Personal budgets and direct payments

A personal budget is how much it costs to the authority to meet your needs.

What is a personal budget

A personal budget is how much it costs to the authority to meet your needs. After the local authority accepted that it has a duty to meet your needs, they must give an indicative personal budget. A personal Budget could be adjusted during the support planning process. The local authority is required by law to explain how the personal budget was calculated and show how it is enough to meet your needs.

Personal budget can exist in 3 forms or as a mixture of those

  • A managed account held by the local authority – this means they will be responsible for commissioning all your support.
  • A managed account held by another party
  • A direct payment – money given to you so that you could arrange and buy your own support.

Direct Payments

Who can get a direct payment?

If the local authority agreed to meet your care and support needs, you have a right to request a direct payment. However, the local authority is not legally obliged to give it to you in every case. They can in rare circumstances, decline your request, but only if they have good reason. In any event, they should tell you what the reasons are in writing and give you the opportunity to ask for a review. You can request a direct payment at any time. Some local authorities may want to consider this request during the review, however they cannot make you wait for a review, the law says they should bring a review forward if a request for a direct payment is made.

The local authority should make a direct payment if all the conditions below are met:

  • You have the mental capacity to make the request and, if you nominate another person, they agree to receive the payment.
  • You are not prevented by law from receiving direct payments. (This for example applies if you have to attend drug or alcohol rehabilitation as part of a court order or under mental health law).
  •  The local authority thinks you can manage direct payments, either on your own or with help from your nominated person.
  • The local authority thinks that making a direct payment to you (or your nominated person) is an ‘appropriate way’ to meet your needs. This condition gives the local authority a broad power to decide, but their explanation of why it is not appropriate to meet the needs through a direct payment must be reasonable.

However, not everyone wants to receive a direct payment and it is important to remember that the local authority cannot force you to. According to the law you can also choose to have a mixed package, where some support is arranged by the local authority and other support is arranged by you through a direct payment. If you have a direct payment and feel like you no longer want it, you can always ask the local authority to arrange your support and stop your direct payment. The fact that the local authority manages your support should not necessarily mean you can’t choose who provides support to you.

The Direct Payment Amount

The law clearly says the amount of your direct payment should be enough to meet your needs specified in your care and support plan. It also requires local authorities to ensure the amount includes all the costs associated with employing your own staff. How much your Personal Assistants (PAs) are paid should depend on the level of experience and skills that are required from them and the local market conditions. It would be unlawful for the local authority to have fixed hourly rates for all cases. Each case should be considered individually. It is easier to argue for higher wages for PAs if the care plan requires PAs to have specific skills or training.

You have a right to get an explanation of how your direct payment was calculated and how it is enough to meet your needs. If you think your direct payment is not enough, the first step you should take is to ask for this explanation and challenge it.

Rights and responsibilities of people receiving a direct payment

Before issuing a direct payment to you, the local authority will usually ask you to sign a direct payment agreement. This document should outline your rights and responsibilities. It is important you read it and clarify any concerns you have. Make sure you ask for an accessible version if you need one.

All direct payment users have responsibility to spend the money appropriately (see below) and to give information to local authorities so they can monitor how the money was spent. If you decide to employ your personal assistants you will have a range of responsibilities as an employer. Those will relate to employment law, tax and pensions. Below are some guides that will help you find the information you need.

Skills for Care toolkit for people employing personal assistants, a comprehensive resource with template documents, advice and information

Disability and Tax Law guide
will help you understand your duties in relation to tax, employee contributions and payroll.

Disability Rights UK guide about employing personal assistants

What can I spend my Direct Payment on?

It is important you spend the money on meeting your support needs, however you should have flexibility in how to do this. The best way to get the flexibility you need is to ensure it is reflected in your care and support plan. It is worth reminding local authorities that the main purpose of Direct Payments is to give you freedom and flexibility in choosing how your needs are met and who provides the support you need.

Local authorities should not have unreasonable restrictions on how you use your direct payment as long as you spend the money on meeting your eligible needs. The law does not allow them to insist you buy support from a particular provider.

