Managing a personal budget (including Direct payments)

Read about the number of ways that a personal budget can be paid and managed.

Who manages a personal budget?

A personal budget is often managed by the person with the assessed needs themselves. However, it does not always have to be managed by them. Some people may prefer or need someone else to do it for them. The important thing is that the person chooses how the budget will be managed.

There are a number of ways that a personal budget can be paid and managed, but not all options will be available everywhere. A social worker should be able to offer information about options in the local area.

A personal budget can be:

  • a managed budget – this is where the money is held and managed by the local authority who arrange and provide the care services. You may still get a choice in services that you want to meet your needs an Individual Service Fund (ISF) – this is where a care provider (such as a care agency) holds and manages your personal budget and arranges the support agreed in your support plan
  • a direct payment – this is where you are given the money directly to spend on meeting your care and support needs. This must be in line with the outcomes agreed in your care plan, but it can be in a way that suits you. Direct payments offer an alternative to the local authority arranging services on your behalf
  • managed by a combination of these methods.
Support with personal budgets

Read more about support with personal budgets, including how brokers can help you plan and organise support.

Read more

Direct payments

A direct payment is when a personal budget is paid directly to you to pay for your care and support. Direct payments aim to give you more flexibility and choice over your care by allowing you to buy a range of different things to help you achieve your outcomes. For example, if you are lonely, you might use your direct payment to help you meet other people. You might spend the money on transport to allow you to get around safely, or on going to an activity. Direct payments must be used in line with your outcomes agreed in your care plan.

Some people use their direct payments to employ their own care worker or personal assistant, either through personal contacts or by advertising in a newspaper. Others use direct payments for social or leisure activities or equipment. You can use your payment for lots of things, but you must keep records of how the money has been spent. You can receive your personal budget as a direct payment and have it managed for you by someone else. If you do this, they will need to keep appropriate records on your behalf.

If you don’t want to hold the direct payment yourself, it can be:

  • managed for you by a broker, or an independent social worker
  • held by a carer, friend, family member, solicitor or other appropriate person (for example, an attorney), as a ‘user-controlled trust’
  • managed by a mix of the above.

If you no longer have the mental capacity to manage the direct payment yourself, a suitable person can be appointed to manage it (see Appointing a ‘suitable person’ below).

Who can receive a direct payment?

Direct payments are available to anyone who is eligible for support and is willing and able to manage them, either with or without assistance. In England and Wales, you must be at least 16 years old and be:

  • a disabled person (which for this purpose includes someone with dementia)
  • a carer
  • the parent of a disabled child.

Appointing a ‘suitable person’

It is possible to receive a direct payment even if you no longer have the ability (called ‘mental capacity’) to manage it yourself. You must have a ‘suitable person’ to manage the money on your behalf. This must be someone reliable who will manage your affairs in your best interests, such as a friend or close family member. A suitable person is often, though not always, someone who has power of attorney to make decisions for you.

For more information see Lasting power of attorney (England and Wales) or, in Northern Ireland, Enduring power of attorney and controllership.

The local authority is responsible for setting up and monitoring the arrangement, and they are responsible for deciding whether someone is a suitable person. They need to find out who you would have wanted to take on this role, and what is in your best interests.
The local authority must consult:

  • you
  • anyone currently caring for you
  • anyone who has been named by you as someone to be consulted about becoming a suitable person or about related matters, such as your personal welfare
  • any written statement of wishes and preferences you make
  • an attorney (of any kind) or a deputy, if you have one.

A suitable person must:

  • be able to manage the payments
  • not employ any spouse, civil partner or partner using the money from your direct payment (except in some specific situations)
  • always act in your best interests, following the Mental Capacity Act.

For more information on mental capacity, see Mental Capacity Act.

How payments are made

Direct payments are usually paid into a bank account set up specifically for this purpose. The local authority will sometimes ask to look at this account so they can check that you are spending the money appropriately.

Some local authorities use a ‘prepaid’ card for paying a direct payment. This should work just like a bank card. The funds are deposited onto the card by the local authority, making it easier to use and monitor the budget. Prepaid cards shouldn’t be the only option available to you however – you should be able to use a bank account if you want to.

The local authority will tell you, or whoever manages the payments for you, what records you need to keep and what information you need to provide. This can include timesheets signed by a personal assistant or receipts for services you’ve paid for.

You can choose to stop receiving your personal budget in the form of a direct payment at any time. If you do, the local authority should arrange alternative services so that you still receive the care you need.

The local authority can also decide to stop direct payments if they feel that you are not getting the care you need, or if you or the person managing the payments for you is unable to do so. If this happens, the local authority will offer another way of managing the personal budget.

What can direct payments be used for?
Direct payments can be used to buy a range of things, provided they are directly linked to an outcome agreed in your care plan. This could include:

  • a personal assistant (instead of a carer arranged by the local authority)
  • a visit to a community or social activity, such as going to a club, concert or sport event
  • an educational activity
  • an item of equipment or assistive technology
  • complementary therapies, such as aromatherapy or music therapy
  • transport – if you have specific needs, it could cover travelling safely to visit family and friends or attend a leisure or educational activity
  • support to get to a café to meet friends, or to go to a place of worship
  • taking a break with a carer.

This list does not cover everything. There are lots of other products and services that direct payments can be spent on. Different local authorities may have different ideas about how a personal budget should be used. You should ask your local authority or speak with a social worker about your local authority’s policy.

A direct payment cannot be used:

  • to pay a spouse, civil partner, live-in partner, or a close relative who lives in the same household, to care for you, except in certain circumstances that have been agreed with the local authority
  • for food
  • for rent
  • for any illegal or unlawful purpose
  • to buy services from the local authority – this can be done via a managed account
  • to pay for anything that is not directly related to meeting an outcome that is set out in your support plan.

Under the current system, a direct payment cannot be used to pay for permanent residential care in a care home, though this may change in the future. It is, however, possible to pay for a short stay of up to four weeks within any 12 month period.

Personal assistants

You can use a direct payment to employ a personal assistant (PA). A PA provides some of the help and support you may need, both at home and in the community.

PAs need to have a range of skills to take on this work, and can do lots of different things. This could include personal care such as help with washing and dressing, walking the dog, watering plants, reading letters or helping you on holiday.

If you choose to employ a PA, the personal budget should include money to pay their insurance, wages, national insurance, and holiday, sickness, maternity and redundancy pay. The local authority should take this into account when calculating the personal budget.

If you employ a PA or other care worker, you need to make a plan for what will happen if they are sick or on holiday. This emergency plan should be included in the support plan. The local authority has a duty of care, which means that they must be sure that you are still being cared for if there is a problem.

Direct payments example

Mahendra is 60 years of age and has young-onset dementia. He lives in a village in Nottinghamshire with his wife who is his main carer. Mahendra’s wife needed a break from caring and Mahendra needed some social interaction.

Before receiving a direct payment, Mahendra attended a day centre where he could play dominos or bingo for two days a week, but he didn’t enjoy it and felt he was too young for traditional day care services. He contacted his social worker to ask about receiving his personal budget as a direct payment.

Through the use of a direct payment he was able to find a male PA who shared similar interests. They enjoyed talking about tennis and Mahendra’s work as a telecoms engineer. A direct payment support service was able to help them with legal issues around employment. While Mahendra spent time with his PA, Mahendra’s wife had free time to relax and to visit friends.