The Personal Budget

1. Requirements of a Personal Budget

The Care Act introduced a legal requirement to set a personal budget. A personal budget must be provided to everyone with needs that the Local Authority intends to meet (either through its duty or powers).

The Care Act defines the personal budget as a written statement provided to a person with Care and Support needs (or a carer with Support needs) which specifies:

1. The cost to the Local Authority of meeting the needs it is either required to meet (under its duty) or decides to meet (under its powers);
2. The amount which the person or carer must pay towards that cost; and
3. The amount which the Local Authority is going to contribute towards the cost.

The Benefits of a Personal Budget Approach

Under the Care Act, the personal budget is a key part of the person-centred planning and support system. As such, it should be seen as a vital part of a much wider approach to enabling greater choice and control for people through:

1. Knowing, before making a decision about how to meet Care and Support needs, how much money may be available from the Local Authority to meet different needs (and how much money they (or in the case of top-ups, their family) may have to contribute);
2. Being able to choose from a range of options to manage the personal budget;
3. Having choice over who is involved in developing a Care and Support/Support Plan for how the personal budget will be spent;
4. Having greater choice and control over the services and support purchased with the personal budget.

Exclusions from the personal budget amount

There are certain things that should not be included in the personal budget amount, but which should be set out in the Care and Support/Support Plan:

1. Top-ups being paid because the provision costs more than the personal budget amount;
2. Services being received that the Local Authority is either not permitted to charge for (such as reablement) or is choosing not to charge for;
3. Eligible needs that are being met by a carer (who is willing and able to continue meeting those needs); and
4. Needs that are not being met by the Local Authority (for example through health, housing or benefits).

2. Deciding the Indicative Budget and Personal Budget Amounts

The Difference between an indicative budget and the personal budget

An indicative budget is a ’ball-park’ figure calculated immediately following the assessment. It is an estimation, based on the information available of how much it may cost to meet the eligible needs identified during assessment. It should be shared with the person/carer (and anyone else involved in the Care and Support/Support Plan) at the start of the planning process to support them to:

1. Develop a Care and Support/Support Plan; and
2. Make appropriate choices about how their eligible needs can be met.

The indicative budget is refined during the Care and Support/Support planning process to arrive at a personal budget figure that represents the final amount the Local Authority agrees is sufficient to meet all of the persons/carers eligible needs. The final amount may be greater or less than the original indicative budget estimated.

The personal budget must cover all of the information described in The Requirements of a Personal Budget. 

Depending on a range of factors the indicative budget and the personal budget amount may or may not be the same, such as:

1. Whether the Local Authority has decided during the Care and Support/Support planning process to use its powers under the Care Act to meet more needs;
2. Whether the services upon which the indicative budget was based are available and appropriate;
3. Whether the person uses a Direct Payment; and
4. Whether the person's needs are particularly complex.

Deciding the Indicative and Personal Budget amounts

Under the Care Act the most important principles when setting the indicative budget and agreeing the final personal budget are:

1. Timeliness;
2. Transparency; and
3. Sufficiency.

Timeliness

In order for the personal budget approach to be successful, the indicative budget is required before the Care and Support/Support planning process begins. Therefore, the timeliness of its provision is crucial.

Starting any planning process without having a clear indicative budget should be avoided. It:

1. Takes away choice and control for the person or carer;
2. Sets unclear expectations about what budget the Local Authority may or may not provide; and
3. Increases the risk of conflict between the Local Authority and the person/carer about the final personal budget.

Transparency

Local authorities must ensure that people understand how the indicative budget and personal budget amounts have been determined and that the method used is fair and robust so that:

1. They have confidence that the amount is correct and sufficient to meet their eligible needs;
2. They are clear about what has been taken into account when reaching an amount, what has not been taken into account and why;
3. That feel they have been treated fairly should a comparison be made with another person who has similar needs in a similar situation.

The Care Act recognises that some local authorities will apply a Resource Allocation System (or RAS) to help them set consistent indicative budgets. When such systems are used, the Local Authority must make sure that it is still able to provide information about how the budget has been calculated in an accessible way.

Where the Local Authority adopts a RAS approach to setting the indicative budget, the Care and Support statutory guidance recognises that this approach may not be appropriate in setting an indicative budget for people with particularly complex needs or multiple needs (for example people who are deafblind). To this end it advises against a one-size-fits-all approach to the setting of indicative budgets and recommends a more flexible approach where necessary, taking into account the particular needs of the person.

