Report 37: Personalisation, productivity and efficiency

Evidence from personal budgets

'Councils should not expect to achieve large cost savings through personal budgets alone' (14)

There is virtually no reliable evidence on the long-term social care cost implications for individual budget schemes for the UK. Equally there is no firm evidence on the actual cost effectiveness of individual budget schemes apart from that they appear to cost less when compared with the monetary value of traditional packages. Policy is based on the assumption that individual budgets should be at least cost-neutral and some authors have speculated that the long-term effect could mean savings for public services in general, especially health. A study comparing costs of care packages before and after a personal budget in 10 local authorities estimated that:

This situation is compromised by the fact that many local authorities are not yet routinely monitoring personal budget costs and outcomes.

Research is showing that personal budgets – like direct payments – will have initial set-up costs relating to local conditions, local authority readiness and leadership, local population profile and need. Time is also needed to review and re-engineer processes and the recovery of set-up costs may take several years.

Personal budget holders will be able to reduce the cost of their own packages by making their own decisions about which services to buy. However, this does not necessarily reflect a saving for the council overall. It may simply result in spare capacity in an apparently expensive service for which the council continues to pay (14).

The potential for efficiency gains through increased choice and control can only begin to be realised if there is information, market development and choice in care and support provision: 'We must ensure that (personalisation) is not seen as simply a different way to move money around the system' (36).

The initial findings of a three-year study being conducted in Essex suggested that, given the right support and information, personal budget holders were potentially able to have greater leverage as individual customers able to negotiate levels of tailoring, flexibility and ultimately, quality, than the local authority purchasing block services (18).

• The IBSEN study of individual budget pilotsOpen

  The most reliable study of a personal budget system is the two-year Individual Budgets Evaluation Network (IBSEN) evaluation of the individual budget pilots in 13 local authorities. It reported that:

  • Across all user groups combined there is some evidence that Individual Budgets (IBs) are more cost effective in achieving overall social care outcomes, but no advantage in relation to psychological wellbeing.
  • For people with learning disabilities, there is a cost-effectiveness advantage in terms of social care outcomes but only really when we exclude people without support plans in place from the analysis. The potential is there to achieve cost-effectiveness, but implementation delays in the pilot sites meant that we did not observe this during the evaluation period. When looking at the psychological wellbeing outcome, standard care arrangements look slightly more cost-effective than IBs.
  • Cost-effectiveness evidence in support of IBs is strongest for mental health service users, on both the outcome measures examined here.
  • For older people, there is no sign of a cost-effectiveness advantage for either IBs or standard support arrangements using the social care outcomes measure. Using the GHQ [General Health Questionnaire] outcome measure, standard arrangements look marginally more cost-effective.
  • There appear to be a small cost-effectiveness advantage for IB over standard support arrangements for younger physically disabled people using either of the outcome measures. (25)