Summary: Mrs X complained about the Council’s refusal to pay her child, Y’s, Education, Health and Care (EHC) Plan personal budget to her direct, in advance. She says the Council insisted on using its own system which limited her choice of tutors and meant they had to be paid in arrears. The Council was not at fault. It was entitled to use its own system and exercised its discretion to set up alternative payments for Y’s tuition. There is no evidence Y’s choice of tutor has been limited.

The complaint

1. Mrs X complained about the Council’s refusal to pay her son’s Education, Health and Care (EHC) Plan personal budget to her direct, in advance. She says the Council insisted on using its own system which limited her choice of tutors and meant they had to be paid in arrears. Mrs X says this caused her distress. She wants the Council to review its procedure to allow parents to request direct payments in advance.

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The Ombudsman’s role and powers

2. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word fault to refer to these. 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)
3. 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)

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What I have and have not investigated

4. I have not investigated the Council’s delivery of Y’s SEN provision before July 2024. We have already investigated this as part of decision 23019010.

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How I considered this complaint

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

Education, Health and Care Plans and direct payments

7. 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. We cannot direct changes to the sections about their needs, education, or the name of the educational placement. Only the Tribunal or the council can do this. 
8. 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. One way that councils can deliver a Personal Budget is through direct payments. These are payments made to the child’s parent or the young person so they can commission the provision in the EHC Plan themselves.
9. When making direct payments the Council must be satisfied the direct payment is an efficient use of its resources, and the recipient will use the payment to secure the agreed provision.
10. The Council must set out in writing, the amount it will pay, the dates it will make payments and the provision that recipients should use the direct payments for. Councils can set conditions on how recipients should spend direct payments. Recipients must agree to use an approved bank account which is solely for the direct payments. Recipients must also provide the Council with evidence of how they have spent the direct payments.
11. 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 provision.
12. The council’s (and health commissioning body’s where relevant) duty to secure or arrange provision specified in EHC Plans is only discharged through a direct payment when the provision has been acquired for, or on behalf of, the child’s parent or the young person.

The Council’s virtual wallet

13. The Council manages and monitors its direct payments through a virtual wallet which provides individuals with a dedicated separate account to receive their direct payments, and for approved providers to receive payment from. This reduces the need for individuals to provide, and the Council to review, receipts and bank statements.
14. The Council pays funds into each wallet account in advance of each term. Council approved providers who are registered on the wallet can then draw down their payment. If a parent wishes to commission a provider who is not registered on the virtual wallet, they can reclaim the cost of this provision, usually in arrears, once they have provided a receipt. The Council will the release funds from the virtual wallet to allow the parent to make the payments.
15. The Council also uses the virtual wallet to pay parents for resources such as fuel and educational equipment.

What happened

16. Mrs X’s child, Y, has an Education, Health and Care (EHC) Plan. They receive an Education other than at school (EOTAS) package by direct payments. In summer 2024 the Council issued an amended direct payment agreement to reflect changes in Y’s provision.
17. Mrs X refused to sign the agreement. She pointed out some errors in the agreement and said she did not want to use the Council’s virtual wallet system. She said one of Y’s tutors and their swimming teacher did not want to register on the system. She wanted the Council to make the direct payments into a dedicated conventional bank account.
18. The Council corrected the errors and explained the purpose of its virtual wallet system. It said it helped the Council ensure suitable use of direct payments. It said it had already paid the direct payment for the next term of Y’s provision into Mrs X’s virtual wallet. It explained it needed to carry out checks on Y’s tutor and would then look at whether it needed to amend its payments. It said it would be happy to speak to Y’s tutor and swimming teacher about registering on the system, or it could pay Mrs X in arrears once she had provided proof of payment.
19. Mrs X said she did not have the money to reclaim the cost of Y’s provision in arrears. The Council said it could look at paying into the virtual wallet more often and offered to meet Mrs X to discuss a way forward. Mrs X complained to the Council. In its response the Council said it had explained why it used a virtual wallet and again offered to meet with Mrs X to try to resolve the situation.
20. In October 2024 the Council again proposed a meeting to discuss Y’s direct payments. Mrs X’s husband responded saying they would be instructing solicitors and would not sign a direct payment agreement. The Council responded saying it could look at several payment alternatives to address cash flow issues with smaller providers. It said it could accommodate advance payments into a conventional bank account but would need to review bank statements each term. Mrs X complained to the Ombudsman.
21. Following Mrs X’s complaint to the Ombudsman the Council met with Mrs X and issued an amended direct payment agreement. Following Y’s most recent annual review the Council has told its virtual wallet team to release funds to Mrs X to pay for Y’s provision in advance. Mrs X recently alerted the Council to a shortfall in payments which the Council corrected immediately.

My findings

22. The Council was entitled to set conditions over Mrs X’s use of Y’s direct payments including the use of a dedicated account to receive payments. The Council was also under a duty to ensure the quality and value for money of any provision it funded through direct payments. The Council’s decision to do this through its virtual wallet scheme was not fault.
23. Mrs X raised concerns about using the Council’s virtual wallet in Summer 2024. The Council immediately responded to Mrs X explaining it could look at different payment frequencies and offering to meet with Mrs X. While the Council’s preferred choice was for Mrs X to use the virtual wallet, the evidence shows it was willing to exercise its discretion and look at alternatives. The Council was not at fault.
24. Mrs X says the Council’s virtual wallet system limits Y’s choice of tutors. Y received tuition from a tutor who is not part of the Council’s virtual wallet system. The Council is under a duty to ensure the suitability of Y’s provision. There is no evidence the Council objected to Mrs X’s use of a different tutor. The Council carried out routine checks on Y’s tutor and looked to adapt its payment frequency to meet their terms. The Council was not at fault.

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Decision

25. I find no fault and have completed my investigation.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman