Why SEN Direct Payments are a legal damp squib

by stevebroach

Anyone who’s read my post on the five best things in the new SEN framework will notice that there is no reference to SEN direct payments. That’s because in my view there is a very broad legal get-out clause that Local Authorities can use if they want to avoid making direct payments to pay for special educational provision. I don’t think the legal position is explained fully in the new Code of Practice – so that’s the reason for this post.

The Children and Families Act deals with direct payments and personal budgets at section 49. Section 49(1) is clear; ‘A local authority that maintains an EHC plan, or is securing the preparation of an EHC plan, for a child or young person must prepare a personal budget for him or her if asked to do so by the child’s parent or the young person’. So far so good.

However, it is critically important to understand the distinction between personal budgets and direct payments. A ‘personal budget’ is simply an amount of money ‘available to secure particular provision that is specified, or proposed to be specified, in the EHC plan’, see section 49(2). As the Code of Practice states, the personal budget can be ‘notional’, in other words the money will still be held by the Local Authority – the only practical benefit for the family being transparency about how much money is being spent. Alternatively the personal budget can be held by a third party – in other words the Local Authority could identify the amount of money to be used to commission a therapy service from a local voluntary group and label this a personal budget.

So the important question is – when does a personal budget have to result in a ‘direct payment’ – in other words when does the money have to move from the Local Authority to the family? Well, that’s where unfortunately there is a huge loophole in the scheme. 

The loophole arises not from the Act but from regulations made under the Act (regulations are a type of ‘secondary legislation’, made by a Minister but carrying the authority of Parliament. Regulations are law – as opposed to guidance, which merely describes the law). The relevant regulations here are the Special Educational Needs (Personal Budgets) Regulations 2014. The problem comes from regulation 6, which is important enough for me to paste in full (emphasis added):

Decision to make direct payments

6.  (1)  A local authority may only make direct payments where a request has been made for direct payments to be made and the authority is satisfied that—

(a) the recipient will use them to secure the agreed provision in an appropriate way;

(b) where the recipient is the child’s parent or a nominee, that person will act in the best interests of the child or the young person when securing the proposed agreed provision;

(c) the direct payments will not have an adverse impact on other services which the local authority provides or arranges for children and young people with an EHC plan which the authority maintains; and

(d) securing the proposed agreed provision by direct payments is an efficient use of the authority’s resources. 

So the problem is sub-paragraphs (c) and (d). Taking (d) first – a Local Authority can refuse to make an SEN direct payment if it would be an ‘inefficient’ use of its resources. Not only is this a very broad get-out clause, it will also be very difficult for parents or young people to challenge.

However if anything (c) is worse from the family perspective. A Local Authority is only allowed to make SEN direct payments where it is satisfied that to do so will not adversely impact on other services for children or young people with EHC Plans. It seems to me that on a strict reading this means that if there is any additional expenditure incurred by the making of a direct payment which reduces the amount of money available to provide for other children and young people the Local Authority does not have the power to make the direct payment. Also, the legal standard is relatively high – before making the direct payment the Local Authority has to be ‘satisfied’ (reasonably sure) that they ‘will not have an adverse impact on other services…’. 

The most obvious situation where sub-paragraphs (c) and (d) will prevent a direct payment being made is where the Local Authority has ‘block commissioned’ a particular service. Take the example of speech and language therapy – a Local Authority has commissioned a block of therapy hours from a local charity. A parent or young person who falls under that Local Authority wants a direct payment to employ their own therapist. However unless the block hours will be used up by other young people this will result in double expenditure – which is likely to breach both the sub-paragraphs above. As such the Local Authority will have no power to make a direct payment.

It may be that Local Authorities and / or the courts take a more liberal approach than my reading of the scheme. I certainly hope that this is the case. However unless they do it seems certain to me that SEN direct payments will be a legal damp squib. Why it has to be this way is not clear – there is no equivalent to these get-outs in the regulations governing social care direct payments. This is another sorry example of how the new scheme is not the properly joined-up system that it could (and should) have been. 

Comments welcome, particularly if you have experience of how SEN direct payments have been operating in the pilot areas.