4.1.3 Direct Payments Policy (Children’s and Adults) – Lancashire Adult Social Care Policy Portal

CONTENTS

1. Introduction

At Lancashire County Council, we believe in empowering you to take control of your care and support. This policy explains how we will help you use Direct Payments to choose and manage your own care, giving you more independence, choice, and control over your life. We encourage everyone to consider Direct Payments as part of the care planning process where this is the right way to tailor their care to their unique needs and preferences.

The option to have a Direct Payment is written into a number of pieces of Government legislation. These are included below:

2. What is a Direct Payment?

Direct Payments for social care

Direct Payments are one way to receive your personal social care budget. If you’re eligible and choose this option, you’ll get money to arrange and pay for the care or support you need in a way that suits your lifestyle.

To get this support, you must first qualify for a social care needs assessment. Adults can check their eligibility on the Getting Our Support web pages (opens in the Lancashire County Council website).

Support for disabled children and families

Children or young people with disabilities and their families may get extra help, such as short breaks, holiday clubs, home care, equipment, or home adaptations. Parents or carers can ask for an assessment of their child or young persons’ needs and may also request a carer’s assessment for themselves. You can find out more by visiting our Social Care web pages (opens in the the Lancashire County Council website).

3. Making Direct Payments Available

What are Direct Payments?

Direct Payments let you arrange your own care instead of Lancashire County Council doing it for you. This option is available if you agree and are able to manage your care. You’ll get support to understand and manage the payments. Lancashire County Council have commissioned Lancashire Independent Living Service (LILS) to support individuals with understanding direct payments.

How you can use Direct Payments

You must spend Direct Payments on safe, legal services or items that meet the eligible needs in your care and support plan. Spending must stay within your agreed personal budget and support your wellbeing.

The cost of care you arrange should represent good value and be sufficient to meet your assessed needs, as agreed in your care and support plan.

Support for young people

If a a young person in family-based care doesn’t have family support, the council can help connect them with advocacy services to guide them through using Direct Payments. See Making decisions and getting your views heard (opens in the Lancashire County Council website).

4. Information, Choice and Advocacy for Direct Payments

Lancashire County Council, through the Lancashire Independent Living Service (LILS), will give you clear information about Direct Payments, what they are, how they work, and how they can support your care needs.

If you’re creating a care and support plan or receiving support under Section 117 of the Mental Health Act, you’ll be told which of your eligible needs can be met through Direct Payments and offered that option.

You’ll get details about your rights and responsibilities, and support to help you decide if Direct Payments are suitable for you. This may include fact sheets, real-life examples, or communication tailored to your needs. You’ll be offered choices more than once and may be referred to support services, advocacy, or peer groups for independent advice.

If you want to use Direct Payments, you must request them. You can do this during care planning or at any time. You can also choose to stop using them by letting the council know.

If you struggle to understand your options but don’t need support under the Mental Capacity Act and have no one else to help, the council will offer you an independent advocate. They’ll help you understand your choices and decide if Direct Payments are right for you. For more information see Independent Care Act Advocacy (opens in the Lancashire Adult Social Care Policy Portal).

5. Your Right to Request Direct Payments

If you have eligible social care needs, Lancashire County Council must offer and discuss Direct Payments with you. This happens during assessments, reviews, or when planning your support.

The following can request Direct Payments:

The person receiving care.
A parent on behalf of a child.
A young person.
A legally appointed representative (e.g. Deputy).

This decision must be made by them, not by someone else on their behalf.

6. What Happens when you Request Direct Payments

If you ask for Direct Payments, we’ll do our best to support your request. If we can’t offer them, we’ll explain why in your assessment and care and support plan.

If you disagree with the decision, you can challenge it through the complaints process (opens in the Lancashire County Council website).

