Date of decision: 11 December 2025
Summary
A disabled man and his wife complained the Council rigidly managed their direct payments, delayed care plans and a carer’s assessment, and refused to let them use funds flexibly to employ suitable personal assistants at market rates.
What happened
In March 2023 the Council assessed the man’s needs as requiring 2 hours of daily support (1 hour morning, 1 hour evening) in response.
While awaiting the Council’s financial assessment, the couple used their own funds to arrange 9 hours weekly care for him, and the wife received 6 hours weekly carer support from an existing Carers’ Direct Payment.
In May 2023 the Council completed its financial assessment and put direct payments in place at £13.04 per hour, with backdated funds that created a surplus on the account. The couple employed a personal assistant to meet his assessed needs, and the Council told the wife she could use her Carers Direct Payment for sitting services and domestic and garden tasks.
In October 2023 the Council reviewed the direct payments. The wife explained the hourly rate was insufficient to cover their PA’s costs and asked if she could use the underspend to make up the difference between the Council’s rate and their PA’s rate.
She stated the social worker had verbally agreed she could do so but went on long-term sick leave before formally confirming this arrangement.
In August 2024 the wife told the Council their PA had left and she was struggling to recruit a replacement at the Council’s hourly rate. The Council offered to source a PA through an agency, but the wife declined as this had not worked previously. The wife also reported changes to her husband’s health conditions. The Council asked whether she wanted an immediate reassessment or preferred to wait for the annual review due soon, and she chose to wait.
In October 2024 the Council visited to complete annual reviews of the man’s Needs Assessment and the wife’s Carers Assessment. At the meeting the wife said she needed additional hours for domestic tasks like laundry as her own health was declining, wanted to use sitting service hours in blocks rather than weekly to facilitate family visits and possibly starting a home business, and explained the man did not want people in their home sitting with him.
She told the Council she had used the direct payment to buy him a medical cushion and requested an uplift in the hourly rate paid to their gardener, which the Council refused.
She stated she had a verbal agreement with the previous social worker to use the surplus to pay the difference between the Council’s hourly direct payment rate and their PA’s hourly rate, and had been operating the account on this basis.
The wife requested permission to keep the direct payment underspend for emergencies and contingency planning, an increase in the hourly direct payment amount to £16 per hour backdated to April 2024, an additional hour and half per week domestic carer support, and an increase in the gardener’s hourly rate to £20.00. The social worker said she would discuss the requests with managers.
Later that month the Council replied stating its current direct payment rate was £14.32, which exceeded the minimum wage of £11.44. It said that while some agencies charge £18 per hour, workers receive minimum wage with the rest covering agency overheads. The Council said if the wife could provide evidence of recruitment difficulties it would consider altering its view on the hourly rate but could not guarantee this would change its decision. It agreed to reassess the man’s needs considering the wife’s request for additional domestic support, confirmed she could use sitting service hours weekly or by pooling them, but refused to allow use of the direct payment underspend to make up the £1.65 per hour difference, stating it would recover the underspend that had accrued.
The wife complained about the Council’s decision not to increase the hourly rate to meet the cost of employing a suitable PA, which she said was contrary to guidance, and about the decision to clawback the underspend. The Council replied that it was responsible for setting an appropriate rate covering national minimum wage and associated employment costs, reviewed annually, and so did not uphold this complaint element. However, it recognised it needed to review its direct payment processes especially when there are difficulties employing a PA, and agreed to allow continued use of the direct payment underspend to top-up the PA’s hourly rate until it completed the review. The Council stated that invoices submitted in October 2024 triggered monitoring which identified an underspend, and it was entitled to clawback any remaining surplus.
In response to Ombudsman enquiries, the Council confirmed it was still reviewing its direct payment processes. It stated the wife had received carers’ assessments since 2017 with continuous carers’ services, initially via a local charity between 2017 and July 2019 when the Council took the service in-house, with annual reviews since. Following the October 2024 carers assessment the sitting service remained in place, but in February 2025 the Council offered a lump sum payment equivalent to the man’s entitlement to a 6-week carer break in a care home, which the wife could use to pay for PA hours when unable to carry out her carer role, with any unused hours to be recouped.
The Council stated support plans had been in place for the man since 2023, and following the October 2024 reassessment the wife requested amendments which were incorporated but caused some delay. The Council said it would not reword information on needs assessments when the information remained accurate.
What was found
The Council set a fixed hourly direct payment rate without demonstrating it had regard to the couple’s specific circumstances when deciding if its hourly rate was sufficient for them to source a PA to meet their needs. The Care and Support Guidance explains that the Council should not set fixed upper limits and should consider the circumstances of each individual case when deciding the hourly rate it will pay. The Council’s failure to consider individual circumstances when setting the hourly rate was fault, causing uncertainty about whether the hourly direct payment was sufficient to meet their needs. Although the Council recognised its processes needed review and was reviewing its procedures, the review had been ongoing since the start of 2025, leaving the couple uncertain about whether they would receive payments to cover the cost of their PA, adding to the injustice.
The Council did not provide evidence demonstrating it considered and assessed the expenses the wife asked to be covered by direct payments, nor provided clear explanations why her requests were refused. This fault caused the couple uncertainty about whether the Council properly considered all the costs associated with meeting their eligible needs.
The Council decided to clawback the underspend without establishing why it had accrued or ascertaining if this was due to changes to eligible needs or problems meeting assessed needs. The Council’s failure to establish the reasons for the underspend before deciding to request its return is fault causing uncertainty that the decision was made correctly. The underspend accrued from May 2023 onwards but was not identified during the six-month direct payment review or at the November 2023 annual review. Failure to identify the underspend earlier was fault denying the couple the opportunity to discuss it and take appropriate action.
