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:

“personal budgets … cost about 10 per cent less than comparable traditional services and generate substantial improvements in outcomes”, but this investigation did not account for the wider costs of starting up and delivering individual budgets. Savings are thought to come from a reduction in administrative or organisational costs and to some extent from employment costs (27).

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).


All SCIE resources are free to download, however to access the following download you will need a free MySCIE account:

Available downloads:

  • SCIE Report 37: Personalisation, productivity and efficiency