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Derby City Children's Social Care Procedures

3.3.4 Direct Payments


This section provides an overview of Direct Payments (including what they are, who is eligible and what they can be spent on) and also links to the full Direct Payments Policy. The appendices contain links to forms and resources needed to set up and maintain Direct Payments.


All information in this section was extensively updated in September 2020 and should be read in full.

Derby City Council uses a Strengths Based Approach for all work with children and families.


  1. What is a Direct Payment?
  2. Why Choose a Direct Payment?
  3. Who is Eligible for a Direct Payment?
  4. What can Direct Payments be Spent on?
  5. What can Direct Payments not be Spent on?
  6. Consent and Capacity to Consent
  7. Managing a Direct Payment
  8. Financial Monitoring
  9. Managed Accounts
  10. Direct Payment Rates
  11. Setting up a Direct Payment
  12. Review
  13. Direct Payments Policy
  14. Appendices

The information given below is a brief guide for practitioners - please always refer to the Direct Payments Policy for full guidance. The Policy and the full contents list can be found at Section 13, Direct Payments Policy below.

1. What is a Direct Payment?

  • Direct payments are cash payments made to disabled children and young people in lieu of community care services provided by Derby City Council;
  • They are available to disabled children and young people who meet the threshold for social care intervention;
  • Direct payments are governed by the Children Act 1989 and Carers & Disabled Children Act 2000;
  • Direct payments must be used only to meet an assessed need identified in an ECHP or Single Assessment.

2. Why Choose a Direct Payment?

A direct payment gives flexibility and control by allowing disabled children and young people and their families to choose what services they use and when they use them.

Example: A family might choose to employ a personal assistant to take their disabled child into the community once or twice a week to go swimming or bowling. The child enjoys social activities and the family are given some respite to spend time with siblings - at a time and day which suits the whole family.

3. Who is Eligible for a Direct Payment?

  1. People with Parental Responsibility for a disabled child;
  2. Some disabled young people aged 16-17 years, following a Mental Capacity Assessment, who meet the threshold for a service.

Provided the following essential criteria are met:

  • The recipient consents to the making of a direct payment;
  • It appears to Derby City Council that the recipient can (with assistance) manage the direct payment;
  • Derby City Council is satisfied that the disabled child or young person's welfare will be safeguarded and promoted by means of a direct payment;
  • The individual is not excluded from receiving direct payments.

4. What can Direct Payments be Spent on?

Direct payments are most often used to employ personal assistants to provide care and support to access activities in the community or to assist with personal care.

Each case must be decided individually, on its own merits - but the service, support or activity proposed should be:

  • Legal;
  • Clearly linked to the outcomes identified in the Single Assessment/EHCP and consistent with keeping the child healthy, safe and well;
  • Affordable and proportionate to the assessed eligible needs of the disabled child or young person.

5. What can Direct Payments not be Spent on?

  • Anything that is illegal or that would endanger the disabled child, young person or any other person;
  • Gambling; debt repayment; alcohol; tobacco;
  • To pay a family member living with the disabled child or young person (except as agreed in exceptional circumstances);
  • Health care services;
  • Purchasing services directly from Derby City Council;
  • Permanent residential care;
  • Equipment;
  • As a substitute for Disabled Facilities Grants;
  • Living expenses (food, rent, utility bills, clothing);
  • Any charges due to the Council.

Before paying a direct payment, Derby City Council must obtain written consent from the parent/carer. See Appendix 1: Requesting a Direct Payment (DP01).

DCC may need to assess whether a person has capacity to consent.

It is vitally important that the parent/carer understands that by consenting to receiving a direct payment they will be taking on legal responsibilities, for example.

In the role of an employer, or contracting with an agency, they will be responsible for thinks like:

  • Issuing a contract of employment and carrying out DBS checks;
  • Buying Employer's Liability insurance;
  • Registering with HMRC and ensuring NI/tax contributions are paid;
  • Offer a workplace pension;
  • Keeping financial records/open a separate bank.

7. Managing a Direct Payment

If the parent/carer does not have the desire, capacity or capability to receive and manage a direct payment themselves, they may ask a suitable person (known as their 'representative') to help them manage it for them.

  • The representative takes responsibility for ensuring support services are in place and becomes the employer;
  • Both parent/carer and representative sign a legally binding Direct Payment Agreement;
  • BUT the parent/carer who consented will retain overall control and responsibility;
  • It would not be appropriate for the representative to also be the PA in receipt of direct payment funds.

8. Financial Monitoring

  • Derby City Council needs to fulfil its responsibility to ensure that public funds are spent to produce the intended outcomes by reviewing the use of the direct payment on a regular basis;
  • The parent/carer/representative will be required to keep paperwork to evidence an audit trail of all financial transactions (HMRC payments, PA timesheets, invoices, receipts) and complete and sign a 'Spending form' and submit a bank statement every 3 months.

9. Managed Accounts

  • It is possible for the parent/carer/representative to engage a payroll service to provide a managed account service;
  • An agreement should be entered into between Derby City Council and the managed account provider;
  • Funds are paid directly to the managed account on behalf of the direct payment recipient;
  • Payroll services and managed accounts vary but usually include processing payroll and making payments to HMRC and issuing payslips and payments to the PA on behalf of the parent/carer;
  • The cost of the managed account will be met by the direct payment;
  • Some organisations help with recruitment and employment contracts.

10. Direct Payment Rates

Direct payments rates are reviewed annually to reflect any changes in the government's annual Budget statement and subsequent Finance Bill. The current direct payment rates can be found in Appendix 2: Direct Payment Rate Structure (DP02).

11. Setting up a Direct Payment

To set up a direct payment, please follow the internal process as laid out in document DP07 – Direct Payments set up process.

12. Review

The direct payment must be reviewed on a regular basis – please follow the internal process as laid out in document DP08 – Direct payments review process.

13. Direct Payments Policy

Click here to view Direct Payments Policy.


Appendix 1: Requesting a Direct Payment (DP01)

Appendix 2: Direct Payment Rate Structure (DP02)

Appendix 3: Direct Payment Agreement (DP03)

Appendix 4: New Customer Form (DP04)

Appendix 5: Financial Monitoring Guidance (DP05)

Appendix 6: Spending Form (DP06)