Report 37: Personalisation, productivity and efficiency

Evidence from direct payments

'Direct payments enable a more effective use of scarce resources - but with opinion divided as to whether this actually reduces overall costs, or merely achieves better outcomes for the same amount of money' (33)

The initial and ongoing policy assumption was that direct payments should be at least cost-neutral, if not yielding cost savings, when compared with traditional services. Although initial findings on outcomes are positive, there are few studies which have examined the costs associated with implementing and administering the schemes and the financial returns and other benefits that result (7).

To the extent that they have been reported, there appears to be a wide variation in implementation costs. Ongoing costs and variables also include what is covered by direct payments (start-up, contingency or support costs), which will impact on what can be spent directly on care and support.

There is evidence to suggest that, if direct payments are administered effectively and efficiently, they have the potential to achieve greater efficiency, while giving people who use services greater control over their care and support. The potential for efficiency gains can only begin to be realised if the changes are supported by improved information, market development and choice in care and support provision.

The 2007 PSSRU UK direct payments survey gives some indications of efficiency and effectiveness of direct payments for different service user groups and different support packages (34). It supports research which shows that user-led organisations or centres for independent living are an essential part of the infrastructure to support the efficient and effective use of direct payments (34, 35). The findings indicate a wide variation in implementation and ongoing costs. Based on the percentage of community care budget spent on direct payments for each group compared with the percentage of users on direct payments, the survey showed that direct payments were cheaper for learning disability, slightly more expensive for physical and sensory disability and mixed for older people (no conclusive data was available for people with mental health problems). However, cost variables also depended on what was included in the direct payment (that is, start-up, contingency or support costs), which will have an impact on what a direct payments user can spend directly on support services.


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