4 Personal budgets and direct payments
In England, most local authorities manage their care packages through the allocation of a personal budget. It is mandatory for local councils to offer a personal budget as an option to all people who have been assessed as needing care services and who qualify for council funding.
For information about Northern Ireland, Scotland and Wales, see the foot of this page.
Here we answer the most frequently asked questions about personal budgets in England.
What is a personal budget?
Personal budgets for social care are part of a government move in England to personalise social care. They allow people, where possible, to make choices about their own care.
If your relative has been assessed as needing non-urgent help and support, he or she will be allocated a sum of money called a personal budget. Your relative can then decide how the money is spent, which enables them to have greater choice and control over the services they need to use rather than taking a council’s ‘one size fits all’ prescription.
There are various ways your relative can choose to take the personal budget:
- As a direct payment, paid straight into their bank account (see below).
- In an account managed by the council, which should be spent as your relative wishes.
- In an account held with a care service provider and managed by your relative.
- In an Independent Living Trust, held on your relative’s behalf by a family carer, friend, family member or other trusted party.
- As a mix of the above.
How much is a personal budget?
There is no fixed sum. The amount your relative gets in their personal budget is calculated following their needs and financial assessments, and usually using the local council’s resource allocation system (RAS). However, if your relative’s needs are very complex or costly to fund, such as for deaf-blind people, the local authority can take an alternative approach to ensure the personal budget is an appropriate amount. The determined amount will be set out in their care plan.
Your relative has the right to receive enough money for their needs to be met, but if they feel the amount is incorrect, they can challenge the local authority’s needs or financial assessment (see Challenging local authority and NHS assessments).
What are direct payments?
Direct payment is the way in which your relative can receive either all or part of their personal budget – or they might decide to leave the organisation of their care needs with the social services and not take the direct payment at all, as outlined above. The decision is theirs.
Most authorities make the direct payment every 4 weeks and straight into your relative’s bank account.
Can my relative opt in or out of direct payment?
If your relative accepts direct payments, but then changes their mind, they can stop them at any time. Equally, they can switch to direct payments at any time instead of having the local authority arranging their services. If your relative decides to move from local authority arrangements to organising their own, the local authority has a duty of care to ensure the current services remain in place until your relative has organised their own.
Direct payments outside England
In Northern Ireland, direct payments are widely available (see below), but personal budgets managed by the local authority are at an early stage of roll out and aren’t yet available in all areas.
In Scotland, the Social Care (Self-Directed Support) (Scotland) Act 2013 provides a range of new options about how individuals can choose to receive social care services in Scotland, for more information go to Self Directed Support Scotland.
In Wales, only direct payments (sometimes also known as self-directed support), described below, are available.
How can my relative spend direct payments?
Direct payments give individuals money so that they can arrange and buy their own care services. Your relative can only spend the money on care that has been agreed in their needs assessment. They must also keep records to show exactly how the money has been spent. The local authority remains responsible for monitoring your relative’s needs and checking that they are still being met.
Direct payments can be used to:
- purchase most community services, such as personal care, provision of meals or attendance at a day centre
- pay for home help services. For example, if your relative’s care plan said that they needed a home help or a gardener, they could use direct payments to employ a neighbour to help.
Hiring your own helpers or carers
Be warned that if your relative uses direct payments to pay someone like a carer, gardener or cleaner they legally become an employer. This could make them liable for PAYE tax and National Insurance. They might also have to think about things like wages and contracts. For more advice on hiring individuals, see Employing private individuals.
Direct payments can't be used to:
- pay anyone else living in the same household, unless that person is specifically employed as a live-in carer
- pay for permanent residential care.
What are the benefits of direct payments?
Receiving direct payments gives your relative more flexibility. They are able to choose who delivers the care services that they need, and when. This might be useful if they have a particular provider in mind – maybe one recommended by a friend – or if they are not happy with the choice of provider offered by the local authority.
I’ve heard the term ‘broker’ used. What are these?
Hiring your own carers or helpers using direct payments can be a hassle. Unless your relative already has someone in mind, they might have to advertise for help and deal with interviews, wages and contracts.
One alternative is to use a ‘service broker’, who can act as an intermediary. Brokers help to arrange the support that your relative needs and assists with recruitment and employment issues. Your local authority (use the Local authority services tab in our Care services directory for contact details) might be able to recommend a broker in your relative’s area.
If your relative receives funding from their local authority, they shouldn’t have to pay to use a brokerage service. The local authority should provide this although they may charge self-funders to use the service.
In Wales, service brokers don’t exist to help older people hire carers or helpers. However, local authorities can help people receiving direct payments in their capacity as an employer, offering support with recruitment and the payroll (see ).
In Scotland, the Social Care (Self-Directed Support) (Scotland) Act 2013 provides a range of new options about how individuals can choose to receive social care services in Scotland. For more information see Self-Directed Support Scotland.
What if I need to act on behalf of my relative because I have a power of attorney?
If you have a Lasting Power of Attorney (In Scotland, Continuing Power of Attorney for financial matters and Welfare Power of Attorney for health and welfare), local authorities must offer the personal budget to you to act on behalf of your relative. Guidance for local authorities outlines the process to be followed, so you will need to discuss this with your relative’s social worker.
- Talking about care options gives you some ideas for positive approaches to discussing financial and other care matters.
- Home care and support services explains the different types of help available.
- Care services directory: use our searchable directory to find home care agencies and local authority services for older people.
Page last reviewed: April 2018