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Individual Budgets

Individual budgets are an aspect of personalisation which is about tailoring public services to the needs of individual users. They involve giving service users discretion over the way in which the budgets for their support are allocated.

Terminology can be confusing in this field. In the UK, ‘individual budgets’ are sometimes distinguished from ‘personal budgets’. The aim  of individual budgets has been to draw upon multiple funding streams (although this aim has not yet been very successful – it has proven difficult to draw together funding from health, social care, education, etc).  Personal budgets , on the other hand, have drawn solely upon social care money.  However, many people use the terms interchangeably. 

Individual budgets in the UK are furthest developed in social care, where they have built on years of campaigning by disability organisations for self-directed support and direct payments. The concept is now being extended into the NHS with personal health budgets and being proposed as a way of reforming a range of other services including education and criminal justice (ACEVO, 2009).

This is not just a UK phenomenon. Similar initiatives are in place in Germany and the Netherlands. Since 1994 the German system has given care benefits in the form of cash, formal services or both. Cash payments make up about one-third of the overall care budget but have persistently proved to be a more popular option than services. Glendinning suggests that the NHS should learn from the German experience, where support is guaranteed for all eligible people, regardless of geographical area or financial circumstances, unlike UK provision, which can be very uneven; moreover, standardised assessment processes are transparent and avoid discrimination against certain groups, for example older people with family carers. The Dutch personal budget system has been in place since 1995. By 2003 there were already 65,000 budget holders. However, the Dutch experience has been that the market for care provision has been slow to develop, with mergers over time reducing the scope for competition. Kremer suggests that consumers have also become dependent on the support of care consultants to manage their care, reducing their autonomy from professionals.

Individual budgets can clearly be enormously advantageous. Clearly, they mean that people who have been passive recipients of services provided by service providers (who they did not necessarily get on with) and of services they did not need or want, can now be in charge of determining who delivers which service at what time. As a young person with severe disabilities demonstrated during a Governance International Study Trip on Co-Production to the London Borough of Lambeth, the transition to individual budgets has meant that people dependent on (state) help have now become self-confident employers, ready to make the important decisions that shape the outcomes they achieve. In this particular case, the quality of life of the young person had improved so much that he had become involved in a number of social activities and build up a new social network. However, nef have argued that devolving bugets to people does not itself constitute co-production, since it treats people as consumers and ignores the importance of integrating people into social networks.

Another issue is to what degree personalisation can be entirely self-led by citizens or must be state-controlled. For example, is it right that people who receive personal budgets may save up part of the money they receive, so they can invest it in an expensive hi-fi system? This is what was done by one person who had always dreamt of becoming a disc jockey – and with a personal budget was able to realise that dream Or even more extreme: is it fair that personal budgets may be spent on unhealthy or risky activities, which could actually damage the health of the person concerned? Or on activities which others consider immoral? While some form of state control is clearly needed to ensure that people do not use their personal budgets for things which are illegal, the people concerned are usually highly indignant at the suggestion that they do not know what’s good for them – particularly when they are also putting in some of their own money to supplement these personal budgets, as is often the case. As often in the UK, there is strong feeling in some quarters that the system for allocating and monitoring individual budgets has already become so complicated and control-ridden that it is actually undermining the potential benefits that it was meant to bring.

Very importantly, there is a debate about how to encourage people to do things which they do NOT want to do. Personal budgets may not be very helpful here. For example, giving a personal budget to a person who is obese may not result them in them spending the money on better food or an exercise club - they may instead just buy more unhealthy food. Again, parents who are thought to be treating their children badly won’t necessarily spend their personal budget on ‘better parenting’ classes. Here there is a strong argument for continuing to use state funding to encourage activities which have wider social significance, rather than passing all social services budgets over to the individuals who are believed to be in need of support.

The policy of individual budgets is still evolving. The balance is still being established between giving people more opportunities to achieve the outcomes they care for and ensuring that public spending to achieve social outcomes is well spent



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Key publications

ACEVO (Association of Chief Executives of Voluntary Organisations) (2009) Making it Personal: a social market revolution: the interim report of the ACEVO Commission on Personalisation, London: ACEVO.

Glendinning, C. (2007): ‘Improving equity and sustainability in UK funding for long-term care: lessons from Germany’. Social Policy & Society, Vol. 6, No. 3, pp.411–22.

Kremer, M. (2006): ‘Consumers in charge of care: the Dutch personal budget and its impact on the market, professionals and the family’. European Societies, Vol. 8, No. 3, September 2006, p.385-401.

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