Direct Payments: 10 reasons for not using them

Social Care

Direct payments are one policy response to the perceived inflexibility of the care system.  The proponents of Direct Payments argue that giving service users a cash sum with which to buy whatever kind of care and help they want to meet their assessed needs offers a significant degree of user control over the services they get. Thus, they argue, the limited options offered by local authorities or others can be swapped for a much richer blend of service options.

It is undoubtedly true that, for some, direct payments do indeed allow new forms of care to be  obtained. This is  especially helpful for people who are able to act as the employer, conduct interviews, oversee and devise the nature  of the care to be given, and cope with the often considerable turnover of staff.

There are however a number of drawbacks to such schemes and ten are briefly described below.

1. Direct payments emphasise the individual employee / employer relationship between carer and cared for. They turn caring into a cash transaction for contracted actions.

2.  “Pooling” direct payments so that the benefits of collective action can be gained  to “shape the provider market” is made difficult. Provision is therefore available from either:

  • a) individual carers operating as little self employed businesses
  • b) from family members and friends
  • c) from care agencies.

a)  offers reduced resilience in times of illness and holidays; c) merely substitutes a commercial company as the employer of carers instead of the local authority, whilst b) potentially introduces new and difficult dynamics into some family situations that are already under  strain.

3. Direct payments have the potential to casualise the employment of carers and drive down wages, training, and benefits, both when cost becomes a key feature driving choice or when cost impacts on the profit margins of care agencies employing staff. Low hourly rates, zero hours contracts, and payment only for care hours given rather than all hours worked, are all features of the care sector.

4. The level of the payment made is determined by a) the level of assessed need and b) the portion of that need which the local authority deems should be met from paid carers. This is, at best, an imprecise computation to make. At worst, it allows sometimes inexperienced staff to flex the sums set aside for direct payments in order to accommodate budget cuts without being overtly seen to reduce service levels.  Recent reports show that the hourly rates blessed by most local authorities are well below the figure of about £15 per hour needed to ensure good quality care.

5. There is often little consideration of the hourly rate which the user will need to pay in his or her locality to command quality (trained / experienced) care from self employed people whose earnings need to cover pension costs and down time needed for holidays, illness and travelling time. Travelling time can be considerable in rural areas.

6. Direct payments assume that users will be able to acquire the services they need. Yet for some types of quality care in some locations, neither the self employed option  nor the care agency approach provides a consisitent – or indeed any – market response. Monetised “demand” does not lead to “supply”. In such locations, the public sector has to remain the “provider of last resort” – but if the number of direct payments increases cash is  taken out of local authority services the ability to do so is reduced. It is similar to a privatised postal service delivering only to houses in densely populated areas.

7. It is understood that the regulations do not allow direct payment cash to be spent with a local authority so there is no even playing field that allows users to choose a public provider .

8. For direct payments to work to the maximum benefit of the user, the user needs to be in direct control of the employment, training and management of the resources employed. Being the legal employer imposes duties on many people which are incompatible with high levels of disability or stress. (The alternative – using an agency to source carers – often results in a loss of control over workload and continuity of carer.) Thus direct payments are more attractive to the self – assured otherwise fit, rather than to the hesitant and wearied.

9. For users not confident to be the employer of their carer, other bodies now exist to  discharge this function on behalf of the user. This adds another cost tot he service – which comes out of the total care budget, and another relationship for the user to manage.

10. Regulation of the care sector, just like regulation of so many other services and sectors, offers little protection against poor supplier practice which often manifests itself in high staff turnover, or low morale, or both. Regulation adds a further cost to be added to the cost of the formal assessment process and the costs of any employment agency.