The Council did not provide a completed carer’s assessment for 2023 despite being asked for it during enquiries. This was fault. Without a completed assessment it is unclear what the wife’s needs were and how these were met, which was injustice.
The Care and Support Statutory Guidance states the amount of direct payment must be sufficient to meet the needs the local authority has a duty or power to meet, and the Council may reasonably consider how to balance funding requirements but should not set arbitrary upper limits on costs as this does not deliver a person-centred approach. The Guidance states direct payments should be used flexibly and innovatively with no unreasonable restrictions placed on use, as long as payments are used to meet eligible care and support needs.
The Council agreed to apologise to the couple for the identified fault, pay them £500 in recognition of the uncertainty and avoidable time and trouble caused, and agree they can keep the direct payment underspend that has accrued. The Council will meet with them to agree what the underspend can be used for considering the man’s preferences about his care, and give them two and half years from the date of the final decision to spend the underspend—the same time it took to accrue.
Within three months the Council should reassess the couple’s case in line with its new direct payment procedures and notify them of the outcome in writing with clear explanations for its decisions. Within three months the Council should review its direct payment procedures and ensure the new procedures comply with the relevant law and statutory guidance and provide training on its new direct payment process to all relevant staff.
Points to note for councils, professionals, people using services and their carers, advocacy groups and members of the public
The Ombudsman’s report contains three significant legal issues that require attention when viewed against public law principles and Care Act duties.
First, it is not wrong for any council to set a fixed hourly rate for the type of work envisaged as meeting need – as long as the evidence basis for that type of work’s cost in the local market has been used to underpin the setting of the rate. It is no more unlawful, or a maximum cap to set a rate for a service; councils do it all the time but the question is, is it a sufficient rate overall to attract people to do the job. The Guidance outlaws a maximum personal budget, not an hourly rate.
Where a council identifies eligible needs requiring personal assistant support through direct payments, it must establish a rate sufficient to secure provision in that individual’s circumstances. The couple here faced evidenced recruitment difficulties at the council rate, yet the authority placed the burden on them to prove impossibility rather than addressing the sufficiency question itself. This inverts the statutory duty. When an authority knows its rate is preventing a person from meeting assessed eligible needs, it cannot lawfully persist with that rate. The failure to adjust the rate or offer alternative arrangements to ensure the man’s needs were actually met likely constituted a breach of the section 18 duty to meet eligible needs, not merely procedural unfairness.
Second, the treatment of the underspend and the proposed clawback exposes serious confusion about the legal framework for direct payments and reviews. Public law principles require that where circumstances affecting a care plan become apparent, the council must consider whether a review leading to reassessment is triggered under section 27 of the Care Act. An accumulating underspend over many months is an obvious signal that the plan is not working as intended, whether because the rate is too low to recruit, the hours are wrong, or the person’s needs have changed. The report states that the man did not want people sitting with him in his home. This suggests obvious problems with the sitting service, indicating that the man’s needs should be met another way. Part of the solution might have been higher payments to enable recruitment of a PA.
Durham, just up the road from Redcar & Cleveland, had been found responsible for the same sort of fault too, only a couple of years ago. That report is on this site.
The direct payment regulations require monitoring within six months and annually thereafter, yet the council identified this underspend only when invoices triggered a financial check in late 2024, nearly eighteen months after it began. The duty to keep plans under review generally cannot be discharged by passive monitoring. Where a plan is manifestly not meeting needs because personal assistants cannot be recruited or retained, the council cannot simply allow the money to accumulate and then retrospectively recover it on the basis that it was always public money. It represents the failure of a care plan. That approach treats direct payment recipients less favourably than those receiving commissioned services, where the council would have to address provider failure. The council’s stance that it could unilaterally claw back funds without first establishing why the plan had failed, and whether its own failures contributed, likely represented an unlawful revision without proper process. The case of Dunn v Lancashire CC, which ended in a settlement statement made public on the internet, established the same point.
Third, the handling of the wife’s position as carer reveals inadequate application of carers’ rights under the Care Act. Whilst the Council asserted that annual reviews had occurred and that carers’ services had been provided since 2017, the absence of a documented 2023 carers assessment is significant. Where, as here, the carer explicitly raised concerns about her own declining health and her difficulties managing the caring role, the Council was obliged to assess whether her needs for support met the eligibility criteria. A sitting service could be supplied to her, as a carer, but obviously that was no good if her husband was unwilling to co-operate with being ‘sat’. Where a carer signals s/he can no longer cope at the current level, the adult’s care plan cannot prudently or lawfully continue to rely on that informal care without a proper carer’s assessment determining what support the carer requires. The Council’s approach of offering a lump sum for respite in February 2025 without a clear evidential basis in a recent needs-led carer’s assessment suggests care planning was driven by the available options rather than assessed need. This risks both failing the carer’s statutory rights and creating an unsustainable plan for the man, since if the wife ceased to be willing or able to care, his unmet needs would increase substantially.
These three issues share a common thread: the Council’s processes prioritised financial control and standardised offerings over the person-centred, needs-led approach that the Care Act legally requires. Where recruitment at a given rate is impossible, the statutory duty to meet needs does not permit a council to leave a person without adequate support whilst conducting a leisurely review of its policies. Where a care plan is visibly not working, the review duty is engaged immediately. And where a carer’s sustainability is in question, a lawful assessment of the carer’s own eligible needs cannot be postponed or assumed away.
Please use the following link if you want to read the original Local Government and Social Care Ombudsman’s Redcar & Cleveland Council (24 019 078) report. If you are affected by the issues in this report, please consider asking a free, one-off question, anonymously, at a level of principle, here. Our experts’ response will give you an opinion which may then help you and the broader community, when posted.
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