Councils’ use of prepayment cards risks contravening Care Act, study claims

Freedom of Information requests reveal 'restrictive and intrusive' use of cards given to service users to manage personal budgets

The use of prepayment cards by councils as a tool to manage personal social care budgets is constraining service users’ right to exercise choice and control, a study has claimed.

The research, carried out via Freedom of Information (FOI) requests by the Independent Living Strategy Group (ILSG), a network of disability organisations and their allies, found almost half of local authorities in England used the cards. Instead of making direct payments into service users’ bank accounts, councils load up the cards with funds, are able to monitor them – at an individual transaction level – and in many cases choose to restrict their use.

Across the 69 areas using them, 15% of all personal budgets – nearly 33,000 in total – were managed via prepayment cards, the study found, with three councils using them for all or nearly all of their personal budgets. Contravening statutory guidance, some councils were allocating cards as a default mechanism, rather than offering other options such as direct payments.


While nearly all councils using prepayment cards said they considered them direct payments, roughly a third prohibited service users from directly withdrawing cash, as they would be able to with a regular bank account. A similar proportion said they allowed cash withdrawals, while the remaining third permitted withdrawals in certain circumstances.

The vast majority of authorities placed some other kind of restriction on how funds were spent, though the research found considerable geographical variance, creating a postcode lottery.

“Most common was a stipulation that the funds must be used as described in the individual care and support plan and to meet assessed eligible needs,” the report said.

Councils frequently imposed blanket bans – including blocking cards at certain establishments – around things such as food, alcohol, and dating and escort services. They also flagged up their ability to monitor spend and suspend cards if they were unhappy with transactions.


Under the Care Act 2014, all people receiving long-term care and support are required to have control of their personal budget – including having agency over how funds are held and used to meet their desired outcomes.

The statutory guidance on the Care Act says prepaid cards “can be a good option for some people using direct payments, but must not be used to constrain choice or be only available for use with a restricted list of providers”.

It adds: “It is also important that where a pre-paid card system is used, the person is still free to exercise choice and control. For example, there should not be blanket restrictions on cash withdrawals from pre-paid cards which could limit choice and control.”

‘No going backwards’

John Waters, a researcher from the charity In Control, who wrote up the ILSG research, said that the study was a warning that there must be no “going backwards” around choice and control.

“As an emerging innovation payment cards present councils with tremendous opportunities – they could if used well help make the aspiration of greater choice and control embedded in the Care Act a reality for people in their day to day lives,” he said.

“The report shows that current use of the technology is focused on increasing monitoring and imposing controls on people’s lives, perverting a potentially empowering technology,” Waters added. “The cards are too often being forced on people in a ways that undermine their rights and dignity.”

‘Cumbersome and difficult’

The ILSG carried out its research after one of its members – Clare Gray, a disability advocacy advisor with Shaw Trust – raised concerns about her personal experience of prepayment cards and how her direct payment was being managed.

Gray told Community Care that her local authority had switched her to a prepayment card with little warning, after 20 years of problem-free direct payments into her bank account. She endured two years on the “cumbersome and difficult” system, including an unsuccessful appeal to the Local Government Ombudsman, before her payments were reinstated.

“The system wasn’t very accessible, I was always having to put in my password and couldn’t view payments easily and I have limited movement, so it’s hard for me to use a mouse and keyboard,” Gray said. She added that the prepayment card made paying her care staff much less convenient.

Council spending on cards

All 152 local authorities with social care responsibilities responded to the ILSG’s FOI requests, with 69 saying they used the cards and many others considering them.

The report estimated that the councils using the cards spent £1.5m on introducing them, and a similar amount per year on associated costs and fees.

“In contrast to the scrutiny on spending expected of disabled people, our research highlighted that many local authorities were not in a position to say how much the schemes had cost them to introduce or to run,” the report said. “It is therefore not clear that the additional cost of operating such systems can be justified.”

There was little evidence of growing public demand for the cards, or benefit to their end users, the report claimed. “Their attraction seems to lie in the ability they give to local authorities wishing to monitor spending,” the report said, adding that their introduction “potentially represents a gross invasion of privacy”.

It concluded that prepayment cards’ use needed to be “characterised by partnership and trust”, and said that misappropriation of funds was “exceptionally rare”.

‘Good test’ for councils

In a series of recommendations, the ILSG advised councils to offer payment cards only as one of a number of options, to avoid blanket restrictions on their use and, when considering individual restrictions, to evaluate whether they represent a deprivation of liberty. It also called for “open and transparent” policies around monitoring accounts, recommending that access be restricted to single named individuals.

Margaret Willcox, the president of the Association of Directors of Adult Social Services (ADASS), which the ILSG told Community Care had engaged positively around the report recommendations, said she was “grateful” that prepayment card practice had been investigated.

“Managing the balance between our duty to protect the people we serve and resources we manage alongside the maximising of choice and control is ever challenging, but the report recommendations provide a good test for us,” she said.

Clenton Farquharson, the chair of Think Local Act Personal, the leadership organisation for personalisation, said he welcomed the report’s highlighting of an issue that was “often” brought to his attention.