7. Who can get Direct Payments?

You may be able to get Direct Payments for yourself or your child if:

You qualify for social care and financial support from Lancashire County Council.
You’re a parent of a disabled child and a social care assessment identifies there are unmet needs that require support.
The support helps safeguard and promote the child’s wellbeing.
You understand what’s involved in managing Direct Payments.
There’s no reason to believe the payments will be misused.
The payments will be used to meet eligible care needs.
You can make informed decisions, or someone has been legally appointed to do this for you.
You’re not under a court order for drug, alcohol, or certain criminal offences (as listed in the Care Act 2014).

For more information relating to Social Care support for children and families and eligibility, please visit Social care support for children and families (opens in the Lancashire County Council website).

For more information relating to Adult Social Care eligibility, please see Eligibility Policy (opens in the Lancashire Adult Social Care Policy Portal).

Preparing for Adulthood with Direct Payments

For young people under 16, Direct Payments are managed by a parent or carer. As you get closer to 16, you may gradually take more responsibility, so you’re ready to manage your own payments by 18, if you’re eligible under the Care Act.

If a young person turns 18 and is unable to manage Direct Payments themselves, a parent or carer may continue to do so, as long as they meet Care Act eligibility. The Young Adult Service can help with this process.

Direct Payments for 16- and 17-Year-Olds with a disability

Direct Payments must be discussed with both the young person and their parent or carer. If they disagree, and the young person is able to make informed decisions, their views should take priority.

If the young person cannot manage Direct Payments or make financial decisions, an assessment under the Mental Capacity Act (2005) should be carried out to decide how best to support them.

If a young person receives Direct Payments and is expected to have eligible needs under the Care Act when reaching adulthood, they should be referred to Adult Social Care for a social care assessment in line with the Lancashire County Council Transition Policy (opens in the Lancashire Adult Social Care Policy Portal).

Direct Payments for Adults who cannot make decisions

If you’re unable to make decisions about receiving Direct Payments, Lancashire County Council will carry out a best interests assessment under the Mental Capacity Act to decide if Direct Payments are appropriate.

This includes checking if you can:

Understand how your care needs should be met.
Use the money only for your care.
Take part in planning your support.
Keep yourself safe (e.g. not sharing your bank or card details).
Manage responsibilities if you employ someone (e.g. setting tasks, keeping boundaries, avoiding risks like unfair dismissal or harassment).

If you can’t manage these responsibilities, the council may agree that a suitable and willing authorised person can act as your authorised representative. This person must be able to manage the Direct Payments and act in your best interests.

The authorised person may be someone with a registered lasting power of attorney or a court-appointed deputy. If no such appointment exists, the council will consider whether another individual is suitable to take on this role.

You can only receive Direct Payments if there is an appropriate authorised person to manage them on your behalf.

Nominated person for Direct Payments

You can choose someone you trust to manage your Direct Payments for you. This person is called a nominated person and must sign an agreement (Form FIN 107) to take on the responsibilities.

If you have concerns or want to change this arrangement, contact Lancashire County Council’s Customer Access Service (CAS) right away for a review by telephone: 0300 123 6720.

Appointing an Authorised Person (Mental Capacity Act)

If you can’t make decisions about Direct Payments, Lancashire County Council will decide if someone else, called an authorised person, can manage them for you. This is done through a best interests process under the Mental Capacity Act.

The council will consider:

Your past and current wishes, especially anything written before you lost capacity.
Your beliefs, values, and what you would likely want.
The views of people involved in your care or legally allowed to make decisions for you.

The council must be confident that:

The authorised person will act in your best interests.
They can manage the Direct Payments (with support if needed).
This is the best way to meet your care needs.

Checks and responsibilities

A background (DBS) check will be done if the authorised person is:

Not your partner or close family member living with you.
New to your care.
Managing payments on behalf of an organisation.

The authorised person must:

Be named as your financial agent.
Sign the Direct Payments agreement (Form FIN107);
Tell the council if you regain capacity.
Inform the council of any major changes, including if you pass away.
Let the council know if they can’t continue (e.g. due to illness or hospital stay), so temporary support can be arranged.

