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Compare the roles of direct payments and individual budgets in supporting personalisation


This page is designed to answer the following questions:

NOTE: This page has been quality assured for 2023 as per our Quality Assurance policy.

For this assessment criterion, you will be required to compare the roles of direct payments and individual budgets in supporting personalisation.


Section 12.3 of the Care and Support Statutory Guidance states that:

12.3 Direct payments, along with personal budgets and personalised care planning, mandated for the first time in the Care Act, provide the platform with which to deliver a modern care and support system. People should be encouraged to take ownership of their care planning, and be free to choose how their needs are met, whether through local authority or third-party provision, by direct payments, or a combination of the 3 approaches.


An individual or personal budget is the overall cost of care and support services to meet a particular individual’s needs. It is defined in the Care Act 2014as:

A personal budget for an adult is a statement which specifies—

  • (a) the cost to the local authority of meeting those of the adult’s needs which it is required or decides to meet as mentioned in section 24(1),
  • (b) the amount which, on the basis of the financial assessment, the adult must pay towards that cost, and
  • (c) if on that basis the local authority must itself pay towards that cost, the amount which it must pay.

A personal budget can be managed either by the local authority (a managed account), a third party (e.g. a service provider) or be paid as a direct payment to the service user (or an individual nominated by the individual, such as a carer or advocate).

The money from a direct payment can then be used by the service user or nominated individual to arrange services to meet their care and support needs. This is known as self-directed support.


The amount of money available in a personal budget will be set following an assessment. This means that everyone will have a clear understanding of how much is available for care and support services – this includes the service user and so, therefore, will support them to make decisions about how the money is spent.

Personal budgets and direct payments support the personalisation agenda because they provide individuals that are in receipt of care services the freedom to decide how their care and support are provided.

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