Direct Payments

What are Direct Payments?

‘Direct payments (DPs) are monetary payments made to individuals who request to receive one to meet some or all of their eligible care and support needs’ Skills for Care: Care Act Learning and Development Materials

But what does that actually mean? And where did the concept stem from?

DPs are an approach to supporting disabled people to lead more independent lives and exercise choice and control over the services they receive. Independent living means support that is flexible and tailor-made for a person, in contrast with identifying their needs through professional assessments and other forms of community care support.

Who is entitled?

DPs for social care have been around since 1997, but since April 2001, they have been available to carers, parents of disabled children and disabled young people aged 16 or 17 years old.

Since 2001, all local authorities have had a mandatory duty to offer DPs to all eligible people requesting one.

Everyone who is eligible has to consent to DP and be able to manage it, with support if required.

Personal Health Budgets (PHBs) were introduced in 2014. A PHB is an allocation of NHS resources that a person who qualifies can use to meet their health and well-being goals. It encourages choice, control and individuality. It does not cover an person’s entire NHS care. Certain services, such as GP services, A&E, and inpatient care, are excluded.

What can it be used for? Are there pros and cons?

There are many examples of how DPs have transformed users’ lives, giving them more independence, flexibility and choice. A DP is an alternative to traditional services provided by a local authority which can mean lack of choice, agency and having no sense of continuity.

Payments can be made for day-to-day things such as dressing, cooking, driving, bathing children and support to facilitate discharge from hospital. They can also be used for social activities – visiting friends, evening classes and college courses, gardening as well as for assistance to access training and employment.

A good way to describe the difference between traditional services and DP is to focus on single words:





Having  a DP can be:




With this comes responsibility.

DPs do mean managing money, paying PAs and invoices, keeping up to date with paperwork and taking on board what it means to be an employer. Some people prefer commissioned services from an agency as they don’t want this level of responsibility.

Some people want the flexibility a DP affords but need support with the financial side of things. This can be done via a nominated person or a third party managed account. We will come back to these.

Are there terms and conditions?

Yes, there are. You have to sign a Service User Agreement (SUA) which sets out how you will spend the DP, and what on.

The SUA is an agreement between the local authority or NHS and the client or nominated person, to receive money in lieu of services for all or part of their support. Effectively, you are agreeing to create your own package with the funds set aside for your support. A suitable person to have as the nominated person might be a family member, friend, someone you trust or someone with Power of Attorney.

Key elements of the Terms and Conditions:

No cash withdrawals

Money must be spent on needs identified in the Care Plan

Requirement to submit monitoring, including receipts/invoices

Compliance with legislation (e.g. Employment law)

DP funds to be kept in a separate bank account

Offering a DP is regarded as positive risk taking by a local authority. This is covered under the 2005 Mental Capacity Act which states that the starting assumption should always be that anyone aged 16 and over has the capacity to make the relevant decisions. Legal capacity (to consent to a DP in principle) and the capacity to administer a DP are two separate things.

Is being an employer complicated?

It takes a bit of getting used to. There’s paper work to begin with, and some unfamiliar things to think about, like liability insurance, National Insurance, holiday entitlement and financial monitoring for the local authority. You have to keep bank statements safe and remember to inform payroll on time every month. Support services are there to assist you with your queries.

For those who are unable to manage their own DP funds, or do not want to, clients have an option of using a third party to manage their funds and therefore do not require a bank account.

There are specialist payroll companies who do this and the local authority normally pay the DP funds directly to them on the clients’ behalf.  They pay invoices or employees directly.

Common misunderstandings about DPs

Clients have to do their own tax calculations, etc

This is not the case. This is done by a payroll company or support service.


The client is not legally the employer (it’s the DP support service, payroll or insurance company)

Once again this is not the case – legally the client is the employer and payroll, insurance providers and DP support services are just that – support services.


I can’t open a bank account so I can’t have a DP

A third party managed account would be ideal in this instance.


A DP is just for employing a PA

Not true! It can be used for other things as mentioned earlier.


You can’t employ family members

Also not true! They just can’t live in the same house. Special circumstances regarding close relatives working for clients (for example, a person with dementia, mental health issues or visual impairment) are assessed on a case by case basis.


DPs can only work for a small minority of people

Again, not true! DPs can be very flexible and allow room for creativity to meet the needs of people with a wide scope of disabilities. You still make all the decisions and have control.


Join the conversation, sign up to our facebook group, tell us the courses you would like to see in the future, talk to other Personal Assistants and Direct Employers and stay connected.