Summary: Mr X complained the Council has failed to properly investigate or rectify errors and discrepancies in Miss Y’s direct payments. He says that as a result of the Council’s failings and errors there is now a negative balance on Miss Y’s direct payment account and outstanding invoices which cannot be paid. We found the failings and errors in the Council’s oversight and management of Miss Y’s care plan and direct payments are fault. This fault has caused Mr X an injustice.

The complaint

1. Mr X complained the Council has failed to properly investigate or rectify errors in Miss Y’s direct payments. He complains the Council wrongly agreed 2:1 support for Miss Y without their knowledge or consent and failed to amend Miss Y’s direct payments to cover the cost of this increased support.
2. Mr X also complained the Council has failed to resolve other discrepancies in the amounts of Miss Y’s direct payments. He says that as a result of the Council’s failings and errors there is now a negative balance on Miss Y’s direct payment account and outstanding invoices which cannot be paid.

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The Ombudsman’s role and powers

3. 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)
4. 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.
5. 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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How I considered this complaint

6. I considered evidence provided by Mr X and the Council as well as relevant law, policy and guidance.
7. Mr X 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

Personal budgets and direct payments

8. The Care Act 2014 gives councils a legal responsibility to provide a care and support plan. 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.  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.
9. There are three main ways a personal budget can be administered:
• as a managed account held by the council with support provided in line with the person’s wishes;
• as a managed account held by a third party (often called an individual service fund or ISF) with support provided in line with the person’s wishes; or
• as a direct payment.
10. Direct payments are monetary payments made to individuals who ask for them to meet some or all of their eligible care and support needs. They enable people to arrange their own care and support to meet those needs. The council must ensure people have relevant and timely information about direct payments so they can decide whether to request them. If they do so, the council should support them to use and manage the payment properly.
11. The Council’s Direct Payments Procedure says it will review the direct payments arrangements every 12 months and will automatically apply an annual increase in April.
12. The Council will also carry out financial monitoring of direct payments every year.
13. The Council’s procedure acknowledges that the support a person uses can alter, and a build-up of unspent funds may accumulate in the Direct Payment account. It refers to this as Unspent Direct Payment money.
14. The procedure states that a person may hold up to four weeks’ worth of their regular direct payment money in the account together with any money that is being budgeted towards future support plans, outstanding invoices. If its monitoring identifies that the balance on the account is more than this, it will contact the person to check whether there is further planned spending that has not already has been identified. Once the amount of unspent money has been confirmed, the Council will raise an invoice will be raised to reclaim this money.

