Personal Budgets and Direct Payments in detail

Personal budgets and direct payments were introduced as a way of increasing independence and choice for individuals by giving them control over the way in which services that they receive are delivered. Direct payments have been available to young people and parents of children with SEN and disabilities for some years to pay for social care provision. Rights to personal budgets and direct payments for health care provision have also been introduced.

The new feature of the Children and Families Act 2014 was the introduction of personal budgets for the provision specified within the plan, (including the special educational provision (SEP)) and the possibility of direct payments for the special educational provision specified in the plan.

What are personal budgets?

A personal budget is a notional amount identified to deliver a service or provision for a particular child or young person with SEND. It is not an actual amount of cash but can be used for the purposes of calculating direct payments which may be received and used to pay for a particular provision. It can include funds from the local authority for education and social care and from the Clinical Commissioning Group (CCG) for health. 

There is a duty on LA’s to identify a personal budget for the provision specified within an EHCP if they are requested to do so by a young person or parent of a child with SEND.  (See the bottom of this sheet for the piece of Law – Children and Families Act, section 49).

There are four ways you can use a personal budget:

  1. Sometimes the local authority, school or college will look after the Personal Budgetfor you. This is called anArrangement or a Notional Budget.
  2. Sometimes you can receive money directly to manage all or part of the Personal Budget yourself. This is called a Direct Payment.
  3. Sometimes you can opt to have someone else to manage the Personal Budget for you. This is called a Third Party Arrangement.
  4. Sometimes you can have a mixture of some or all of these arrangements.

The LA will prepare such a budget with a view to the parent of the child or the young person being involved in securing such provision, normally by way of direct payments but there are other methods of securing the provision.

A personal budget requested may contain elements of education, social care and health funding. The SEND Code says (at paragraph 3.38) that partners must set out in their joint commissioning arrangements their arrangements for agreeing Personal Budgets.

In respect of the health care and social care provision specified within an EHCP, the LA will effectively be recording the personal budgets and direct payments (if any) which have already been agreed or are being made by either the relevant clinical commissioning group (CCG) (for Health care provision) or its own Children’s Services or Adult Social Care (for social care provision).

Once a personal budget has been obtained, the next step is to identify what element of the personal budget, if any, can be provided by way of a direct payment. It is a direct payment which is the actual cash payment which is made, i.e. where individuals receive the cash to contract, purchase and manage services themselves.

The power to make direct payments in health care is contained in Section 12 A of the NHS Act 2006.  The NHS (DP) Regs set out the detailed provisions for the making of direct payments under the NHS Act 2006. This includes the persons to, or in respect of whom, direct payments may be made, and the persons excluded from direct payments as well as the requirements for the conditions under which direct payments can be made and monitoring.

Since April 2014, all those who were receiving continuing healthcare from the National Health Service were given the ‘right to ask’ for a personal health budget. Continuing healthcare is the name given to a package of care that is arranged and funded solely by the NHS for individuals who are not in hospital but have complex ongoing healthcare needs, which will include some children with SEND.  

If a CCG refuses a request for a personal budget, paragraph 9.109 of the SEND Code confirms that they must give reasons for their refusal in writing and provide an opportunity for review, but the review and any challenge which a parent wishes to make to the refusal, will have to be carried out via internal NHS complaints procedures.

Who can have a Personal Budget?

Parents of a child with an EHCP or a young person with an EHCP, can request a Personal Budget either during the drafting of an EHCP or once the plan has been issued and is under review.

You do not need to have an EHCP to get Personal Budgets for social and health care but once you have an EHCP or one is being prepared, you can request budgets for all three areas of support. You must have an EHCP to get a Personal Budget for special educational provision.

However, you do not have to have a Personal Budget.

The SEND Code of Practice says: Local authorities mustprovide information on Personal Budgets as part of the Local Offer. This should include a policy on Personal Budgets that sets out a description of the services across education, health and social care that currently lend themselves to the use of Personal Budgets, how that funding will be made available, and clear and simple statements of eligibility criteria and the decision-making processes”. 9.96

A young person with an EHCP can ask for their own Personal Budget after the end of the school year in which they become 16.

Sometimes the local authority or the health authority may not agree to a Personal Budget. If the local authority refuses a personal budget for special educational provision it must tell you why. You cannot appeal to the Special Educational Needs and Disability Tribunal over this refusal.

What can a Personal Budget be used for?

Personal Budgets can be used only to fund the support set out in an EHCP. This must be agreed by the local authority for education and care support and by the health authority for the health provision.

You can find out what can be included in a Personal Budget in the Local Offer. You can also ask SEND Advice Surrey for more information about this.

