A personal budget is the amount of money that the local authority estimates will cover all the support required to meet your needs.
If you request this personal budget to be paid to you directly for you to then spend on the services of your choosing, this is called a direct payment.
We explain further about what personal budgets and direct payments are and how they work below.
Personal budgets
If, following either a needs assessment or a carer’s assessment, the local authority decides that you have a need for support and that you are eligible for financial assistance, you will be given a personal budget. This is the money that the council has assigned to you to cover the overall cost of any care or support you need.
The amount that they decide you are entitled to in your personal budget is based on three factors:
- The type and amount of care you require to meet your identified ‘eligible needs’.
- How much this care should cost, based on the local options that are available to you.
- How much you are able to contribute yourself towards this cost.
The local authority has a legal duty under the Care Act 2014 to make sure that your personal budget calculations are transparent, timely and sufficient. They must explain how they calculated the amount and why they think this is enough to cover all the care you need. If you do not agree with the amount allocated to you in your personal budget, for instance if you think the calculation is wrong or the amount assigned is not sufficient for your needs to be met, you can complain. Take a look at our guide ‘Making a complaint about the local authority’ for more information.
When choosing how your personal budget is managed, you can ask the local authority to do one of the following:
- Look after the personal budget on your behalf. They will then arrange all the care for you, based on your wishes as laid out in your support plan. They will also make sure that you are ok with the options they are selecting.
- Pay out the budget to a third-party organisation, sometimes called a broker, to manage. This is often known as Individual Service Funds (ISF). This organisation will arrange payments directly with the local authority. The third-party organisation may charge you a fee to manage the payments this way.
- Pay your personal budget to you directly for you to make your own choices about the care that it is spent on. This is known as direct payments. See below for further details.
You could also ask for them to do a combination of these different options, which is called either a mixed package or mix and match.
The local authority must review your personal budget once you start receiving the care you are entitled to, to ensure that it is still enough to provide all the support you need. This review will usually happen between six and eight weeks later, though some local authorities wait for 12 weeks to ensure there is enough time to see whether it is working. The budget will then be reviewed again at least once a year. If your circumstances change then you can ask for it to be reviewed again sooner. Bear in mind though that a review could lead to the amount you are given being reduced as well as increased.
Direct payments
Direct payments are one of the methods you can select for how your personal budget is spent.
Under direct payments, instead of the council or another organisation managing the funds allocated to you for your care, you manage these yourself.
With direct payments, the council will send you the funding either directly into your bank account or on a pre-paid card. You must spend it all on services that will meet the eligible needs identified in your support plan. You cannot spend it on supporting the person you care for or anybody else; it must be spent on you. If you do not spend it on meeting your own identified needs, then the local authority might stop your funding and ask for you to repay what you have already spent. The council may ask you to sign a direct payment agreement to show that you understand what is expected of you in terms of what you can and can’t spend it on and what records you need to keep. You may even be asked to open a separate bank account to receive the direct payments in, to keep this funding apart from your other money.
If you decide to choose direct payments, it is easy to arrange this. Anyone can request that their personal budget is paid to them through direct payments, so long as the council is happy they have the mental capacity to manage the funding themselves.
Direct payments are usually offered as an option automatically, but if not you can request them from the social services department of your local council. You can change to direct payments for some or all or your care at any point. If you change your mind and want to stop receiving direct payments you can switch back to a different method anytime too. Alternatively, if you do not want to receive any of your personal budget through direct payments, you do not have to and the council is not allowed to force you to take it this way.
Your direct payments will be reviewed regularly, sometimes as often as every three months. During this review, the local authority will request to see evidence of what care and support services you have spent your direct payments on, such as receipts.
Under direct payments you can also request that a friend or relative manages the funding on your behalf. They are known as your nominated person. Alternatively, an advocate could handle the funding for you. Take a look at our guide ‘Getting an independent advocate’ for further advice. If someone else is going to receive the funding instead of you, you will need to set up a trust to manage the payments. You may also want to put down in writing how you would like them to act, in what is known as a decision-making agreement.
Yes, you can. If as part of managing your care under direct payments you decide to hire a carer or personal assistant for yourself, bear in mind that you will technically become an employer which brings with it a wide range of other legal responsibilities. You may need to arrange employer’s liability insurance, tax, National Insurance and pension contributions as well as carrying out all the right background and reference checks. You must also be aware of a number of other important areas of employment law such as national minimum wage requirements, statutory sick leave and holiday entitlement. The local authority should have a system in place to support you with this, and will take the additional costs entailed into consideration when deciding on your personal budget.
If you decide you would like a carer but without becoming an employer, you can use a care agency instead. However, this will likely be more expensive and mean that you will have no say in who cares for you. It is also important to clarify in advance whether their fees include VAT and travel time, or whether these will be added on top later.
Should I choose direct payments?
It can be difficult to decide whether direct payments are the best option for you or not, so we have broken down some of the pros and cons to help you to decide whether you would like to choose this option:
- It is a lot more flexible as you have a free choice about what services your funding is spent on, rather than having to rely on the choices made for you by either the council or a third-party organisation.
- The council is not able to place any unreasonable restrictions on what you spend the funding on, as long as it is going towards meeting a need identified in your support plan.
- Direct payments allow you to prioritise the things that are important to you for your care. This could include making sure you have the same carers visiting every day rather than always having new people, giving you some consistency.
- Direct payments also allow you to have a much greater say in who is looking after you, meaning you can pick one or two particular people that you are more likely to get on with and trust. You could pick someone who has a similar background to you, someone with experience working with people with your needs or someone that has come through a personal recommendation.
- Just the feeling of being able to make your own choices and be independent in this area of your life can be a really important for some people, especially if you are finding that your independence is becoming increasingly limited in other areas.
- It can involve considerable extra work to administer the funding and manage your care, which some people can find quite time-consuming and stressful.
- You may find dealing with money hard, or worry that you can’t be trusted with it.
- You may find having to employ people and manage them directly brings more stress than you would like.
- You may not have a lot of experience of keeping records and might find managing that level of paperwork very taxing.
- You might find it difficult to be the boss of someone who then also comes and provides you with care. It can be hard to have a relaxed and friendly relationship with them as your carer if you are also their employer.
Online Help and Advice
Visit our online support section where we have provided advice and guidance on a range of relevant topics to help you in your caring role.