Only individuals, not companies, can be authorised persons.

8. Who Cannot get Direct Payments

You can’t receive Direct Payments if:

You’re under a court order for drug or alcohol treatment (as listed in the Care Act 2014).
You’re in prison or a young offender institution.

On a case-by-case basis, the authority will consider whether it is appropriate for you to receive a Direct Payment. There may be circumstances where a Direct Payment is refused, such as where there is a history of misuse of funds or you are unable to manage a Direct Payment and there is no one to authorise to manage it on your behalf.

9. What Direct Payments can be used for

Direct Payments must:

Meet your assessed care needs and agreed goals.
Support your health, safety, and wellbeing.
Be sufficient to meet needs and reflect the outcomes agreed in your care and support plan.
Be used responsibly, especially if you employ someone.

Adult Short Breaks with Direct Payments

You can use Direct Payments to arrange short breaks for carers. Support can be provided:

In your home.
At a day centre.
In residential care (up to 4 weeks in any 12-month period).

You may need to contribute to the cost, based on a financial assessment under the Non-Residential Care Charging Policy (opens in Lancashire Adult Social Care Policy Portal). Check the policy to see if you’ll need to pay.

Short Breaks for Children and Young People

You can use Direct Payments to pay for short breaks for children and young people through private or voluntary providers.

The provider must be registered with the appropriate regulator, such as Ofsted or the Care Quality Commission (CQC).

Children’s Travel Assistance

Travel Assistance Grants are Direct Payments that families can use instead of council arranged school transport.

You can learn more in the Home to Mainstream School Transport Policy 2024/2025 (opens as a PDF).

10. What Direct Payments cannot be used for

Direct Payments should be used to meet the care and support needs identified and agreed in your care and support plan and linked to your assessed needs. Whilst there is some flexibility in how needs are met (which should be discussed at the support planning stage) they must not be used for items or services that are unlawful, unsafe, or not aligned with your care outcomes, which would include:

Illegal activities, substances, or drugs.
Permanent residential care.
Permanent foster care.
Local Authority provided services.
Support and services that are the responsibility of other statutory bodies, such as Health or Education.
Any personal contributions resulting from a financial assessment.
Personal expenditure on general household expenses, maintenance, drugs, tobacco, tobacco products, alcohol, gambling, or other personal expenses such as food or clothes.

In addition, a Direct Payment cannot be used for any support or needs that are not agreed as eligible within the assessment or care and support plan.

Shared or Core Support Costs

A Direct Payment cannot be used for shared or core support costs in Supported Living or Extra Care settings. In such settings, the Authority will deduct this element of the personal budget and manage these payments. The remainder of the budget will be paid to you as a Direct Payment.

Continuing Healthcare and Direct Payments

By law, NHS Continuing Healthcare (CHC) funding can’t be given as Direct Payments for health services.

If you’re receiving Direct Payments and later qualify for full CHC funding, your Direct Payments must stop. However, if your care is jointly funded, Direct Payments can still be used for the social care part, but not the health part.

If you receive both types of support, the process will be simplified to reduce paperwork and make things easier to manage.

Technology Enabled Care (TEC)

Technology Enabled Care (TEC) is a universal service provided by the Council to everyone and is not dependent on a care assessment. It is not typically funded through Direct Payments unless specifically included in your assessed care and support plan.

It has a flat daily fee, which covers:

Equipment installation.
Maintenance and monitoring.
Emergency response.

The equipment remains the property of Lancashire County Council and must be returned when no longer needed.

If you already pay towards your care, the TEC charge might count as a Disability Related Expense (DRE). You can ask for a reassessment to see if this cost can be deducted from your care contribution.

11. Conditions for Getting Direct Payments

You may receive Direct Payments if the council is satisfied that the following conditions are met:

You (or a nominated person) can manage the responsibilities, with or without support.
You have the mental ability to make decisions.
There are no legal restrictions preventing Direct Payments.
It’s a suitable way to meet your care needs.