“We will be delighted to work with ILSG and ADASS and support the sector by developing practical advice and materials which councils and their partners can use to improve practice,” he said.

Waters said: “It is helpful that the recommendations in the report are being welcomed, as they provide a template for implementation that if adhered to will see payment cards implemented in positive ways.”

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7 Responses to Councils’ use of prepayment cards risks contravening Care Act, study claims

  1. Shiiva October 13, 2017 at 6:07 pm #

    In my opinion, Councils are right to do so. Prepayment cards allows the monitoring and implmentation of service users’ Care plan previously discussed with service users.In my personal experience, individual can misspend their money and donot implement their outcomes strategies.

    • Jim Greer October 18, 2017 at 3:34 pm #

      Please see my other comment Shiiva. My mother-in-law was told she could not spend money on items which she needed for her care without a social workers permission. The concept of direct payments is based on a principal that service users can be trusted to manage their own care and know what’s in their own best interests. If every item is going to be scrutinised individually then this is completely against the spirit of direct payments. Being responsible for a payment card involves a certain amount of administrative burden. If the council want to dictate how every pound is spent then they should administer the payments to care companies themselvelves.
      By issuing a direct payment card and then micro-managing how it is used some councils are giving the illusion of compliance with Care Act while doing nothing of the sort.

  2. Nick Johnson October 17, 2017 at 1:46 pm #

    There is confusion between PB and DP. A Direct Payment is not a payment if the money is still held in the Council’s bank account – this challenge was levelled against Kent (the Kent card was the first debit card to be used) and verified several years ago.
    A Personal Budget can be de[ployed in collaboration with the service user in a number of ways, possibly applying it to council or other provider services ‘virtually’ with no cash changing hands, just an accounting of use. In that case, the retention of the money in the LA bank account seems less problematic

  3. Jim Greer October 18, 2017 at 3:19 pm #

    My mother in law has a direct payment through a pre-Payment card from a northern local authority. Although this is supposed to allow her to flexibly pay for her care and get more care of the type she needs this is not how the Council is running the system. They micro-manage everything she pays for with the card. She has been assessed as having psychical care needs and social needs. When she is less physically disabled she has used less care hours for physical care and saved it up for the carers to take her on an outing to the shops or an outing to a cafe. She was told that she should get online shopping or ask the carers to shop for her. The council have told her that this is not what her budget is for (despite her care plan saying she has social needs) and said that this money has to be used for domicilliary care. She was also questioned about payment she had made to a pharmacy for a wheelchair (which she has a receipt for) and was told she would have to have that item added to her care plan even though it is recognised that she has serious mobility problems.
    Meanwhile the council has changed pre-payment providers without giving vulnerable clients envy guidance about how to manage this change other than a letter. My mother in law has full cognitive functioning but it has taken her and my wife weeks to sort out the problems caused by the disorderly transfer between card providers. I dread to think how much distress it has caused to people who are less able.
    My mother in law has the worst of both worlds. She has the admin work of managing payments to a care company while enjoying none of the freedoms that personalised care is supposed to bring.

  4. Jenny Hurst October 22, 2017 at 12:57 am #

    Cards can be a good option… but OPTION they should be. People are being set up on cards as a default, not being told of alternatives and given a choice. The micromonitoring of the prepaid card accounts is one thing, but disabled people are not even being allowed to write support plan – they are system generated. And people tell me that the “agreed” use of the DP in no way resembles the way in which, had the had proper input, they would have chosen to use it had they been properly involved in support planning. Furthermore, people don’t even have sight of drafts before they are signed off by managers)!
    Prepaid cards allow councils to easily suspend access to the funding and forcing use of what the might feel are inappropriate care solutions…
    And evidence has recently shown that a number of people set up on the card have not been recieving the required support as 1. They didn’t know funding was in a card account, 2. People didn’t know how to use the account 3. People have been terrified of spending incorrectly and having the account suspended.
    The card accounts are the tip of the iceberg… There is much, much more wrong with the social care system currently.

    • Josh October 23, 2017 at 1:55 pm #

      Local Authorities can monitor pre-paid cards (and rightly so for many patients).
      Restricting cards is another matter, if the council is restricting card use due to inappropriate spending request a capacity assessment. Capacity assessments are SPECIFIC TO THE TEST IN QUESTION, i.e., capacity assessment to manage money will only be for that, capacity assessment for making decisions about care will only be for that etc.
      Everyone has the right to spend unwisely and if deemed to have capacity then no-one, not even the council, can dictate on what the cash is spent on.
      If deemed to have capacity and the council DO restrict expenditure, it will contradict the Care Act. Personally, in this scenario I would write to the responsible contact at the council informing them that the police will be contacted regarding financial abuse and financial neglect of vulnerable adults if restriction on the cards keeps happening.

      Best wishes,
      Social Work Assistant

  5. Long in the tooth November 7, 2017 at 8:10 pm #

    Councils can stipulate what a direct payment (using a pre payment card or not) can not be spent on. Such as food, drink and activities. These are items that people with care and support needs would have to buy anyway.