What happened here

15. The following is a summary of the key events relevant to our consideration of the complaint. It does not include everything that happened.
16. Miss Y lives with her parents, Mr and Mrs X and her sister, Miss Z. Both Miss Y and Miss Z require support with all aspects of daily life. Miss Y’s care and support plan provides for overnight respite 100 nights per year and 1:1 support at day care providers for six hours a day Monday to Friday. The day care service is provided by three different centres. Miss Y’s support is funded via direct payments, paid to Mrs X and managed by Company B.
17. The Council’s records show one of the day service providers, Centre C contacted the Council in February 2023 to discuss Miss Y’s pick up and drop off times. Miss Y’s support plan stated the day service was for seven hours but Centre C said it was only for six hours. Centre C also said Miss Y continued to spit which made it difficult for staff to support and transport her. They suggested Miss Y may have outgrown their service.
18. Centre C contacted the Council again on 1 March 2023. The records show Centre C stated Miss Y required 2:1 support and that they had been providing this since October 2022. The social worker said there would need to be an urgent review to agree the increase.
19. The Council updated Miss Y’s care and support plan on 1 March 2023 to reflect six rather than seven hours support from Centre C. The support remained as 1:1.
20. In September 2023 the Council started an audit of Miss Y’s direct payment account for the period September 2022 to May 2023. This identified an underspend of almost £39,000 in Miss Y’s account.
21. The Council completed a Care Act assessment in November 2023. This did not alter Miss Y’s care and support. On 22 November 2023 the Council wrote to Mrs X advising Miss Y’s direct payments had changed. The payment would be reduced to £2,453.74 per week with effect from 1 March 2023.
22. In January 2024 Company B returned an underspend of £20,000 to the Council from Miss Y’s direct payment account.
23. An officer met with Mrs X in late May 2024 to discuss Miss Y’s needs and gather information for a review of her care. The Council’s records show Mrs X wanted to review the day services and for Miss Y to attend another provider rather than Centre C. Mrs X also said there was a surplus in the direct payment account and asked whether this could be used for extra respite days. The Council agreed the surplus could be used in this way in July 2024.
24. Mrs X asked Company B for copies of Miss Y and Miss Z’s statements to confirm the balances in the direct payment accounts. These statements showed additional payments to Centre C for Miss Y, that were not paid for Miss Z. Company B said this was because Miss Y’s care had moved to 2:1 so there were double invoices. Mrs X questioned this with the Council as they were not told Miss Y was receiving 2:1 support and had not agreed to this.
25. The social worker told Mrs X they were not aware Miss Y was receiving 2:1 support and that the support plan specified 1:1 support. They advised they would ask Company B to only pay for 1:1 support and that Mr and Mrs X had the option of making a formal complaint.
26. Mr X made a formal complaint on 31 July 2024. He said Miss Y and Miss Z had the same medical condition and similar care needs yet Centre C had received almost £16,000 more for Miss Y’s support than Miss Z’s since March 2023. Mr X asked for explanations for the additional payments. He said they had not been told about Miss Y’s supposed need for 2:1 support at Centre C and her care plan had not been changed to reflect this.
27. In addition Mr X asserted that if 2:1 support was required Miss Y’s direct payments should have been increased to cover the additional cost. He also questioned why Miss Y would need 2:1 support at centre C, but not at the other two days centres she attended each week.
28. Mr X also raised concerns they had not been consulted or informed about the £20,000 underspend being reclaimed from Miss Y’s account. Mr X asserted the money was not surplus and it had recently been agreed the money could be used for additional respite.
29. He asked the Council to repay both the £20,000 and the additional monies paid to Centre C into Miss Y’s direct payment account as soon as possible.
30. The Council repaid £20,000 to Miss Y’s direct payment account in August 2024 and agreed to investigate the anomalies.
31. The Council responded to Mr X’s complaint in October 2024. It said the increase to 2:1 support was never agreed so Centre C should not have invoiced for this and Company B should not have paid for this level of support. The Council said any refund should be worked through between Centre C and Company B and paid back into the direct payments account.
32. The Council also confirmed it had completed in depth financial monitoring and found overspends on both Miss Y and Miss Z’s accounts and would make Company B aware.
33. Mr X was not satisfied with the Council’s response and asked for his complaint to be considered further
34. Company B told Mrs X it had requested a refund from Centre C on 20 November 2024 and they had advised they were contesting this with the Council.
35. The Council arranged a meeting with Mr and Mrs X in March 2025 to discuss their concerns. Prior to this meeting Mr X raised additional concerns that the Council paid both Miss Y and Miss Z’s accounts about £8,000 per year less that the agreed weekly budget shown on their care and support plans.
