Outsourcing Direct Payment Support Services

Author: Chris Watson

The growing complexity of administering Direct Payments (DPs) has led many local authorities to explore outsourcing DP support services to independent organisations. These specialist providers offer expertise, independence, and user-focused solutions that can enhance the effectiveness of self-directed support systems. However, outsourcing also carries risks, including potential loss of local accountability and challenges in market oversight.

This article examines the benefits and drawbacks of outsourcing DP support services, drawing on research and case studies from across the UK to inform council decision-making.

Introduction

Direct Payments (DPs) are a cornerstone of personalisation in adult social care, enabling individuals to take greater control over their care. However, managing DPs involves navigating complex tasks such as payroll, employment law compliance, and budget monitoring. These administrative burdens often deter potential users and strain local authority resources.

To address these challenges, many councils have turned to independent specialist organisations to deliver DP support services. While outsourcing offers numerous advantages, it also raises important questions about accountability, cost, and user experience.

1. Expertise and Specialisation

Specialist providers are often better equipped than local authorities to manage the complexities of DPs.

Glasby and Littlechild (2009) emphasise that specialist providers have a deeper understanding of DP administration, enabling them to deliver tailored support that meets the unique needs of individual citizens. This includes expertise in navigating employment law, setting up payroll systems, and ensuring compliance with care budgets.
Spandler and Vick (2006) highlight the importance of this expertise for fostering citizen independence. By demystifying complex processes, specialist providers empower citizens to manage their own payments confidently and effectively.

Practical example: A specialist provider might establish tailored payroll services for a citizen employing multiple personal assistants, ensuring compliance with employment law while reducing administrative burdens on the citizen.

2. Independence and Advocacy

One of the most significant advantages of outsourcing is the independence that specialist providers bring to their role.

Priestley et al. (2007) found that independent providers often act as advocates for service citizens, ensuring their preferences and rights are respected. This independence is particularly important in situations where local authorities may face conflicts of interest between managing budgets and promoting citizen autonomy.
Leece and Bornat (2006) report that citizens working with independent providers felt more empowered and supported compared to those relying on local authority-managed services.

Key insight: Independence fosters trust. citizens are more likely to engage with providers who prioritise their well-being over bureaucratic constraints.

3. Flexibility and Citizen-Centred Approach

Independent providers are often more agile and Citizen-focused than local authorities, enabling them to offer bespoke solutions.

Baxter et al (2011) note that specialist providers excel at adapting their services to meet the diverse needs of citizens, particularly those with complex or evolving care requirements. This adaptability is critical for delivering truly personalised care.
Manthorpe et al (2011) provide evidence that specialist providers often deliver innovative solutions, enabling citizens to make the most of their DPs in ways that enhance their quality of life.

Example of innovation: A specialist provider might help a citizen allocate their DP for creative purposes, such as community participation or assistive technology, beyond traditional care services.

4. Cost-Effectiveness

While outsourcing may involve upfront costs, the long-term financial benefits can outweigh these initial expenses.

Clarke and Glendinning (2002) argue that specialist providers’ expertise ensures more efficient use of DPs, reducing the likelihood of misuse or mismanagement.
By reducing administrative burdens on councils and preventing costly errors, outsourcing can deliver substantial savings over time.

Financial insight: Independent providers often streamline processes such as DP budget management, which can reduce the risk of overspending or unallocated funds remaining idle.

Drawbacks of Outsourcing DP Support Services

1. Potential Loss of Accountability

When councils outsource DP support services, they must ensure that providers adhere to high standards of service delivery.

Citizens may feel disconnected from decision-making processes if councils fail to maintain clear lines of accountability.
Local authorities remain legally responsible for meeting their duties under the Care Act 2014, even when services are outsourced.

Risk Management: To mitigate this, councils should establish robust governance frameworks to monitor provider performance and address citizen complaints promptly.

2. Risk of Service Fragmentation

Outsourcing to multiple providers can create inconsistencies in the quality and availability of support.

Priestley et al. (2007) warn that fragmented service delivery can undermine trust and lead to inequities in citizen experience.
Citizens in different regions or with varying needs may receive unequal levels of support, which contradicts the personalisation agenda of the Care Act.

Solution: Councils should prioritise consistency in service delivery by standardising key aspects of DP support, regardless of provider.

3. Financial Risks

Poorly managed outsourcing agreements can lead to unexpected costs for councils or citizens.

Providers may charge additional fees for services outside standard agreements, such as managing complex DP cases.
Without proper oversight, cost-saving measures by providers may compromise service quality.

Recommendation: Councils should negotiate transparent contracts that include provisions for managing unexpected costs while ensuring quality standards.

4. Reduced Opportunities for Co-Production

Outsourcing can distance councils from citizens, reducing opportunities for co-production in service design.

Direct engagement between councils and citizens is often key to fostering trust and innovation in DP systems.
Leece and Bornat (2006) highlight the importance of maintaining citizen involvement to ensure services remain responsive and effective.

Balancing act: Councils should involve citizens in provider selection and evaluation processes to preserve opportunities for meaningful collaboration.

Recommendations for Councils

To maximise the benefits of outsourcing DP support services while mitigating potential risks, councils should

1. Develop Clear Contracts

Define roles, responsibilities, and performance metrics in service-level agreements.
Include provisions for regular reviews and penalties for non-compliance.

2. Strengthen Oversight

Establish robust governance frameworks to monitor provider performance and address issues promptly.
Appoint contract managers to liaise between citizens, providers, and the council.

3. Foster Citizen Engagement

Consult Citizen’s during the provider selection process to ensure alignment with their needs.
Regularly gather feedback to inform service improvements.

4. Promote Market Development

Support the growth of independent providers through grants, training, and collaboration with community organisations.

5. Maintain a Mixed Economy of Provision

Balance outsourcing with in-house services to retain flexibility and preserve local accountability.

Final Thoughts

Outsourcing DP support services to independent providers offers a compelling opportunity for councils to enhance service quality, empower citizens, and achieve financial sustainability. The expertise, independence, and flexibility that specialist providers bring are invaluable for navigating the complexities of self-directed care. However, these benefits must be balanced against potential risks, including loss of accountability and service fragmentation.

By adopting robust governance frameworks, fostering citizen engagement, and investing in market development, councils can ensure that outsourcing becomes a tool for transformation rather than a source of inequity or inefficiency. A well-executed outsourcing strategy has the potential to not only meet statutory obligations but also deliver a more sustainable and citizen-centred social care system.

References

Baxter K, Glendinning C & Clarke S (2011) Making informed choices in social care The importance of accessible information. Health & Social Care in the Community, 19(6), 639-648.
Clarke J & Glendinning C (2002) Partnerships and the remaking of welfare governance. Social Policy & Administration, 36(2), 134-150.
Glasby J & Littlechild R (2009) Direct payments and personal budgets Putting personalisation into practice. Policy Press.
Leece J & Bornat J (2006) Developments in direct payments. Policy Press.
Manthorpe J, Stevens M, Rapaport J, Jacobs S, Challis D, Netten A, & Harris J (2011) Individual budgets and adult safeguarding Parallel or converging tracks? Further findings from the evaluation of the individual budget pilots. Journal of Social Work, 11(4), 422-438.
Priestley M, Jolly D, Pearson C, Ridell S, Barnes C & Mercer G (2007) Direct payments and disabled people in the UK Supply, demand and devolution. British Journal of Social Work, 37(7), 1189-1204.
Spandler H & Vick N (2006) Opportunities for independent living using direct payments in mental health. Health & Social Care in the Community, 14(2), 107-115.