants and needs are different. Both Mr and Mrs D signed an agreement that explained when the Council could determine there had been a misuse of the scheme. This included instances where the payments were used for purposes not specified in the service user’s care plan.
43. The Council determined this is what happened in this case and was a decision the Council was entitled to reach. Aside for the delay, I do not find fault in the Council’s decision-making process, and therefore cannot question the merits of this decision.

Injustice and remedy

44. As explained above, had the Council had appropriate systems in place to manage and monitor Mr X’s direct payment account properly, this would, on balance of probabilities, have prevented further unauthorised spending between June 2023 and May 2024. Because I am satisfied a part of the current debt would not have accrued had the Council acted without fault, it is not fair for Mr X to repay all of the money correctly owed.
45. In the circumstances, I consider it appropriate for the invoice to be reduced. Because of various adjustments to the direct payments, together with Mr and Mrs D’s decision to use the surplus in the account to pay for ongoing care, it is not possible for me to determine how much of the amount currently owed is related to unauthorised expenditure. My recommendation below reflects this.
46. The reduction will also serve to acknowledge the distress and frustration experienced by Mr and Mrs D. I have not recommended a full write off of the debt because there remains a duty on recipients of public funds for them to be spent on their intended purpose and in accordance with the rules.

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Agreed action

47. Within four weeks from the date of my final decision, I recommend the Council will take the following action.
1. Apolgise in writing to Mr and Mrs D.
2. The Council will provide both the Ombudsman and Mrs and Mrs D with an itemised breakdown of the unauthorised spending between December 2022 and May 2024. It will reduce the outstanding invoice by one half of this amount and issue Mr and Mrs D with a revised invoice.
3. By training or other means remind relevant officers of the requirement to regularly monitor direct payment accounts and take action at the earliest opportunity to address unauthorised spending.
48. The Council should provide us with evidence it has complied with the above actions.

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Final decision

49. I have found fault causing injustice. The Council has agreed to take action to remedy the injustice to Mr X, Mrs D and Mr D and to improve its service.

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Investigator's decision on behalf of the Ombudsman