36. Following this meeting, Mr X asked for a full audit of Miss Y and Miss Z’s direct payment accounts. He provided spreadsheets highlighting the differences between payments to and from Miss Y and Miss Z’s accounts.
37. In April 2025 Mrs and Mrs X contacted the Council again asking for an update and that the matter be resolved. They asked for back payments to cover the increase to 2:1 care for Miss Y. They chased the Council again in June 2025.
38. The Council responded to the complaint in late June 2025 and apologised for the delay. It said there were multiple elements to the complaint which had taken longer to investigate than they would have liked.
39. It said Centre C contacted the Council in May 2023 to request an increase in the care package to 2:1 care, and that this 2:1 care ended in the summer of 2024. The Council said it had been told that the social worker at the time had verbally approved the increase in support for Miss Y. Centre C also told the Council that Miss Y’s needs at the time differed from Miss Z’s. In addition, Centre C told the Council the request to increase support to 2:1 and a referral to the community disabilities team was made with Mrs X’s involvement.
40. The Council said it could find no evidence that the change was formally documented in Miss Y’s support plan. Neither Centre C not Company B had written confirmation of the change, and the social workers involved in the case had since left the Council.
41. It said that following a discussion to increase care, it would normally have created a new support plan and sent copies to Company B and the family. This did not happen here and has led to a lack of clarity.
42. In addition the Council said its initial investigation did not accurately reflect this and therefore provided an inaccurate response to their complaint.
43. The Council said Miss Y’s care needs were met and the additional costs were paid from unspent funds. And that while personal budgets could be used flexibly to meet agreed outcomes, accumulated unspent funds cannot be held as contingency funds or used on an ad hoc basis. The Council said that as a rule, people may retain up to four weeks’ worth of regular direct payment funds in their account.
44. The Council apologised for the confusion stress and delay and offered to pay Mr and Mrs X £300 for their time and trouble.
45. In relation to the variances between Miss Y and Miss Z’s accounts the Council suggested Mr and Mrs X work with Company B and the care and support providers to understand these. It also noted that when they met in March 2025 the payments matched the agreed support plans.
46. Mr and Mrs X were not satisfied by the Council’s response. They disputed the suggestion they were aware of the request for 2:1 support. Mr and Mrs X maintained Miss Y does not require 2:1 support. She does not receive 2:1 support in any other support setting or at home. They also asserted that if 2:1 support was needed her support plan needed to be amended and the direct payments increased.
47. Mr and Mrs X said they had never agreed that underspent funds could be used to cover additional costs and Company B had not told them they were doing this. As Miss Y’s direct payments were not increased, Mr and Mrs X said they were running out of money to pay for her ongoing needs. They said there were unpaid invoices on Miss Y’s account as a result of the unauthorised additional payments to Centre C.
48. In addition Mr and Mrs X said the Council had given them permission to use unspent funds for additional respite days, which they had now started to do. They said the additional respite was needed to avoid Miss Y and Miss Z going into permanent residential care. They would not have agreed to it to be used to fund 2:1 care instead.
49. Mr and Mrs X asserted the Council’s errors meant almost £35,000 had been wrongly taken from Miss Y’s direct payment account. And that this error should be rectified by a payment to Miss Y’s account to cover the increased cost paid to Centre C.
50. The Council told Mr and Mrs X it would obtain legal advice and respond in early September 2025. It also said it would carry out a reassessment of Miss Y and Miss Z’s needs and ensure their care plans were up to date.
51. On 15 September 2025 the Council responded to Mr and Mrs X’s outstanding concerns. It again acknowledged there was no evidence Mr and Mrs X were consulted or informed about the increase in Miss Y’s care. And accepted it was not proper to make decisions without family involvement. The Council set out the action it was taking to ensure this did not happen again.
52. The Council said that had the money not been spent of additional care at Centre C, it would have required some unused monies to be repaid to the Council. It said Miss Y and Miss Z’s needs were being met despite the errors.
53. The money paid into the direct payment account reflected the amount agreed in the care and support plan. The Council said it was concerned that there was unused money on the account which could be used to pay the invoices for Centre C without creating a negative balance. The balances on both Miss Y and Miss Z’s accounts should be and remain the equivalent of four weeks’ worth of direct payment monies in line with the Council’s policy.
54. The Council said it had discussed the matter with Centre C and Company B and accepted the care had been provided regardless of the lack of formality around its origins. It said the money paid out of the direct payment account would not be refunded. It was public money to meet Miss Y’s needs and did not ‘belong’ to Miss Y so should not adversely affect her.