A Personal Budget for educational provision cannot cover payment for a place at the school or college. A Personal Budget can include any top up funding (known as Element 3 funding). It can also include support that is managed by the school or college – but only if the Headteacher or Principal agree.

You can find out more about what can be included in a Personal Budget in Sections 9.110 to 9.118 of the SEND Code of Practice.

What is the difference between a Personal Budget and a Direct Payment?

A Personal Budget shows you what money there is to make some of the provision specified in an EHCP and who provides it. The parent or young person does not actually manage the funds directly.

With a Direct Paymentthe parent or young person is given the money for some services and manages the funds themselves. The parent or young person is responsible for buying the service and paying for it.

A Personal Budget can include a Direct Payment if it is agreed that this is the best way to manage part of the Personal Budget.

Direct payments can be used for special educational provision in a school or college only if the school or college agree. Local authorities can refuse a direct payment for special educational provision if it would make things worse for other children and young people with an EHCP or if it would be an inefficient way to pay for services.

It is also possible to have a Third Party Arrangement to manage a Direct Payment.

How much will I get if I have Direct Payments?

How much you get will depend on what has been set out in the EHCP, so it will vary from one person to another.   If the local authority has agreed to make a Direct Payment it must be enough to pay for the service or services specified in the EHCP.

The legal framework for personal budgets and direct payments for special educational provision

Section 49 (1) of the Act says that a LA that maintains an EHCP or is securing the preparation of an EHCP, for a child or young person must prepare a personal budget for them if asked to do so by the child’s parent or the young person.

Section 49 (3) provides for regulations to be made about personal budgets, including about direct payments, whose purpose is “representing all or part of a personal budget to be made to a child’s parent or a young person or a person of a prescribed description in prescribed circumstances, in order to secure provision to which the budget relates”.

Whilst section 49 gives the right to request a personal budget in respect of the special educational provision specified in an EHCP, there are limits on the scope of that right. The SEN (PB) Amendment Regs inserted regulation 4A into the SEN (PB) Regs, which confirmed that in certain circumstances, an LA is not required to prepare a personal budget. This will apply where the personal budget is part of a larger overall budget sum and disaggregation of the sum for the personal budget:

  • Would have an adverse impact on services provided or arranged by the LA for other EHC plan holders, or
  • Where it would not be an efficient use of the LA’s resources

If the LA does refuse a personal budget on such grounds, it should inform the parents or the young person why it is unable to do so. The SEND Code (9.106) indicates that the LA should work with the parent or young person to try to personalise the services in question through other means and should use the information to inform future joint commissioning arrangements to ensure that greater choice and control can be achieved in future.

Paragraphs 9.112 and 9.113 of the SEND Code of Practice set out the funding streams from which personal budgets for special educational provision might be met and the fact that it is anticipated that the LA’s high needs funding block will, in many cases, be used (other sources of funding such as schools own funding could be used to identify the personal budget). Paragraph 9.113 also confirms that a school placement choice might affect the availability of a personal budget as some special schools would make some special educational provision available from their core provision which would reduce the scope for a personal budget to be identified for such provision.

When can a personal budget be requested for the provision within an EHCP?

Personal budgets are optional for any of the provision specified within a plan. There is no duty on a parent or young person to request that the LA identify a personal budget but information must publish information about the availability of personal budgets through the Surrey Local Offer site (as well as setting out clear and simple statements of eligibility criteria and the decision-making processes).

Parents can request that the LA identifies a personal budget for the provision within the EHCP:  

  1. when a draft EHCP is being prepared or
  2. when an EHCP is being reviewed or reassessed.

In respect of personal budgets for health care or social care provision within an EHCP, the LA will effectively simply be recording the personal budgets which have already been agreed in respect of those elements of provision. These would need to have been agreed prior to those points, in order for the LA to be able to identify such a budget when the EHCP is being prepared or reviewed/reassessed.

Details would be set out in section J of the EHCP.

How might a personal budget be delivered?

In respect of all types of provision for which a personal budget has been requested and identified, there are four potential ways in which the child’s parent or young person might be involved in securing the provision and having the personal budget delivered:

  • Direct payments – where individuals receive the cash to contract, purchase and manage services themselves;
  • An arrangement – whereby the LA, school or college (or the CCG or LA in the case of health or social care personal budgets) holds the funds and commissions the support specified in the plan (these are sometimes called notional budgets);
  • Third-party arrangements – where funds (direct payments) are paid to and managed by an individual or organisation on behalf of the child’s parent or the young person;
  • A combination of the above.

Law mentioned above:

Children and Families Act

49 Personal budgets and direct payments

(1)A local authority that maintains an EHC plan, or is securing the preparation of an EHC plan, for a child or young person must prepare a personal budget for him or her if asked to do so by the child’s parent or the young person.