If any of these conditions aren’t met, your request will be declined. Lancashire County Council will explain in writing:

Which condition wasn’t met.
Why it wasn’t met.
What you can do to meet the requirements.

If you make a complaint, the council will still work with you to plan how your care needs will be met without using Direct Payments.

12. Your Responsibilities when using Direct Payments

If you agree to receive Direct Payments, you are responsible for how the money is spent. You must use it as agreed in your care and support plan and may take on legal duties, such as employing staff or working with an agency.

13. Using Direct Payments to Buy Services

If you use Direct Payments to buy services from a provider or agency, you’re entering a private contract. It’s your responsibility to understand the terms.

If you’re buying personal care, the provider must be registered with the Care Quality Commission (CQC).

The provider won’t be paid by Lancashire County Council and must not have access to your pre-paid card or bank account. If you need help managing payments, you can use a Supported Banking Service or ask a nominated person to help.

14. Employing a Self-Employed Worker with Direct Payments

You need to be aware of your responsibilities when using your Direct Payment to employ self-employed personal assistants for personal care.

Employment status must be confirmed with HMRC. In many cases, personal assistants may be considered employees rather than self-employed. If you do employ a self-employed worker, you are responsible for ensuring compliance with HMRC rules and you would be responsible for any tax, insurance, or penalties, not Lancashire County Council.

If you need help understanding HMRC rules, the council, through the Lancashire Independent Living Service (LILS) can provide information and advice.

15. Paying someone to manage your Direct Payment

If your care is complex or changes often, you may be able to use part of your Direct Payment to pay someone to manage it for you. You will remain accountable for its proper management, unless an authorised person is appointed due to lack of capacity, in which case the authorised person assumes legal responsibility.

This must be included in your care and support plan, and Lancashire County Council must agree it’s necessary and affordable within your budget.

16. Becoming an Employer with Direct Payments

If you use Direct Payments to employ a personal assistant, you become their employer and take on legal responsibilities. This includes:

Following employment laws.
Buying employer’s liability insurance.
Providing or arranging staff training.
Registering with HMRC and handling tax and payroll correctly.
Keeping enough funds to cover costs like sick pay, pensions, notice, and redundancy.

You cannot pay yourself with Direct Payments, but you can use it to employ someone. Lancashire County Council offers advice and support to help you manage these responsibilities.

17. Employing Family or Household Members

You usually can’t use Direct Payments to pay:

Your spouse or partner.
A civil partner.
A close relative you live with.
The partner of a close relative you live with.

However, Lancashire County Council may allow this if it’s clearly necessary to meet your care needs. This is decided case by case, based on a risk assessment and how it affects everyone’s wellbeing.

This rule helps protect family relationships, gives informal carers a break, and supports their ability to work, study, or take part in other activities. A carer’s assessment may be offered if not already done.

You can employ a live-in personal assistant, as long as they’re not someone who would normally be excluded under these rules. The restriction applies when the relationship is mainly personal, not professional.

You also can’t use Direct Payments to pay someone to support you in their home. In that case, a Shared Lives arrangement may be more suitable.

18. Employing Friends or Relatives who don’t Live With You

You can use Direct Payments to employ friends or family members who don’t live in your home. Your care and support plan will set clear boundaries between personal and professional roles and ensure the arrangement follows employment laws, like working hours.

If the person also provides unpaid care, a carer’s assessment may be offered.

For children and young people, Direct Payments cannot be used to pay someone with parental responsibility.

19. Safeguarding Alerts

If a safeguarding concern involves a personal assistant hired through Direct Payments, it will be investigated under Lancashire County Council’s Safeguarding Policy.

As part of the process, the council will review whether it’s still appropriate for you to receive Direct Payments. You or your representative will be informed of the outcome.

20. DBS Checks and Direct Payments

Lancashire County Council strongly recommends a Disclosure and Barring Service (DBS) check for anyone you hire with Direct Payments, though it’s not always required.