55. It said the transactions were historic and settled and should not affect her current direct payment. The Council said the current shortfall in Miss Y’s account was due to more recent developments. This would be addressed by a back payment equivalent to two months of respite accrued when a provider closed and there was a delay in transferring to a new provider, and payment of a shortfall in the uplift in costs from one of the day service providers.
56. Mr X remains dissatisfied. He said that as of 15 August 2025 Miss Y’s direct payment account had a negative balance of over £-8,000 with two outstanding invoices which could not be paid. Mr X did not accept that the additional payments to Centre C of over £16,000 would not adversely affect Miss Y. Nor did he accept that unused monies would be required to be repaid if not spent on care. He said the unused money had been spent on additional respite as agreed with social services.
57. Mr X had also obtained details of all payments made by Company B for Miss Y and Miss Z and found that since September 2021 Miss Y had received around £8,200 less than Miss Z in direct payments. This combined with the overpayments to Centre C had led to a variance of over £24,000 between their accounts. Mr X asked the Council to rectify the £8,200 underpayment.
58. In response to my enquiries the Council says it has conducted extensive investigations and is unable to confirm conclusively whether or not there was an agreement to increase support at Centre C to 2:1. As this was not proven either way, the Council has honoured the cost of 2:1 support as invoiced. There was no need for additional transactions as the cost was covered by the surplus of monies that had accumulated in the account. It again reiterated that had the unspent money not been used to pay the invoices a large repayment of funds would have been needed from the direct payment account.
59. The Council says it was satisfied Miss Y did not need 2:1 support, but having made extensive enquiries with the provider, was also satisfied the care had been provided.
60. The Council has audited Miss X’s direct payment account three times since 2023. The audit in 2023 showed an underspend of almost £39,000, the 2024 audit showed an overspend of around £9,000 and the 2025 audit showed an overspend of around £5,000.
61. At the time of the Council’s response in September 2025, it says the direct payment account had been balanced by backdating annual uplift amounts and backdating fee increases from providers. The Council says the increased charges applied by Centre C were dealt with in August 2024. The £20,000 underspend that had been reclaimed was also returned in August 2024.
62. The Council says Miss Y’s direct payment increased to £2,562.11 per week in April 2023 due to an annual rate uplift. However when the care plan was revised in November 2023 it reduced the weekly amount to £2,453.74 with effect from 1 March 2023. This retrospective reduction generated a credit on the account. The actual reduction was then processes and applied in January 2024. The Council says the reason for the delay in processing the change is unclear but did not cause Miss Y an injustice.
63. Miss Y’s plan was uplifted again in April 2024 to £2,682.68 per week and the Council made further adjustments.
64. The Council says any current deficits on the account are not as a result of errors in 2023. Miss Y has 100 nights of respite care per year. This has been deemed satisfactory for her needs. The Council says it reviewed Miss Y’s care needs in February 2025 and declined to approve funding for additional nights respite. However the family continues to use direct payment monies to purchase more respite days that agreed as necessary in the care plan. Any deficit now arises from overspending on the account.
65. The Council accepts there were instances of its processes and procedures not being followed, and that had the Council complied with its statutory duties in a timely manner these matters would have been picked up and addressed sooner. To prevent this situation happening again the Council:
• is revising its practice guidance for all staff and will specify the need for individuals, their families and other appropriate people to be consulted as part of the review process;
• has developed a new process for capturing information from contacts and referrals and ensuring it is processes appropriately;
• is reviewing its framework for money management providers and setting quality standards. Company B will be removed from the current framework.
• will communicate with providers and reiterate the need for any proposed increases in care plans to have written agreement form the Council before any change is implemented.
66. Notwithstanding the errors in this case, the Council does not consider there was any injustice caused to Miss Y that had not already been remedied. It says her assessed needs were met at all times and no harm was caused to her. However it acknowledges there has been a large amount of confusion caused by third parties and a lack of clarity around uplifts in direct payments which have had to be backdated. It has also taken a long time to resolve the complaint which will have caused Mr and Mrs X distress and anxiety.
67. The Council has revised its previous offer of £300 to £1000 to address the anxiety and stress caused by its handling of the complaint and the delay in applying the change in care plan in 2023 to the direct payment money.

