Commissioning for Individual Service Funds (ISFs) presents local authorities with an opportunity to develop a more person-centred, flexible, and sustainable care system. Unlike traditional block contracts or time-and-task models, ISFs shift decision-making power to individuals, allowing them to shape their support in alignment with their personal goals, ambitions, and long-term independence.

However, introducing ISFs alone is not sufficient. A strategic and structured approach is required for provider development, market shaping, and quality assurance. Embedding fading support—the principle of enabling individuals to gradually reduce reliance on formal care—should be a core objective, ensuring that ISFs promote independence rather than perpetuating dependency.

This guide provides a comprehensive framework for commissioners to shape the market, foster high-quality ISF provision, and drive systemic change in adult social care.

1. Establishing a Tiered Market Framework

A tiered provider framework ensures the effective delivery of ISFs by differentiating providers based on their values, competencies, and service models. This approach incentivises quality while offering pathways for providers to progress towards person-centred, ISF-ready support.

The Need for a Tiered Market Framework

Historically, social care markets have been driven by a one-size-fits-all approach, with traditional providers dominating provision. While this model has ensured service availability, it has often led to inflexible care arrangements that do not fully support individual aspirations. By developing a structured, tiered framework, commissioners can create a dynamic and adaptable market that meets a wide range of needs while encouraging innovation and high standards in service delivery.

Tier 1: Partnership Providers (Core ISF Providers)

These organisations fully embrace ISF principles and demonstrate leadership in delivering flexible, transparent, and person-centred support. Their key responsibilities include:

• Providing virtual wallets, transparent costed support plans, and accessible financial reporting to ensure individuals and families have full visibility over their budgets.
• Enabling individuals to aggregate, bank, and adjust support hours over time, moving away from rigid schedules towards more responsive care models.
• Engaging in co-produced support planning, ensuring that services evolve alongside an individual’s changing needs and aspirations.
• Embedding fading support, training staff to enable rather than replace personal capacity, helping individuals develop independent living skills over time.
• Acting as trusted support planners to help individuals and families navigate budgets effectively and make informed decisions about their care.

To qualify as a Tier 1 provider, organisations must demonstrate a strong commitment to personalisation, a willingness to be held accountable through transparent cost structures, and a track record of fostering individual independence.

Tier 2: Community Model Providers

These organisations show strong potential for ISF delivery but may not yet have the technical infrastructure to fully implement ISFs. Many community providers already operate with high levels of flexibility and personalisation, but additional support is needed to align them fully with ISF standards. They:

• Have deep community integration, linking individuals to local networks, activities, and opportunities to strengthen social capital and reduce isolation.
• Provide specialist support, such as forensic services, autism support, or mental health enablement, ensuring that ISFs cater to a diverse range of needs.
• Are committed to transitioning to Partnership Provider status through structured training, mentorship, and capacity-building initiatives.

Supporting these providers to develop ISF-ready models is a key component of a sustainable market strategy. Commissioners should provide clear pathways for progression, ensuring that providers receive the necessary resources to refine their practices and adopt ISF-compatible frameworks.

Tier 3: General Support Providers (Traditional Care)

These providers do not yet offer fully flexible ISF-driven care but should be encouraged to transition towards personalised approaches. Historically, this group has operated within standardised care models, with fixed schedules and limited user control. To remain within the framework, they must:

• Demonstrate a clear plan for adapting services to ISF principles, with defined milestones for improving flexibility and transparency.
• Engage in ongoing training to improve person-centred practices, ensuring staff understand and embrace the philosophy behind ISFs.
• Commit to an improvement timeline (e.g., 12 months) to move up the tiers or risk being phased out from ISF contracts.

Encouraging traditional providers to evolve is essential for long-term market sustainability. While some organisations may resist change, a well-structured improvement plan can create opportunities for gradual adaptation without disrupting service continuity.

Commissioning Levers to Support Tiered Development

Commissioners play a crucial role in ensuring that the tiered framework is implemented effectively. Key actions include:

• Defining clear expectations: Establishing robust provider criteria and communicating these expectations transparently.
• Providing developmental support: Offering training, peer learning, and mentorship to assist providers in shifting towards ISF-compatible models.
• Implementing financial incentives: Rewarding organisations that demonstrate commitment to person-centred approaches and fading support.
• Phasing out poor-quality provision: Gradually withdrawing funding from providers who fail to meet ISF standards and reallocating contracts to those who do.

