Personal Budget

Personal budgets are underpinned by the Care Act 2014. The council must tell the person the amount of their personal budget before finalising their care and support plan. If taken as a direct payment, the person can employ their own care workers, purchase services from providers of their choice, or pay for other agreed support — though close family members living in the same household generally cannot be employed directly without council agreement. The budget must be sufficient to meet assessed eligible needs; if a person chooses a more expensive option, they can top up from their own funds. Personal budgets are also available for carers who have support needs following a carer's assessment. Annual reviews can result in the budget being adjusted if needs have changed. In education, a similar concept applies via Education, Health and Care (EHC) plans.

In practice, the number in your personal budget should be built up from your assessed eligible needs, not down from what the council would like to spend. Councils often start with an indicative allocation produced by a resource allocation system, but that is a starting point only. If the indicative figure cannot buy enough hours at local market rates to meet the needs written into your support plan, the budget is not sufficient and you should say so in writing before the plan is signed off.

Worked example: Farida is assessed as needing two hours of personal care each morning and one hour each evening, plus support to get to a weekly community group. Her indicative budget covers 18 hours a week at a rate below what any local agency charges. She asks the council three questions in writing: which specific eligible needs each part of the budget is meeting, what hourly rate the calculation assumes, and which provider is available at that rate. When no provider is, the council increases the budget. Farida takes it as a direct payment so she can employ a personal assistant on a rota that fits her routine, and the council arranges payroll support and insurance guidance.

The pitfalls are worth anticipating. A direct payment brings employer responsibilities — contracts, payroll, pension auto-enrolment, insurance and cover for sickness and holidays — which is why some people choose a managed budget instead. Money in a direct payment account must be spent on meeting assessed needs and is auditable, so keeping receipts matters. A top-up you pay yourself is separate from the budget and should never be used to plug a shortfall that the council is legally required to meet. And an annual review should not become a routine cut: any reduction must follow a reassessment of needs, not a change in the council's budget.

Personal budgets follow on from a care needs assessment and sit alongside the financial assessment that decides your contribution; where health needs dominate, NHS Continuing Healthcare may apply instead. Read our guides to personal budgets and direct payments before you agree the figure.