Analysis

68. It is clear there have been failings and errors in the Council’s oversight and management of Miss Y’s care plan and direct payments. There is no evidence the Council properly considered or agreed to Centre C’s request to increase Miss Y’s support to 2:1 in March 2023. Or that it agreed this additional support could be backdated to November 2022. Nor is there any evidence the Council discussed this increased support with Mr and Mrs X. This is fault.
69. The 2:1 support appears to have been implemented by Centre C without the Council’s express approval and was paid for by Company B, again without express approval from the Council. The Council and Mr and Mrs X were not aware of the change and the associated increase in cost for over a year as the charges were met from an underspend in the direct payment account.
70. When the Council audited Miss X’s direct payment account in September 2023 it identified a significant underspend and subsequently reclaimed £20,000. We would not criticise the Council for reclaiming unspent funds. However we would expect it to act in accordance with its policies and procedures. The Council should have checked with Mr and Mrs X and Company B whether there was any further planned spending before claiming the money. This did not happen in this instance and the Council’s failure to follow its own procedure is fault.
71. The delays and length of time taken to respond to and address Mr X’s complaints also amount to fault.
72. Having identified fault I must consider whether this has caused Miss Y and/ or Mr X an injustice.
73. Mr X asserts this fault has caused Miss X an injustice as but for this fault there would be an additional £16,000 available in Miss Y’s direct payment account. I am not persuaded this would automatically be the case.
74. There was a statutory requirement that the Council review the account every year. And the Council’s Direct Payments Procedures are clear that it will reclaim unspent sums of more than four weeks’ worth of direct payment money.
75. I consider it more likely than not that had the additional payments not been made to Centre C and the money remained in the account, the Council would have sought to reclaim at least some of that unspent money. This is public money which the Council should not allow to accumulate unspent in an account.
76. Mr X and the Council have differing views on the reasons for the current deficits on Miss Y’s account. Mr X asserts this is due to the additional payments to Centre C and a sustained period of underpayments while the Council attribute them to overspending on respite care.
77. According to Miss Y’s care and support plan of July 2024, her personal budget for respite care was about £71,000 per year. However the records show in the financial year 2024/ 2025 the respite provider was paid significantly more than this. This overspend was equivalent to over 20 additional respite nights.

I recognise that the Council agreed Mr and Mrs X could use underspent monies to pay for additional respite, but this clearly should not go beyond the funds available /required for the agreed provision. Mr and Mrs X requested a statement to confirm the balance in Miss Y’s direct payment account in July 2024. They were aware there was not a significant underspend on Miss Y’s account at this stage which could be used to fund additional respite.

78. In relation to Mr X’s concerns about underpayments, the records show Miss Y and Miss Z’s direct payments were the same until March 2023. At that point their care and support plans changed and their payments were no longer the same. Miss Z’s care and support plan was amended and backdated which meant she also received a backdated payment Miss Y did not. Miss Y personal budget was then reduced in November 2023, following a care assessment, and backdated to March 2023. However the Council did not apply the reduction until January 2024. It has not sought to recover the overpayment created by the backdated reduction. Miss Y’s has received the personal budgets set out in her care and support plans. While this was less than Miss Z’s personal budget it correctly reflects the sum calculated in Miss Y’s care and support plans.
79. The documentation does not therefore support Mr X’s view that Miss Y has been underpaid by £8,200.
80. The Council has returned the £20,000 unspent money reclaimed and also made back payments to the account to reconcile annual uplift amounts and provider fee increases in July 2024. Payments to Miss Y’s direct payments account are in line with the personal budget in the support plan and should be sufficient to cover the agreed provision.
81. I do not consider the faults have caused Miss X a significant injustice.
82. However it is clear that the fault has caused Mr and Mrs X significant anxiety and frustration and has put them to unnecessary time and trouble in trying to resolve the matter. The Council has offered to pay £1000 to recognise this. This is an appropriate remedy.
83. The Council has set out the action it has taken/ will take to prevent this situation happening again. I do not therefore consider it necessary to make recommendations for service improvements.

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Action

84. The Council has agreed to:
• apologise to Mr and Mrs X for the anxiety and frustration caused by the faults identified and the unnecessary time and trouble they have been put to. We publish guidance on remedies which sets out our expectations for how organisations should apologise effectively to remedy injustice. The organisation should consider this guidance in making the apology I have recommended in my findings.
• Pay Mr and Mrs X £1000 to recognise the anxiety and frustration the have experienced and the unnecessary time and trouble they have been put to as a result of the faults identified.
85. The Council should take this action within one month of the final decision and provide us with evidence it has complied with the above actions.

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Decision

86. I find fault causing injustice. The Council has agreed actions to remedy injustice.

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Investigator's decision on behalf of the Ombudsman