Personal Budgets Explained

Under the Care Act 2014, everyone who is assessed as eligible for council-funded social care must be given a personal budget — a statement of the resources the council is willing to allocate to meet their eligible needs. The personal budget is usually expressed as a weekly or annual monetary amount.

The personal budget should be enough to meet the person's eligible care needs in a way that is appropriate to their circumstances. It is calculated using the council's resource allocation system (RAS) — a formula that converts assessed care needs into a monetary amount. Councils are required to publish their RAS or at least explain how budgets are calculated.

The personal budget is indicative — it is a planning figure. The final budget may increase or decrease slightly as the care and support plan is developed, if the costed plan comes out higher or lower than the indicative figure. If you disagree with the level of your budget, you have the right to challenge it.

A personal budget can be managed in three ways:

• Direct payment — The council pays the money to you (or someone acting on your behalf) and you arrange and pay for your own care. See the Direct Payments guide for details.
• Council-managed budget — The council holds the money and arranges and commissions services on your behalf. You do not handle the money directly, but you still have input into what services are arranged.
• Third-party-managed budget (individual service fund) — An organisation (often a support broker or care provider) holds and manages the budget on your behalf. This combines the personalisation benefits of direct payments with professional financial management.

You can also use a combination of these approaches — for example, receiving a direct payment for some elements of your care while the council arranges others. Many people use a direct payment for their personal assistant and ask the council to arrange transport or day services.

If you believe your personal budget is too low to meet your assessed needs, you have the right to challenge it. The first step is to ask your social worker or care manager to review the calculation and explain how it was reached. If the budget has been calculated using the council's RAS, ask for details of how the formula was applied to your specific circumstances.

Common grounds for challenge include: care needs that are higher than reflected in the assessment; a change in circumstances since the budget was set; or the budget being based on market rates that do not reflect the actual cost of appropriate care in your area.

If informal discussion does not resolve the issue, you can use the council's formal complaints procedure and ultimately refer unresolved complaints to the Local Government and Social Care Ombudsman (LGSCO).

If you believe your personal budget is too low to meet your assessed eligible needs, you have the right to challenge the council's decision. Start by asking for a written explanation of how the budget was calculated, including the Resource Allocation System (RAS) score and any adjustments. Many councils use indicative budgets based on a points-based RAS, but the law requires the budget to be sufficient to meet your assessed needs — not just match a formula.

If informal discussion does not resolve the issue, use the council's formal complaints procedure. If the complaint is not resolved, you can escalate to the Local Government and Social Care Ombudsman (LGSCO). The LGSCO has upheld complaints where councils set budgets too low to meet eligible needs, resulting in the council being required to reassess and increase the budget. In some cases, councils have been ordered to pay compensation for the period during which the person's needs were not properly met.

Your personal budget is funded by the council in whose area you are ordinarily resident. Ordinarily resident means the place where you normally live and to which you have a settled purpose of returning, rather than merely being present temporarily. If you move to a different council area, the new council must carry out its own care needs assessment and produce a new personal budget — it is not bound by the level set by your previous council.

However, the Care Act 2014 introduces important portability protections to prevent gaps in care when people move. The original council must continue to fund your care until the receiving council has completed its own assessment and produced a care and support plan. You should not experience any interruption to your care as a result of moving area. The receiving council may set a different personal budget based on its own RAS and local market rates — if the new budget is lower than the old one and you believe your needs are unchanged, you can challenge it through the normal routes.

Disputes about which council is responsible for funding care — known as ordinary residence disputes — can arise when someone moves into a care home in a different area, or when it is unclear where they were ordinarily resident before entering residential care. The Care Act provides a mechanism for councils to refer disputed cases to the Secretary of State for Health and Social Care for determination. While a dispute is live, both councils must continue to provide services — neither can simply withdraw on the basis that the other should be responsible. If you are caught in a funding dispute between councils, this is a serious matter and you should seek advice from Citizens Advice, Age UK, or a solicitor specialising in community care law.