By embedding these mechanisms into commissioning practice, local authorities can drive systemic change, ensuring that the market aligns with the principles of self-directed support and long-term independence for individuals

2. Shaping the Market Through Strategic Commissioning

Creating a strong ISF market requires active commissioning, not just passive procurement. Local authorities must proactively cultivate high-quality providers while phasing out those unwilling to evolve. A structured commissioning approach ensures that ISFs are not just an option within a traditional care model but become the default mechanism for delivering personalised, flexible support.

A. Engaging and Supporting Providers

A well-functioning ISF market relies on committed providers who embrace flexibility, transparency, and co-production. Commissioners must work closely with providers to develop their capability, improve standards, and create the conditions for sustainable ISF delivery.

1. Market Engagement and Communication

• Establish regular engagement forums, such as roundtables, provider networks, and learning workshops, to ensure ongoing dialogue and shared development.
• Provide clear commissioning statements and frameworks, outlining expectations for ISF providers, including financial transparency, person-centred planning, and flexible support models.
• Develop provider toolkits to support organisations in transitioning towards ISF-readiness.

2. Capacity Building and Workforce Development

• Fund and promote training programmes to equip providers with the knowledge and skills required for ISF delivery.
• Offer technical support and mentoring schemes to help traditional providers adapt to ISF principles.
• Support the recruitment and training of a flexible, community-based workforce, skilled in co-production, person-centred planning, and fading support.

3. Partnership Development and Collaborative Working

• Encourage collaboration between providers, self-advocacy groups, and micro-enterprises to ensure a diverse and innovative ISF market.
• Promote peer learning between high-performing ISF providers and those transitioning to ISF models.
• Develop partnership frameworks that encourage small, local providers to play a meaningful role in the ISF market.

B. Implementing a Gradual Market Shift

To ensure that ISFs become the default commissioning model, councils must take an active role in shaping the market and influencing provider behaviours.

1. Tiered Referral System

• Make ISFs the default commissioning route by directing new referrals to Tier 1 Partnership Providers first.
• Ensure Community Model Providers (Tier 2) have structured support to transition towards full ISF-readiness.
• Establish clear incentives for General Support Providers (Tier 3) to modernise and align with ISF principles.

2. Supporting the Transition of Traditional Providers

• Implement capacity-building plans to help traditional providers develop flexible service models.
• Offer transitional funding to providers making significant changes towards ISF delivery.
• Develop improvement plans with time-limited targets, ensuring that providers either adapt or are phased out of ISF contracts.

3. Re-tendering Poor-Quality Services

• Introduce quality thresholds for ISF providers and withdraw contracts from those failing to meet minimum standards.
• Establish re-tendering processes to shift funding from traditional, time-and-task providers to values-driven, flexible ISF providers.
• Encourage individual choice and control by enabling citizens to select from a range of ISF-approved providers.

C. Incentivising and Measuring Market Performance

A strategic commissioning approach must include clear measures of success, ensuring that ISF providers deliver high-quality, person-centred support.

1. Outcome-Based Commissioning

• Shift from time-and-task models towards outcome-based commissioning, where providers are incentivised for achieving independence-building, choice, and personal development outcomes.
• Implement performance monitoring frameworks, co-designed with citizens, to assess provider effectiveness.

2. Financial Incentives and Sustainable Funding Models

• Introduce incentive payments for providers that successfully support people in reducing reliance on formal care(fading support).
• Ensure cost transparency by setting clear, consistent pricing structures for ISF services.
• Encourage the development of micro-enterprises and small-scale providers, ensuring a diverse, community-led care market.

3. Citizen-Led Oversight and Feedback Mechanisms

• Establish citizen-led panels to review provider performance and inform commissioning decisions.
• Create real-time feedback mechanisms, allowing individuals and families to report on provider quality and responsiveness.
• Develop transparent provider scorecards, helping individuals make informed choices about their ISF support.

Moving Forward

A strategic, proactive approach to commissioning is essential for embedding ISFs as a core mechanism for personalisation and flexibility in social care. Commissioners must:

• Actively shape the market, engaging and supporting high-quality ISF providers.
• Use financial and contractual levers to phase out traditional models that do not align with ISF principles.
• Ensure ISFs are the default option, making them the primary commissioning route for new referrals.
• Develop robust performance monitoring frameworks, ensuring that ISFs deliver real, measurable improvements in individual choice and independence.

By embedding these principles into commissioning practice, local authorities can drive systemic change, creating a thriving ISF market that delivers meaningful, person-centred support.

3. Enabling Individuals to Take Control

A well-functioning ISF system should ensure that individuals have meaningful choice and control over their support. The key goal of ISFs is to shift power from providers and commissioners to individuals and families, allowing them to directly influence their support arrangements in ways that promote independence, inclusion, and self-determination.