If you want to spend your direct payment money on something that is not in your care plan, you should always consult your local authority’s adult social care department.

Paying relatives

Generally you cannot use direct payment money to pay your close relatives who live in the same household with you for meeting your care and support needs. This applies to your spouse, partner or civil partner, as well as close relatives such as parents or parents-in-law, children or children-in-law or step children, grandparents and grandchildren, brother or sister, aunt or uncle, spouse or civil partner of any of these people.

However, the local authority can make exception in some cases if they think it is necessary for meeting your needs or if they think it is necessary to pay those people for providing administrative and management support to meet the direct payment legal obligations and day to day financial management. This usually happens with complex packages. If your family members or relatives do not live in your home, you can employ them if you want. Sometimes however, your direct payment agreement can ban you from paying your relatives in all cases. If you disagree, you should ask for reasons and challenge this condition if necessary when you sign your agreement.

Paying back the unspent money

Sometimes due to different circumstances the money on direct payment account can accumulate, for example if your personal assistant was ill or you struggled to recruit because the rate is too low. In such situations generally you should be able to spend an underspend to pay for support that meets your needs according to your care plan. To prevent any disputes it is always worth informing your social worker how you propose to spend this money. Your direct payment agreement also may require you to inform social services when your underspend reaches a certain amount.

There is no definitive answer in law whether or not local authorities are entitled to claw back the underspend. The law only gives local authorities the power to ask for money back if you breached one of the conditions in the Direct Payment Agreement, for example when you spend the money on something that doesn’t meet your eligible needs.

If an underspend occurs regularly, the local authority should consider the reasons at the review and update the care plan accordingly. You may argue for better contingency planning, higher rates if you struggle to recruit or a different provider. The local authority could however decide that the direct payment is too generous, but in this situation they have to show that your eligible needs have changed or they could be met in a less costly way.

Help to manage your direct payment

Many people like the flexibility direct payments bring, but find the idea of being an employer quite daunting. Your local authority should have a system to provide advice and information to help you with this.

You can get this support whether you manage your own direct payment or whether you are a nominated or authorised person managing it for someone else. When you discuss the possibility of a direct payment with your social worker at the care planning stage, you should be given all the advice you need to help you get started and you should be put in touch with other organisations offering help and support.

If you don’t feel you are able to manage your direct payment, you can nominate someone to do it on your behalf – a nominee. Direct Payments for people who lack capacity will be managed by an appropriate person who is able and willing to do it. In some cases where packages are complex and require a lot of administrative work, the local authority can include the cost of administration in the direct payment amount, so you can pay for this support too.


The law requires local authorities to ensure direct payments money is spent appropriately. However, the law also says they must not place undue burden on people to provide information. They must not require information to be provided more often and in more detail than is reasonably required for the purpose of monitoring. For example you should not be asked to duplicate information. In any event, any monitoring system must be accessible to you.

Prepaid cards

In the past most people received their Direct payment on a separate back account. At present local authorities prefer to issue a direct payment on a prepaid card and often operate prepaid cards as a default or the only option.

Pre-paid cards should not be the only option. The offer of a ‘traditional’ direct payment paid into a bank account should always be available if this is what you request and this is appropriate to meet your needs.

Any pre-paid card systems should not impose restrictions which limit your choices. For example, there should not be blanket restrictions on cash withdrawals from pre-paid cards. The card must not be linked solely to an online market-place that only contains selected providers in which to choose from.

If the local authority is forcing a prepaid card upon you and you would like to challenge this, see our template letter below.

What to do when things go wrong

In this guide we focus on what to do when you disagree with the local authority’s decisions related to your direct payments, such as the conditions of the direct payment agreement, the amount, monitoring procedures, prepayment cards, clawbacks etc.

If you experience problems with your personal assistants, you can find information in the dedicated section on this website

When challenging decisions about your direct payments it is important to get a copy of your local authority’s policy or a direct payment agreement.

The process

You should try and challenge decisions as quickly as possible. Raise the issue initially with the social worker. Make sure they know what you think. Ask for explanations. For example you have a right to know how your direct payment was calculated and how it is enough to meet your needs. Often disagreements about the conditions in the direct payment agreement or the amount of direct payment may lead to delays in support being put in place. It is therefore important to give a deadline for social workers to respond. You could also insist that support is put in place in the interim, while disagreements are resolved as local authority still has a duty to meet your needs. If the issue has not been resolved or there is no response, you should make a formal complaint, using local authority’s complaints procedure or consider legal action, see below.

Collecting evidence

Many decisions about direct payments will be guided by local authority’s policies and procedures. Make sure to get a copy of those policies. Those policies should be available to the public. If it is difficult to get a copy, you should make Freedom of Information request. Sometimes to challenge the amount of your direct payment you may need to look at your care and support plan, review record or assessment. You can ask the local authority to give you a copy of those documents. You can also use the rights you have under the Data Protection legislation to ask for copies of the documents.

Making a formal complaint

Each local authority should have a complaints procedure. Ask for a copy of it. If you need this document in alternative formats make sure you let them know. Providing a policy in alternative formats should be considered as a reasonable adjustment under the Equality Act 2010. Complaints are usually investigated by a different person to the one whose actions or decisions you are complaining about. They will usually ask a person concerned to explain their actions or decisions, check if they are reasonable and communicate their opinion to you.

When making a complaint you should:

  • Make it clear this is a formal complaint and ensure it is registered as such.
  • Set out the facts and be clear what you are complaining about. Is it about a decision, or the way you have been treated?
  • Set out the law or local policy and explain how the local authority did not follow it.
  • Say what you would like to be done as a result of this complaint: a decision to be changed, an apology, a change in practice.

When thinking about the outcome you want to achieve, think about possible wider implications of your complaint: if other people are likely to be affected by the issue you are complaining about, or if it is possible to do something to prevent the same problem from happening again.

Examples of wider outcomes

  • Asking the local authority to publish information on its website or to change the wording of the information it already has
  • Asking to make changes to their policy or practice

See The Public Law Project’s guide Making an Effective Complaint to a Public Body for more practical tips about making a complaint.

If you are not happy with the response to your complaint

If you are not happy with the outcome of your formal complaint you generally have 2 options available to you: the local government and social care ombudsman or legal action. We consider both of those processes below in greater detail. It is worth noting that you might be able to start legal action without having to go through a complaints procedure.


What they can consider: Complaints about maladministration: where the local authority did not follow its procedure, delays.
Time limits: 1 year
Risk and costs: free
Representation: People usually represent themselves or are represented by advice and advocacy organisations
Outcome: Ombudsman cannot enforce its decisions, but usually local authorities agree to implement them. Ombudsman can make decisions about individual cases and policies. Decisions are not an authoritative interpretation of the law, but can be used to support the argument in future complaints
Key advantages: Free, accessible, can consider a wider range of cases compared to judicial review proceedings. Can make recommendations to change policy.

Judicial review

What they can consider: Whether or not the decision or failure to act was lawful. Did the local authority follow the procedure set out in law. Did it consider all the factors it must consider. Did the decision breach your human rights. Was it discriminatory
Time limits: As soon as possible and no later than 3 months from when the decision was made.
Risk and costs: Judicial review is costly, but some people can get legal aid, which will pay for all the costs
Representation: People are usually represented by solicitors
Outcome: Can change policy, can have an impact on other individuals in the same situation. Local authorities must obey decisions made by courts.
Key advantages: Decisions made by courts can help to change policy or practice beyond the respondent in the case. You get better quality of representation and much higher scrutiny of the decision or the policy.
Courts can make interim orders, for example order to keep your support in place before final decision is made or to put support in place urgently.

Local government and social care ombudsman

An ombudsman is a person appointed to investigate complaints in a particular area of public body decision-making. Their service is free, independent and impartial. A complaint to an ombudsman could be a way to resolve an issue. An ombudsman does not have the power to force a local authority or a social care provider to change its decision, but their recommendations are usually followed.

The Local Government and Social Care Ombudsman (LGSCO) can investigate complaints about the decisions, actions or inactions of local authorities. It can also investigate complaints about private care providers, such as care agencies, care homes, etc., even in cases when a person pays for their care. If a package is funded by both the local authority and the Clinical Commissioning Group, you can still complain as the LGO has a joint team with the Health Service Ombudsman. So both aspects of your complaint will be considered and you will have a single point of contact.

You cannot complain to the ombudsman before you go through the local authority’s complaints procedure. You have to complain within 12 months of the original decision.

You have to be personally affected and experience an injustice. If your particular problem has been resolved by a local authority but you want them to make a bigger change, the ombudsman may decide not to investigate your complaint.

There are a variety of ways to start a complaint, including by phone, via email, filling in an online form or by post.

The ombudsman will investigate complaints when there is a maladministration – a fault by the council or another organisation and which results in you experiencing an injustice. Examples of such situations include:

  • A local authority did not follow the law or its own policies,
  • A local authority took too long to act or make a decision,
  • A local authority did not follow the right process when making a decision, for example did not involve you in the assessment and care planning process or or did not give you information you were entitled to know.

How will a complaint be investigated?

The case is allocated to an investigator, who will look at all the documents, contact you and speak to the organisation that supports you. They may ask for additional information, and will then contact the local authority and ask for their view. After gathering all the necessary information the investigator will draft a decision, and ask for your comments before reaching a final decision. They will usually send you copies of the local authority’s written responses, but will not necessarily pass on minutes from their phone conversations with them.

The decision of the ombudsman is final; however, if you can prove that it was based on factually incorrect evidence or you have important new information which is relevant to the case, you could ask for a review. Decisions of the ombudsman can be challenged through a judicial review if they are legally incorrect, or the decision was taken unlawfully.

The ombudsman publishes its decisions on its website, although these are made anonymous.

Taking legal action

When a public body has acted unlawfully or their decision/action breaches human rights, this can be challenged through a legal action. This could either be done through a process called Judicial Review or by bringing a legal action under the Human Rights Act. Since the Human Rights Act applies to private care providers it can also be used in private legal actions against them.

Judicial review is a process in which the judge will look at the lawfulness of a decision, action or inaction of a public body, including the local authority’s decisions about social care. The judge will assess whether the law has been applied correctly and whether a public body followed the right process. The court plays a supervisory role: it won’t determine whether a decision was right or wrong based on the facts. The court can overturn a decision, order the local authority to take a certain action or prohibit it from making a certain decision or taking action. The court can also ask the local authority to take certain actions until the case is resolved, for example put the support in place or keep existing levels of support, while a cut to support package is disputed.

For more information about Judicial review see the Public Law Project’s guide: An introduction to Judicial Review

Sometimes the local authority’s decisions about your social care support will have an impact on your human rights. Find out more information about your human right and how they are relevant to your social care support in our Human Rights Guide.

When considering legal action it is worth thinking about the following things:

  • Time limits: There are strict deadlines for starting a legal challenge. For judicial review it is 3 months and for breaches of human rights it is 12 months from the date of the decision. Is your case still within those time limits? It is also important to remember that lawyers will need time to investigate the case.
  • Funding legal advice: would a person you support qualify for legal aid? Are there other sources of funding? If a problem is widespread and a particular person cannot get legal aid, you could look for another person in similar situation.
  • How serious the situation is: although it may take a long time for a case to get to court, it may be possible for lawyers to secure an interim solution while the case is being considered.

It is also important to remember that not all cases reach court. Sometimes the involvement of solicitors can help to resolve the issue or clarify the situation.

If you decide to contact a solicitor, it is best to approach solicitors who specialise in community care. You can check the list on our website for solicitors who specialise in advising Disabled people. You can also use Find a Legal Aid Advisor tool on the website to find a solicitor who can give advice for people eligible for Legal Aid or Find a Solicitor on the Law Society’s website.

Further information

The Law Society’s Using a solicitor guide
For a list of solicitor firms, who are experienced in offering legal advice to Disabled people See a list on our website