Summary: Ms X complained about how the Council funded her son’s education. The Council was at fault for failing to have suitable oversight of how it funded Z’s education and in how it decided to reduce Z’s funding. This allowed the funds to be misused and meant Z did not receive all the special educational provision he needed. The Council will review Z’s Education, Health and Care Plan, and put this Ombudsman’s decision to its family and children’s services overview and scrutiny committee.

The complaint

1. Ms X complained about how the Council funded her son, Z’s, education. Specifically, Ms X said the Council:
• had not been paying her the correct amount in Education, Health and Care Plan direct payments at the time some of Z’s provision stopped in February 2023;
• later stopped paying the direct payments; and
• then reduced the amount it would pay to secure the provision in Z’s Plan. Ms X said the changes mean she can no longer arrange suitable education that meets Z’s needs and that it caused her significant stress.

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The Ombudsman’s role and powers

2. 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)
3. 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)
4. 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(i), as amended)
5. Under our information sharing agreement, we will share this decision with the Office for Standards in Education, Children’s Services and Skills (Ofsted).

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How I considered this complaint

6. I have considered:
• all the information Ms X provided and discussed the complaint with her;
• the Council’s comments about the complaint and the supporting documents it provided; and
• the relevant law and guidance and the Ombudsman's guidance on remedies.
7. Ms 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

Relevant law and guidance

Education, Health and Care Plans

8. A child or young person with special educational needs may have an Education, Health and Care (EHC) Plan. This document sets out the child’s needs and what arrangements should be made to meet them. The EHC Plan is set out in sections. Section F covers the special educational provision needed by the child or the young person. 
9. The council has a duty to make sure the child or young person receives the special educational provision set out in section F of their EHC Plan (Section 42 Children and Families Act).

Annual reviews

10. The council must arrange for an EHC Plan to be reviewed at least once a year to make sure it is up to date and still meets the child or young person’s special educational needs. The review is also an opportunity for the council to consider the suitability of the provision the child or young person receives. The annual review begins with consulting the child’s parents or the young person and the educational placement. A review meeting must take place. The process is only complete when the council issues a decision after the meeting. The decision is to either keep the Plan the same, change it or stop it.

Personal budgets

11. A personal budget is the amount of money the council has identified it needs to pay to secure the provision in a child or young person’s EHC Plan. It is set out in section J of the EHC Plan. One way that councils can deliver a Personal Budget is through direct payments. These are cash payments made to the child’s parent or the young person so they can commission the provision in the EHC Plan themselves. Other solutions include where the council commissions the provision itself, where a third party organisation holds and administers the direct payments on the young person or parent’s behalf, or a combination of arrangements.
12. The Special Educational Needs (Personal Budgets) Regulations 2014 (the Regulations) sets out the duties on a council in relation to personal budgets. It says the final allocation of a Personal Budget must be sufficient to secure the agreed provision specified in the EHC Plan and must be set out as part of that Plan.
13. Councils must review a child’s direct payments at least once per year as part of the annual review of the child’s EHC Plan. The review should consider if the direct payments still secure the provision in the Plan and if the young person or child’s parent are using them correctly. Following a review, a council can increase, maintain or reduce the amount of direct payments.