For ISFs to work effectively, individuals must have the right funding mechanisms, accessible information, and practical support to take control. Commissioners play a vital role in embedding these principles into their ISF strategy.

A. Funding Options for Individuals

A strong ISF model provides flexibility in how budgets are managed, allowing individuals and families to choose the best option for their circumstances. Commissioners should ensure that people are offered genuine, well-supported choices between different funding arrangements.

1. Direct Payments

• The preferred option for maximum control, allowing individuals or their representatives to directly manage their budget.
• Enables people to employ personal assistants (PAs), purchase flexible support, and fund community-based solutions.
• Requires investment in peer support networks and payroll services to help people navigate the complexities of managing a personal budget.
• Some people may struggle with financial administration, so alternative options must be available.

2. Individual Service Funds (ISFs)

• A fully flexible alternative where a provider holds the budget on behalf of the individual but must deliver services based on the individual’s choices.
• The provider must operate transparently, offering detailed breakdowns of expenditure and ensuring flexible service design.
• Commissioners should ensure ISF agreements include:
  • Virtual budgets with real-time tracking.
  • Flexibility clauses, allowing people to bank and adjust their hours.
  • Regular financial statements to maintain transparency and accountability.

3. Notional Budgets with Flexible Support

• The council retains the budget but allows the individual to make meaningful choices over how their support is delivered.
• Suitable for people who may not want the responsibility of managing funds but still want control over their support.
• Works best when councils allow for flexibility in care planning, rather than imposing rigid, time-allocated services.

Commissioning Considerations

• Councils should regularly review the uptake and impact of different funding options to ensure people are genuinely empowered.
• ISF providers should be contractually required to offer a high level of transparency and honour individual choice.
• The default assumption should be that individuals can manage their support, with assistance provided where needed.

B. Embedding Fading Support

A critical success factor for ISFs is ensuring that they do not become another passive service delivery model but instead promote personal growth and independence. This means embedding the principle of fading support—where people are actively supported to develop skills, build confidence, and reduce their reliance on formal care.

1. Staff Training and Cultural Change

• ISF providers must train staff in coaching and strengths-based approaches, moving away from a “doing for” culture to an “enabling” model.
• Training should focus on:
  • Goal-setting and skill-building, helping individuals take on more responsibilities over time.
  • Encouraging natural supports, ensuring individuals build relationships within their communities.
  • Using assistive technology, helping people become more self-sufficient in managing their daily lives.

2. Commissioning for Independence

• Councils should track progress toward independence, ensuring that ISFs lead to tangible improvements in a person’s ability to self-manage.
• Introduce commissioning incentives that reward providers for successfully supporting people to reduce their reliance on formal services.
• Require ISF agreements to include clear independence-building goals, ensuring that support plans focus on personal development.

3. Measuring Success and Outcomes

• Develop metrics to assess independence, tracking reductions in formal care reliance alongside improvements in quality of life.
• Establish citizen-led oversight groups to review provider progress in enabling individuals to take control.
• Use real-life case studies to showcase examples of people successfully reducing their dependency through ISFs.

C. Providing Practical Support for Individuals and Families

Even with well-structured ISF options, many people will require additional support to navigate the system, make informed decisions, and effectively manage their services.

1. Independent Advocacy and Brokerage

• Ensure access to independent advocacy and peer support networks, helping individuals understand and exercise their rights.
• Develop brokerage services that support individuals in planning and managing their ISFs, particularly those who may find financial administration challenging.
• Provide online tools and resources to help people compare providers, review budget options, and understand their choices.

2. Family and Carer Involvement

• Recognise the crucial role of families and unpaid carers in supporting ISFs, ensuring they have the right information and guidance.
• Develop training programmes for family carers, equipping them with the knowledge to navigate ISFs effectively.
• Ensure councils engage families in ISF system design, ensuring their perspectives shape market development.

3. Clear and Accessible Information

• Ensure public-facing materials are jargon-free and clearly explain ISFs, flexible support options, and the principles of self-directed support.
• Develop easy-read guides, video explainers, and real-life success stories, making ISFs more accessible to individuals with learning disabilities, autism, or other additional needs.
• Require ISF providers to offer detailed, plain-language breakdowns of financial arrangements, ensuring transparency.