Sufficiency

Both the indicative budget and the final personal budget must be based on the needs of the person/ carer and the cost of available services in the local marketplace to enable a realistic and effective planning process to take place.

The Local Authority should not set arbitrary limits (fixed cut off points that do not take into account individual circumstances) on budget amounts that result in people being forced into choosing services that are either inappropriate or that are against their will (for example, being forced to accept care home provision because of an arbitrary limit on homecare budgets).

Generally, the determination of the final personal budget amount coincides with the signing-off of the Care and Support/Support Plan.

The amount that the Local Authority calculates as the final personal budget amount must be sufficient to meet the needs which the Local Authority is required to meet (under its section 18 or 20(1) duty) or decides to meet (under its section 19(1) or (2) or 20(6) powers). The Local Authority must also be sure that the final personal budget agreed is sufficient to meet the costs of any services that will be used to meet the needs and that it has taken into account the reasonable preferences of the person or carer about how to meet needs as detailed in the Care and Support/Support Plan.

If the person or carer is unhappy about the personal budget they have been given, they may use the complaints process to complain about it.

Deciding the Personal Budget when a Direct Payment is Proposed

Where a Direct Payment is proposed decisions about the final personal budget amount must also:

1. Take into account the local available market place costs and not base decisions on 'block contract' or 'bulk purchase' amounts; and
2. Take into account any additional costs such as those necessary to fulfil the legal requirements of employing a personal assistant.

Financial Considerations for Direct Payments

Despite the above requirements, a request for needs to be met via a Direct Payment does not mean that there is no limit on the amount that the Local Authority should attribute to the personal budget of a person using a Direct Payment. It is important that the Local Authority makes the best use of the resources available to it and uses them in ways that achieve the best outcomes for people whilst representing good value for money.

In making a decision about this the Local Authority must consider:

1. Whether it would be able to commission the same service at a lower cost than through a Direct Payment;
2. Whether there is a cost implication to the Local Authority from arranging the service directly;
3. Whether it would be more appropriate for the Local Authority to manage some or all of the personal budget; and
4. What the impact would be on the person's outcomes of either of the above options.

The Local Authority is not required to set the amount of the personal budget higher where the cost of an alternative provider arranged via a direct payment is more than the cost to the Local Authority of arranging the same support whilst achieving the same outcomes for the person.

General Financial Considerations

The Care Act recognises the financial pressures on local authorities and permits them to take into reasonable consideration its own finances and budgetary position when deciding final personal budget amounts.

The Local Authority may reasonably consider how to balance its legal requirement to maintain services to the entire local population with the duty to meet the eligible needs of a person. In doing so it must:

1. Ensure that it still fulfils the duty to meet eligible needs;
2. Consider things on a case-by-case basis;
3. Not set arbitrary limits about what it will and will not pay for a particular type of service; and
4. Consider all the factors, including Wellbeing and outcomes and not make its decision based on finances only.

3. Managing the Personal Budget

The person should have the maximum possible range of options for managing their personal budget, including how it is spent and how it is utilised.

Personal budgets can be managed in 4 different ways:

1. By the Local Authority as a managed account;
2. By a third party as an Individual Service Fund;
3. By the person or carer as a Direct Payment; or
4. As a combination of these options.

Each way provides a different level of direct control to the person whose needs are being met about how they are met, with a Direct Payment providing the most autonomy. For further information see Direct Payments. The person or carer should be able to choose which method of managing their personal budget will work best for them.

The Care and Support statutory guidance states that the Local Authority, in offering more flexible ways to manage a personal budget, must not then put barriers up or inadvertently limit options and choices for people. It gives the example that, when using pre-paid cards for Direct Payments there should not be a restricted list of providers that the person can use.

Regardless of the manner in which the personal budget is managed, the Local Authority maintains overall responsibility to meet the eligible needs. This means that should the selected method become inappropriate, the Local Authority must arrange another method and ensure it continues to meet the needs.

4. Reviewing the Personal Budget Amount

The Local Authority has the power to review the personal budget it has set for a person or carer at any time. However, it can only make changes to the personal budget amount if it has:

1. Involved the person or carer to whom the personal budget relates; and
2. Where the revision is due to a change in need, completed a needs assessment or carers assessment to evidence the change in needs.