DBS checks are mandatory if:

A child or young person under 18 or a vulnerable adult lives in the home.
The person is being hired to support a child or young person (must be completed before they start work).

If you have the ability to make decisions, you don’t have to get a DBS check, but it’s advised. The same applies to authorised persons managing Direct Payments. If the authorised person is not a close relative, partner, or friend involved in your care, the council will carry out a DBS check.

Lancashire County Council will cover the cost of DBS checks for Personal Assistants as part of your first-year setup costs.

21. Direct Payments Agreement (FIN107)

Before any payments can start, you (or your representative or authorised person) must read, understand, and sign the Direct Payments Agreement (Form FIN107). This sets out your responsibilities and those of Lancashire County Council.

22. Payment and Frequency

Payments will be made every four weeks, after deducting any charges under Lancashire County Council’s Charging Policy (if applicable). If you’ve been overpaid before, this may affect the schedule. You must add your assessed contribution to the amount you receive.

23. Pre-payment Cards, Bank Accounts and Supported Banking Services

Lancashire County Council’s preferred method for making payments is by a Direct Payments prepaid card. However, if there is a specific reason as to why this would not meet your needs then you can make a request to have it paid into a bank account, that is separate and designated for your care costs only.

A Supported Banking Service provider can be used if required. The charge for this will be detailed on the plan and will be met by your Personal Budget. It will be expected that a Supported Banking Service will provide the following services, as a minimum:

Setting up a dedicated bank account in your name Receiving the Direct Payments and making sure they are correct.
Paying the personal assistants wages, care agency fees and any other bills.
Paying all amounts due to HM Revenue and Customs (HMRC).
Keeping a record of all the income received and payments made.
Providing statements showing all transactions at the request of the council.
Dealing with Lancashire County Council’s audit and inspection checks.
Making sure employer’s liability insurance is in place before any employee starts.

A Supported Banking Service is a private contractual relationship between you, receiving the Direct Payment budget, and the Supported Banking Service provider. Lancashire County Council will have no contractual authority over this service and all Direct Payment responsibilities such as those of an employer, keeping records, spending within the plan and other responsibilities detailed in this policy remain with you as the person in receipt of the Direct Payment.

The FIN 107 Direct Payment Agreement underlines these responsibilities.

24. Cost of Services

The Direct Payment budget will be a sufficient amount to meet your eligible needs. You can use Direct Payments to pay for services, as long as the cost is within Lancashire County Council’s reasonable estimate for a suitable and cost-effective service.

If you want extra or more expensive services, you will be required to pay for this from your own personal funds.

25. Assessed Financial Charge

This is the amount you may need to pay towards your care, based on a financial assessment by Lancashire County Council. They look at your income, savings, and expenses to decide what you can afford.

If you have to contribute, this amount will be taken off your Direct Payments, and you must pay it into your funding account. If you don’t do this regularly, your Direct Payments may be stopped and other support options considered.

26. Financial Monitoring

Lancashire County Council checks how Direct Payments are spent to make sure public funds are used properly. You must keep records and share them if asked.

If you don’t provide records or take part in monitoring, your Direct Payments may stop and other support options will be offered subject to a review of your care and support plan.

Using a Prepaid Card allows the council to monitor spending remotely and in real time. This makes the process quicker, easier, and less intrusive for you.

27. Social Care Reviews

How often your plan is reviewed will be agreed when it’s approved, based on legal requirements. If there are concerns or risks, reviews may happen more often.

For adults who can’t make decisions, Direct Payments to an authorised person must be reviewed within six months, then at least once a year. For a child or young person, reviews will match the child or young persons’ needs and family situation.

After a review, your Direct Payments may go up or down if your needs or circumstances change, or if council policy changes. If payments are reduced, you’ll get four weeks’ written notice.

