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Contracting for ISFs

Author: Chris Watson

A couple of weeks ago we had an entertaining and enlightening afternoon webinar session with Belinda Schwehr (CASCAIDr) on all things Individual Service Funds and Direct Payment related (the full video of the session will be available online soon). We also touched on some of the main impacts of the Coronavirus Bill and the care act easements.

Alongside this we also talked about how micro-enterprises could hold Individual Service Funds (ISFs) and what the contracting arrangements could look like in setting these up. There were some elements of our thinking that we had confirmed again and also some interesting new lessons from a legal perspective, the highlights being:

  1. Two-way agreements are the only real way of commissioning ISFs (i.e. they are based on a contract for flexible support between the commissioner and independent agency).
  2. There is no need to use a best interest decision process to set up an ISF as it is a commissioned service - in line with the Care Act 2014 it is expected decisions around support are co-produced with the person and their family during a normal assessment or review process
  3. An agreement between the person and their ISF holding organisation sets out expectations on both sides is good practice but it doesn't necessarily need to be a signed agreement (it is not the same as a Direct Payment, as the provider is directly commissioned).
  4. The quality of the initial ISF contracting framework is the key to avoiding legal challenges in future - the more detailed the contract is the easier it is to then manage expectations on all sides.
  5. The ISF holding organisation is contractually responsible for safe delivery of support and as such must maintain oversight of how it is delivered even when sub-contracting.
  6. Individual personal assistants cannot hold and manage ISFs (as they would be both the employer and the employee at the same time).
  7. Micro-enterprise provider organisations can hold ISFs though as long as they are registered companies or legal entities with 2+ workers.
  8. Dispensing ISFs with prepaid cards or financial management portals is good practice in minimising risk as funds sits in the holding account and are drawn down as required (i.e. they are not sat in providers accounts).
  9. Belinda strongly advocates for ISFs via Direct Payments if people want to have full and absolute control (i.e. the provider holds the Direct Payment and operates it like an ISF, taking away day to day hassle and management/audit responsibilities from the person).

Setting up micro-enterprise using an ISF

Any individual personal assistant that sets up as a sole trader locally to provide support will effectively have to be paid by the person they support via a direct payment (DP) or alternatively they would need to connect with an umbrella organisation who would hold and manage the ISF payments as a commissioned service on behalf of the person. The umbrella organisation could be a local neighbourhood community hub that decides it can support and oversee local PA’s or a more specialised care and support centric organisation. If a group of two or more PA’s decide to get together and form into a small company then this is of course absolutely fine for holding ISF’s and/or DP’s.

I’ve had a go at creating an illustration (below) to explain some of this in relation to where individual PA's and Micro enterprises fit together - in essence an ISF is a form of sub-contracting that is managed and overseen by the ISF holding organisation who holds an overarching contract with the commissioner allowing them to do this.


The publisher is the Centre for Welfare Reform.

Contracting for Individual Service Funds (ISFs) © Chris Watson 2020.

All Rights Reserved. No part of this paper may be reproduced in any form without permission from the publisher except for the quotation of brief passages in reviews.