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In the social care world local authorities make direct payments to service users and carers to enable them to buy their own care. But they often clash with other parts of the benefits system.

Alice is disabled and her husband, Daniel, is thinking of giving up work to look after her. The social services department has agreed that the direct payment can be made to Alice to enable her to pay Daniel to care for her. Daniel wanted to know their benefits entitlement if he gave up work.

They would be looking at carer’s allowance for Daniel, as Alice gets disability living allowance (DLA) at the middle rate. They would also receive income support as a couple, which would include a disability premium and a carer’s premium. They are in rented accommodation, so would also receive housing and council tax benefit. Currently, while he is working, his wages disqualify him from these benefits.

Alice has no income of her own apart from DLA, as she hasn’t got a national insurance record that would enable her to get incapacity benefit. Up to a few years ago, she would have had severe disablement allowance, but that was abolished for new claimants. Alice is more recently disabled, so she misses out.

Direct payments are normally disregarded for income support purposes, when paid to the disabled person. But the problem comes when the payment made to the disabled person is then used to "pay" the carer. For carer’s allowance purposes, Daniel would be treated as an employed person if he gets more than £79 a week and would lose that benefit all together. Worse still, their income support entitlement would appear to be lost, too. If he was the income support claimant, any work he does of more than 16 hours a week would disqualify him from income support (24 hours a week, if the claim was in his wife’s name).

Also, his income from direct payments would be treated as earned income even if he worked below 16 or 24 hours. Subject to the usual "disregard" of £20 for carers, a £75 payment for 15 hours work a week would mean a £55 cut in income support. If the carer’s allowance is lost, then the carer premium would be lost too, costing them another £25.55 a week.

Alice and Daniel considered arranging the payments so that she is only paying him for a small amount of care each week (no more than £20) and the rest of the direct payment was paid to Daniel, not Alice. But according to the National Council for Independent Living, the direct payment has to be paid to the assessed person. It can only be paid to a third party to help manage the payment.

So it looks as though Daniel will have to receive, as wages, the full amount of any direct payment paid to Alice (paid at the national minimum wage rate). He may even be due some working tax credit (WTC) as a low paid adult. But his housing and council tax benefit entitlement is likely to be low or even extinguished altogether, especially if he gets WTC. This is despite the fact that direct payments are supposed to be disregarded when calculating benefits.

For a system that is supposed to put power into the pockets of disabled people, there can be very little as disempowering as having to jump through these hoops because the benefit system is so inflexible.

Gary Vaux is head of money advice, Hertfordshire Council. He is unable to answer queries by post or telephone. If you have a question to be answered please write to him c/o Community Care.