(2)The authority prepares a “personal budget” for the child or young person if it identifies an amount as available to secure particular provision that is specified, or proposed to be specified, in the EHC plan, with a view to the child’s parent or the young person being involved in securing the provision.

(3)Regulations may make provision about personal budgets, in particular—

(a)about requests for personal budgets;

(b)about the amount of a personal budget;

(c)about the sources of the funds making up a personal budget;

(d)for payments (“direct payments”) representing all or part of a personal budget to be made to a child’s parent or a young person, or a person of a prescribed description in prescribed circumstances, in order to secure provision to which the budget relates;

(e)about the description of provision to which personal budgets and direct payments may (and may not) relate;

(f)for a personal budget or direct payment to cover the agreed cost of the provision to which the budget or payment relates;

(g)about when, how, to whom and on what conditions direct payments may (and may not) be made;

(h)about when direct payments may be required to be repaid and the recovery of unpaid sums;

(i)about conditions with which a person or body making direct payments must comply before, after or at the time of making a direct payment;

(j)about arrangements for providing information, advice or support in connection with personal budgets and direct payments.

(4)If the regulations include provision authorising direct payments, they must—

(a)require the consent of a child’s parent or a young person, or a person of a prescribed description in prescribed circumstances, to be obtained before direct payments are made;

(b)require the authority to stop making direct payments where the required consent is withdrawn.

(5)Special educational provision acquired by means of a direct payment made by a local authority is to be treated as having been secured by the authority in pursuance of its duty under section 42(2), subject to any prescribed conditions or exceptions.

(6)Subsection (7) applies if—

(a)an EHC plan is maintained for a child or young person, and

(b)health care provision specified in the plan is acquired for him or her by means of a payment made by a commissioning body under section 12A(1) of the National Health Service Act 2006 (direct payments for health care).

(7)The health care provision is to be treated as having been arranged by the commissioning body in pursuance of its duty under section 42(3) of this Act, subject to any prescribed conditions or exceptions.

(8)“Commissioning body”, in relation to any specified health care provision, means a body that is under a duty to arrange health care provision of that kind in respect of the child or young person.

SEND Code of Practice: Personal Budgets

3.38 Young people and parents of children who have EHC plans have the right to request a Personal Budget, which may contain elements of education, social care and health funding. Partners must set out in their joint commissioning arrangements their arrangements for agreeing Personal Budgets. They should develop and agree a formal approach to making fair and equitable allocations of funding and should set out a local policy for Personal Budgets that includes:

  • a description of the services across education, health and social care that currently lend themselves to the use of Personal Budgets
  • the mechanisms of control for funding available to parents and young people including: o direct payments – where individuals receive the cash to contract, purchase and manage services themselves o an arrangement – whereby the local authority, school or college holds the funds and commissions the support specified in the EHC plan (these are sometimes called notional budgets) o third party arrangements – where funds (direct payments) are paid to and managed by an individual or organisation on behalf of the child’s parent or the young person o a combination of the above
  • clear and simple statements of eligibility criteria and the decision-making processes that underpin them

The legal framework for personal budgets and direct payments for social care

In relation to social care, the relevant law is different depending upon whether the young person is a child or an adult (for social care purposes, a young person remains a child until they are 18). There are also transitional provisions in the Care Act dealing with children approaching 18.

Section 17A (1) is an enabling provision permitting regulations to set out the basis on which direct payments can be made. Section 17A (2) lists the persons who can benefit from social care direct payments:

(2) A person falls within this subsection if he is–

(a) a person with parental responsibility for a disabled child,

(b) a disabled person with parental responsibility for a child, or

(c) a disabled child aged 16 or 17,

and a local authority have decided for the purposes of section 17 that the child’s needs (or, if he is such a disabled child, his needs) call for the provision by them of a service in exercise of functions conferred on them under that section.

The Community Care (DP) Regs contain the detailed provisions about the making of direct payments under various community care enactments, including the Children Act. These regulations have been superseded for young people receiving social care provision by those made under the Care Act, but these regulations will still apply to those under the age of 18 who are receiving such provision.

If an LA offers services to a disabled child or their family who has been assessed as ‘in need’ within the meaning of section 17 of the Children Act, the LA must offer direct payments to pay for that provision if certain conditions are met.

Regulation 7(2) of the Community Care (DP) Regs confirms that the LA must be satisfied:

that the child’s need for the relevant service can be met by securing the provision of it by means of a direct payment; and

that the welfare of the child in respect of whom the service is needed will be safeguarded and promoted by securing the provision of it by means of a direct payment.

Paragraph 9.123 of the SEND Code of Practice confirms that the LA must be satisfied that the person who receives the direct payment must use them in an appropriate way and will act in the best interests of the child.