28. Suspending Direct Payments

If you go into hospital, short-term care, or use rehab/reablement services, and your Direct Payments are used to pay an agency, payments will stop based on the agency’s notice period.

If you leave Lancashire for more than four weeks but plan to return and still live in Lancashire permanently, payments may continue but only if agreed in advance.

29. Terminating Direct Payments

Ending your direct payment

You may decide at any time that you no longer wish to continue receiving Direct Payments. If you remain eligible for services, Lancashire County Council will make arrangements for alternative services to be provided. You or your nominated or authorised person must inform the county council if there is change in circumstances or if you pass away, so that the payment can be ceased.

If you had capacity and were receiving Direct Payments but then lose capacity to consent, the county council should discontinue Direct Payments to you and consider making payments to an authorised person instead. In the interim, the county council should make alternative arrangements to ensure continuity of support for you.

Direct Payments ended by the Authority

Lancashire County Council will only end a Direct Payment as a last resort and will work with you to try and avoid this if possible. The Council will always work with you to ensure the care and support required will be provided to those with eligible needs. This might include by way of alternative arrangements. We will give you notice of your Direct Payments ending, usually four weeks, although this could be more or less depending on their personal situation.

Direct Payments must be discontinued where you are placed by the courts under a condition or requirement relating to drug and / or alcohol dependency. Councils also have discretion to discontinue Direct Payments in respect of particular services if you become obliged to receive that service as a result of certain provision of mental health legislation.

The Regulations state that a council shall cease making Direct Payments if the person no longer appears to the council to be capable of managing the Direct Payments or of managing them with help. The Regulations also state that the council Direct Payments must stop making Direct Payments if it is not satisfied that your needs can be met by using Direct Payments. The council retains the right to terminate the Direct Payments with immediate effect if any of the terms of the Direct Payments Agreement are not adhered to, including but not limited to:

You are not spending the Direct Payments, or any part of the Direct Payments, as agreed in the plan.
The council is not satisfied that the arrangements made by you are adequate for securing services.
Your assessed needs and agreed outcomes are not being met.
You are no longer capable of managing the Direct Payments with support.
A risk assessment finds that you are putting yourself at risk of a complaint, for example, under employer legislation or the management of the Direct Payment is not legal.
A risk assessment concludes that there is an imbalance in the employer/employee relationship to the detriment of meeting the eligible care needs.
You go into permanent residential care.
A safeguarding investigation considers that you are at risk of abuse or has suffered abuse.

This list is not exhaustive.

Ending Direct Payments when someone dies

In the event of your death, we will make contact with your personal representative or executor approximately four weeks after the date of death. This period allows for any remaining care related costs to be paid from the Direct Payments account.

A final audit of the Direct Payments account will be carried out to determine whether any surplus funds remain. Where appropriate, your personal representative will be asked to return any unspent monies to the council (see Section 30, Repaying Direct Payment Funds).

In all cases where the Direct Payment ends, a social care and finance review should be completed. The council will provide a written explanation of the reason for termination. The final audit will be conducted in accordance with the Direct Payments Agreement and relevant legislation.

30. Repaying Direct Payment funds

Each account is subject to an annual audit. There may be times when Lancashire County Council may ask you to repay some or all of your Direct Payments if:

The money wasn’t used as agreed in your plan.
You were overpaid.
You didn’t provide records when asked.
There’s too much money left in your account:
- Over 10 weeks’ worth for children and young people.
- Over 4 weeks’ worth for adults.

Before asking for repayment, the council will contact you. If you have a valid reason for the surplus, you’ll have 14 days to respond. Usually, it is likely that agreement is reached that funds not needed to pay for care and support now or in the future will be paid back to the Council.

If you repay money but need it again within 12 months, you can ask for it back. The council aims to return it within five to seven working days.

If you don’t repay when required, the council will take steps to recover the money. This will not affect your eligibility for support.

If there’s evidence of fraud or misuse, the council may involve the police or legal team and possibly make a safeguarding referral.

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