What happened

14. This section sets out the key events in this case and is not intended to be a detailed chronology. I have investigated events during 2023.
15. Z is a young person with complex needs. He has had an EHC Plan for several years. After previous educational placements failed, the Council agreed Z should have Education Otherwise That At School (EOTAS). EOTAS is where a child or young person receives a package of educational provision which is delivered outside of a school setting. The Council amended Z’s EHC Plan to reflect that Z would have EOTAS.
16. Ms X requested a personal budget and in January 2022, she signed a direct payment agreement with the Council. The agreement noted that to deliver the special educational provision in his plan, Z would have weekly provision made up of:
• an outdoor activity for two days a week;
• swimming;
• resources like learning tools;
• money to visit places of interest;
• money to cover transport costs; and
• training funds.
17. The direct payment agreement noted misuse of payments may lead to them being stopped immediately and that the Council could seek repayment of any misspent funds. It stated Ms X had to keep proper financial records of what she spent and that the Council would carry out audits to make sure the money was being spent correctly.
18. The Council asked Ms X to send information for an audit in September 2022. She refused.
19. The Council agreed an increase in the direct payments in October 2022. It meant Z received around £900 per week for his education during term time (almost £12,000 a term). The Council paid the direct payments every four weeks.
20. In late October and early November the Council asked Ms X to agree to an audit twice more. Ms X did not spend evidence of her spending and the Council continued to send direct payments.
21. In January 2023, the Council became aware Z had not been going to his swimming sessions. Ms X told it she was struggling to manage the payments.
22. Z stopped attending the outdoor activity in early February 2023 and Ms X promptly told the Council. It did not update the direct payments, so Ms X continued to receive money for the activity and the swimming.
23. In mid-August, the Council told Ms X it was doing a personal budget review. It asked her to provide bank statements to evidence what she spent the direct payments on and asked her to send in receipts for purchases.
24. Ms X responded to say she did not have time to sort out the finances and it was too difficult. The Council replied to say it had been a long time since the last personal budget review so Ms X should make a new application for a personal budget. It had paused payments in the meantime.
25. Internal emails show the Council accepted it had overpaid Ms X for the swimming and outdoor activity. It thought that because of the overpayment she would have around £13,000 in direct payments left in the bank account. It therefore thought there was no need for urgent funding while the review was ongoing.
26. In late august, the Council sent Ms X around £1800. This was for the first two weeks of the autumn 2023 term.
27. In early September 2023, the Council issued Z’s amended EHC Plan. The special educational provision in the plan remained largely the same as in Z’s previous Plan. Section J was for the same provision as in Z’s previous EHC Plan, except that the Council had removed the outdoor activity and swimming. The cost was now £1600 per term.
28. In mid-September 2023, the Council sent Ms X its decision following the personal budget review. It said the Council would deliver the direct payments of £1600 per term through a managed system. This meant a company would hold the bank account the payments went into and when Ms X wanted to commission provision, she could request it, providing she submitted evidence of the cost. This would support Ms X to use the payments correctly. Ms X did not agree to that service because she felt receiving the funds directly had worked well.
29. Ms X sent the Council bank statements in mid-September. They showed that between September 2022 and September 2023, she had misspent over £9,000, including on things that were not in the direct payment agreement and which were likely not for Z. She had spent over £7,000 of the misspent funds in the period between February and August 2023. The total amount misspent is not certain because Ms X has not supplied receipts.
30. In mid-October, Ms X chased the Council for the payment for the next four weeks of term. She expected it to be the value of the previous personal budget, around £900 per week.
31. After a few days, the Council sent Ms X £1600. It explained to Ms X that the payment she had received in late august had been for the start of the autumn term but that it had subsequently reduced Z’s direct payments to £1600 per term. She had therefore already received the full amount for autumn term. It said it had transferred an extra £1600 to make sure Z would have sufficient funds to commission the provision in his EHC Plan, but it was an advance, not extra money.
32. Ms X submitted a new personal budget request in October 2023. The Council considered it at a decision making panel in early November. Records of the panel meeting show the Council considered Ms X’s arguments, questioned whether some of the provision she asked for could be delivered in a more cost-effective way and noted that it had suggested Ms X consider some provision which it could pay for directly.
33. The Council sent Ms X an offer document setting out the direct payments it had agreed. It would now pay taxi fees directly to the provider rather than giving Ms X the taxi funds and asking her to submit receipts. It agreed to pay for a number of memberships for Z and a carer to attend cultural and educational sites rather than reimbursing Ms X for entry tickets. The overall cost of the agreed direct payments was substantially higher than £1600 per term but far below the previously agreed amount of around £900 per week (£12,000 per term). The offer set out the Council’s expectations that Ms X would comply with audit requirements.
34. Ms X did not agree to the offer and worked with the Council to make amendments to the provision. The Council says Ms X has agreed the final offer but has not signed it. As a result, it has continued to pay her £1600 per term. Ms X has not submitted audit information.
35. In December 2023, the Council tried to arrange Z’s EHC Plan annual review meeting. The Council says Ms X did not engage with it so the review has not happened.

Findings

36. Ms X complained the Council had not been paying her the full direct payment amount up to February 2023. The Council paid Ms X the full amount of direct payments in January and February 2023; around £900 per week in term time. The Council was not at fault, and I note it had been paying that amount since it was agreed in October 2022.
37. The Regulations set out that the Council is under a duty to stop direct payments when, following a review, it finds the funds are not being used correctly. It must also stop payments if the person receiving them fails to keep proper financial records and comply with audit requirements.
38. The Council asked Ms X to engage with an audit three times in 2022 and she had refused. Given this, it is concerning that when the Council heard Ms X was struggling to manage the direct payments in January 2023, it did not begin a direct payment review to check the funds were being spent properly, explore what extra support it could offer Ms X, or to consider if it should stop the payments and arrange Z’s educational provision in another way. This was fault.
39. Z stopped attending swimming in January 2023 and the outdoor activity in February. That was a large change in Z’s agreed package of support and should have prompted a review of his personal budget and direct payments, to ensure the Council was still securing all the special educational provision in his EHC Plan and was paying the correct sum in direct payments. The Council’s failure to do so was fault. It meant the Council overpaid Z’s direct payments by around £13,000. Records show Ms X spent £7,000 of that money on items and services outside of the direct payment agreement. It is not clear whether any of that sum was used to deliver the special educational provision that was no longer being provided through the outdoor activity and swimming.
40. The Council was not at fault for deciding to pause the direct payments while it carried out the August 2023 review. The Council must ensure the funds it sends are being used appropriately and should not continue to make payments where there are concerns about how the funds are being used. Miss X had not agreed to an audit three times in 2022 and the Council had made a substantial overpayment. It had valid reason to pause the payments.
41. After the review, the Council issued an amended EHC Plan for Z, which contained largely the same special educational provision but with a significantly reduced personal budget because the Council removed the funds for the swimming and outdoor activity. The Council reduced Ms X’s direct payments to reflect the new personal budget. However, the Regulations set out that child or young person’s personal budget should be sufficient to secure the special educational provision in their EHC Plan. Given the outdoor activity alone was for two full days each week, it is difficult to see how the reduced package delivered all of the special educational provision in Z’s EHC Plan. The Council was at fault in how it decided to reduce Z’s personal budget to £1600 per term. This meant it failed in its duty to secure the special educational provision in Z’s EHC Plan.
42. When the Council told Ms X about the reduced direct payment and said it would pay her through the managed service, she did not agree to the service. The Council then continued to pay her directly, and still does. It did this despite the fact it knew Ms X struggled to administer the payments, that she had not complied with audit requirements and that she had misspent a large sum of money. This was not in line with the Regulations and was fault. Instead, the Council should have considered how else it could secure the provision in Z’s EHC Plan, for example by directly commissioning it.
43. The Council made a payment to Ms X In August 2023 ready for the start of the autumn term. Once it decided to reduce the direct payment package, it treated that August payment as the autumn term funds. There was no fault in that decision, and Z benefited from it because the August payment was for around £1800 instead of new direct payment funds which were £1600 per term. The Council did not tell Ms X the August payment was now for the whole autumn term, and she did not find out until mid-October 2023. While it would have been preferable for the Council to have told Ms X sooner, it does not amount to fault.
44. Ms X made a new personal budget application in October 2023, which asked for a substantial increase in funds. The Ombudsman cannot question a council’s decision if it was made without fault. The Council’s panel hearing considered the relevant information and concluded it would agree some changes to the personal budget, which it set out in a new offer document. There was no fault in that decision so I cannot question it.
45. The Council says Ms X has agreed to an amended version of its personal budget offer, but has not signed the document yet. In the meantime, the Council has continued to pay her £1600 per term, in line with the budget set out in Z’s EHC. However, as set out above, the personal budget is unlikely to be sufficient to secure the provision in Z’s EHC Plan. The fact the Council has offered Ms X an increase in the personal budget shows it accepts the existing budget is insufficient. The Council continues to fail to meet its duty to Z, to secure all the special educational provision in his EHC Plan. This was fault.
46. When Ms X did not sign the amended personal budget offer and continued to not send auditing information, the Council should have promptly considered whether it should stop the direct payments and deliver Z’s provision in another way. Its failure to do so was fault.
47. The Council must review Z’s EHC Plan once a year. However, when Ms X would not engage with the Council’s efforts to arrange an annual review in December 2023, the Council accepted this. This was fault and means the Council does not know if the special educational provision in Z’s Plan is still appropriate. It also meant the Council missed a further opportunity to review how Ms X is using the direct payments to secure Z’s special educational provision.
48. Overall, there has been a concerning and repeated lack of oversight of Z’s case, which has meant large sums of money have been misspent and may still be being misspent. In addition, Z has not had the full special educational provision in his EHC Plan since September 2023, and potentially since January 2023. This caused Z an injustice, which the Council should remedy.

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Agreed action

49. Within one month of the date of my final decision, the Council will take the following actions.
1. Begin an annual review of Z’s EHC Plan. The review should consider, in particular, whether the Council’s failure to secure all the special educational provision in Z’s EHC Plan has impacted on his wellbeing and development, and whether more provision is needed as a remedy. The review should also consider the suitability of direct payments for Ms X, given the findings set out in this decision. The Council should issue its decision within four weeks of the meeting and if it decides to amend Z’s EHC Plan, it should do so within twelve weeks of the meeting.
2. Place a copy of this decision on Z’s case file.
3. Put this decision to the Council’s family and children’s services overview and scrutiny committee for it to consider the impact of poor oversight in this case and what steps are necessary to prevent it happening again. Within two months of the date of my final decision, the Council will send the Ombudsman an action plan setting out the steps it will take as a result of the committee’s consideration.
50. The Council will provide us with evidence it has complied with the above actions.

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Final decision

51. I have completed my investigation. I have found fault leading to personal injustice. I have recommended action to remedy that injustice and prevent reoccurrence of this fault.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman