Direct Payments under the Care Act

May 18th, 2016 by Christopher Knight

Readers of this blog will be well aware that many individuals with social care needs receive direct payments from their local authority which enables them to make their own arrangements and purchase their own care. However, those in receipt of such payments will often need support in managing their own payments, and many authorities make direct payments through authorised third parties.

In Nottinghamshire, the largest such third party was a company called Direct Payments Service Users Ltd (or DPSU), who ran the accounts of over 3,000 people with care needs. However, in July 2015 Nottinghamshire County Council were informed by Trading Standards that it was conducting a criminal investigation into DPSU in relation to a series of very serious financial allegations which including fraudulent use of service user accounts. Perhaps unsurprisingly, the Council suspended DPSU’s accreditation shortly afterwards.

In R (Collins) v Nottinghamshire County Council [2016] EWHC 996 (Admin) (see here: 20160412 Approved Judgment (Collins -v- NCC and ors)) a number of individual payment recipients challenged the suspension of the accreditation of DPSU on various grounds under the Care Act 2014. As it happened, the case – on an oral renewal permission hearing – came before Patterson J, who had been a Law Commissioner responsible for drafting the Bill. She had no difficulty in upholding the Council’s course of action, acting to safeguard public funds and prevent the risk of individuals’ payments being abused, in the circumstances. Of particular relevance was that no individual was being deprived of the right to receive direct payments; the Council was just obliging them to receive those payments through accredited third parties other than DPSU.

Patterson J rejected an argument that the general section 1 wellbeing duty prevented the Council acting. It was obliged to act quickly in respect of a very large number of vulnerable affected people. The protection from abuse and neglect under section 1(2)(c) and 1(3)(g) had a clear influence on the judge’s approach. She also rejected an argument, the tenor of which is not entirely clear from judgment, based on sections 31-33 because the right to receive direct payments was not being prevented; the Council was merely altering the mechanism by which they were received, which was a preferable alternative to placing conditions on the payments given the vulnerable status of many recipients.

The judge also rejected an argument that the safeguarding duty in section 42 of the Care Act required an individualised assessment for each recipient in the circumstances, holding that it was reasonable for the Council to act swiftly across the board to protect vulnerable people and public funds, supported by the fact that there were specific concerns about fraudulent action on service user accounts which the users had not identified themselves.

Finally, Patterson J accepted that the Council was entitled to depart from the statutory guidance under the Care Act which warns against a requirement of the use of specified authorised providers. In the exceptional circumstances, she held that the Council was entitled to rely on its existing list of authorised providers to give an indication of those with probity and experience. (In fact, as none of the claimants had said they wanted a provider who was not on the list, other than DPSU, the point was strictly academic.)

Permission was refused on all grounds, and also refused under section 31(3D) on the basis that it was highly likely that the outcome would not have been substantially different in any event.

Technically, as a permission decision, the judgment cannot be cited as an authority, but those who work in the area will find it an interesting read on some otherwise untested provisions of the Act. It is also a welcome reminder that Courts can and do accept the practical problems and difficult situations in which local authorities can be placed by the actions of third parties in the care sector, and that acting swiftly to protect vulnerable service users is defensible and appropriate.

Jonathan Auburn appeared for the Council.

Christopher Knight


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