This article explores how councils can benefit from a hybrid approach to direct payments.
Author: Chris Watson
Councils managing Direct Payment (DP) support services often face a tough decision. Should they provide these services in-house or outsource them to independent providers? While both approaches have advantages, a hybrid model – a third way – is increasingly recognised as a balanced and effective solution.
This model combines the strategic control of in-house provision with the expertise of external specialists, supported by platform technologies like Virtual Wallet and Pre-Paid Credit Cards. This article explores how councils can benefit from this approach, addressing key challenges and offering a detailed roadmap for implementation.
Direct Payments empower individuals to take control of their care, but they bring significant administrative challenges. Citizens often need support with employment law, payroll, and compliance, which require a level of expertise that councils may not always have in-house.
Historically, councils have taken one of two routes. They either provide DP support services themselves or commission external providers to do so. In-house models offer direct oversight and accountability. Commissioned services, on the other hand, can deliver specialist knowledge and citizen-focused flexibility.
This article argues for a third way – a hybrid approach that allows councils to benefit from both models. By retaining in-house responsibility for strategic oversight and outsourcing specialist functions to independent providers, councils can create a system that combines control, expertise, and cost-effectiveness. The adoption of platforms like Virtual Wallet and Pre-Paid Credit Cards further enhances this model, offering modern tools for managing Direct Payments more efficiently.
A hybrid model blends the strengths of in-house and outsourced services while addressing their respective weaknesses. Councils remain responsible for oversight, ensuring services align with statutory obligations and local priorities. At the same time, specialist providers handle complex tasks, supported by digital platforms that reduce administrative burdens for both councils and citizens.
Keeping strategic management in-house allows councils to retain direct control over services. They can monitor performance, address issues quickly, and ensure statutory obligations are met. This level of oversight builds trust among citizens, who know their needs are being prioritised by a local, accountable authority.
For example, an in-house team can manage compliance checks directly and ensure that budgets are allocated fairly across different citizen groups. This avoids the risks of fragmentation that can occur when outsourcing is handled without clear accountability.
Outsourcing specialist functions, such as payroll or employment law advice, ensures citizens receive high-quality support from professionals who understand the complexities of Direct Payments. Independent providers often bring innovation and flexibility to their services, which can be difficult for in-house teams to replicate.
Research by Glasby and Littlechild (2009) highlights that external providers often have greater expertise in navigating legal and financial systems. This can empower citizens to manage their Direct Payments with confidence, particularly those employing personal assistants (PAs) or managing complex care arrangements.
Platforms like Virtual Wallet and Pre-Paid Credit Cards revolutionise how Direct Payments are managed. These tools automate routine processes, reduce administrative workloads, and provide transparency for citizens and councils alike.
Virtual Wallet enables citizens to allocate funds, track spending, and produce compliance reports with minimal effort. Pre-Paid Credit Cards provide a secure, citizen-friendly payment mechanism that helps citizens manage transactions and stay within their budgets. These platforms not only improve efficiency but also make Direct Payments more accessible to citizens who may struggle with traditional systems.
The hybrid model reduces costs by outsourcing specialist tasks while keeping core oversight functions in-house. Councils save money by not maintaining large teams for technical roles, while also avoiding the higher operational costs of running all services internally.
Platform solutions further enhance cost efficiency by automating tasks that would otherwise require significant manual input. This frees up council resources to focus on strategic planning and Citizen engagement.
A hybrid approach allows councils to adapt to changing Citizen needs and policy demands. In-house teams can focus on strategic priorities, while outsourced providers handle operational challenges. Digital platforms provide real-time data that councils can use to make informed decisions about service delivery.
For example, if demand for personal assistants increases in a particular area, councils can allocate resources to recruitment campaigns while relying on external providers to manage payroll or legal compliance.
A hybrid model requires effective coordination between in-house teams, outsourced providers, and platform providers. Without clear roles and responsibilities, there is a risk of duplication or gaps in service delivery.
Solution: Councils should develop service-level agreements (SLAs) that define each party's responsibilities and set performance standards.
Implementing digital platforms like Virtual Wallet and Pre-Paid Credit Cards requires initial investment in technology and training. Councils may also need to invest in developing relationships with high-quality providers.
Solution: These costs should be viewed as long-term investments. Platforms reduce administrative burdens, leading to savings over time.
Citizen’s may feel uncertain about navigating a system that involves multiple providers and digital platforms. Ensuring seamless communication and Citizen-friendly tools is essential.
Solution: Councils should use in-house teams as the primary point of contact for Citizen’s, providing guidance and reassurance throughout the process.
The hybrid ‘third way’ model offers councils a balanced approach to delivering Direct Payment support services. By combining in-house oversight with outsourced expertise and modern technology, councils can create a system that is both efficient and citizen-centred.
The publisher is Citizen Network Research. Hybrid Direct Payment Support Services © Chris Watson 2025.
Self-Directed Support, social care, England, Article