Moving Forward

To fully realise the potential of ISFs, councils must take a proactive role in ensuring that individuals are truly empowered. This means:

• Expanding access to ISFs as the default commissioning model, ensuring individuals have flexible, transparent options.
• Embedding fading support within commissioning, ensuring ISFs promote personal growth rather than dependency.
• Developing strong support structures to assist individuals, families, and providers in navigating and maximising ISF opportunities.

By prioritising individual control, independence-building, and practical support mechanisms, ISFs can transform social care, ensuring that citizens lead fulfilling, self-directed lives.

4. Creating a Sustainable ISF Infrastructure

For ISFs to be viable in the long term, councils must establish a robust infrastructure that ensures financial sustainability, effective governance, and ongoing knowledge sharing. Without these structural foundations, ISFs risk being underutilised, mismanaged, or failing to achieve their full potential as a transformative approach to social care.

A sustainable ISF system is built on three key pillars:

1. Strong governance and monitoring mechanisms.
2. Financial sustainability and cost-effectiveness.
3. Knowledge sharing and the scaling of best practices.

A. Governance and Monitoring

Ensuring transparency, accountability, and quality assurance is essential for ISFs to maintain credibility and public trust. Commissioners should establish clear governance frameworks that define expectations for providers and ensure ongoing monitoring of ISF performance.

1. Developing Clear ISF Quality Standards

• Quality standards should be co-produced with citizens, families, and advocacy groups, ensuring they reflect the priorities of those using ISFs.
• Standards should include:
  • Transparency in financial reporting – individuals must have full visibility over their budgets.
  • Flexibility in service delivery – providers must demonstrate their ability to offer personalised, adaptable support.
  • Commitment to fading support – measurable plans must be in place to help individuals increase independence over time.
• Providers should be contractually required to meet these standards, with clear enforcement mechanisms for non-compliance.

2. Citizen-Led Oversight and Accountability

• Establish citizen panels to evaluate provider performance and shape ongoing ISF development.
• Introduce mystery shopper programmes where individuals using ISFs provide feedback on their experiences.
• Develop real-time feedback tools, such as online ratings and reporting mechanisms, allowing individuals to highlight concerns about provider performance.

3. Outcome-Based Commissioning and Continuous Improvement

• Move away from time-and-task-based commissioning, ensuring providers are evaluated on their impact, not just their service hours.
• Monitor ISF outcomes, focusing on:
  • Increased personal independence.
  • Higher satisfaction with support arrangements.
  • Improved community connections and social capital.
• Require providers to submit annual improvement plans, demonstrating how they are evolving their ISF models to better support independence and personalisation.

B. Financial Sustainability

ISFs must be cost-effective for both councils and individuals. Poorly structured financial models can lead to budgetary pressures, provider instability, and a lack of investment in innovation.

1. Ensuring Cost Transparency and Fair Pricing

• ISF budgets should be transparent, predictable, and sustainable for both individuals and providers.
• Councils should introduce fixed-rate agreements to prevent excessive administrative costs and profit-driven cost-cutting.
• Clear cost structures should be established, setting expectations around:
  • Provider fees and charges.
  • Flexibility in how budgets can be used.
  • Allowable expenditure categories to prevent unnecessary restrictions.

2. Financial Incentives for Independence-Building

• Introduce payment structures that reward outcomes rather than service hours.
  • Example: Providers receive higher payments for successfully supporting individuals to reduce their reliance on formal care rather than maintaining static care arrangements.
• Consider graduated funding models where individuals receive additional resources at key transition points(e.g., moving from residential care into independent living).

3. Encouraging Micro-Enterprises and Community-Led Solutions

• Traditional large-scale providers often struggle to deliver highly personalised ISFs. Councils should encourage micro-enterprises and community-led initiatives to provide smaller, bespoke solutions.
• Support self-employed carers, personal assistants, and small-scale providers to enter the ISF market by:
  • Offering startup grants or development funding.
  • Providing training on financial management and ISF principles.
  • Reducing bureaucratic barriers that make it difficult for small providers to compete with larger organisations.

C. Knowledge Sharing and Scaling Best Practices

To ensure that ISFs continue evolving, local authorities must facilitate learning, collaboration, and the dissemination of best practices.

1. Creating an ISF Partnership Forum

• Establish regional and national ISF networks where providers, commissioners, and individuals can share innovations, resolve challenges, and improve practice.
• Hold regular knowledge-sharing events, including:
  • Workshops on successful ISF implementation.
  • Panel discussions with individuals who have used ISFs effectively.
  • Case study presentations showcasing good practice.

2. Developing Peer Support Networks

• Enable individuals and families to learn from one another by funding peer support groups and mentoring schemes.
• Encourage co-production of ISF training materials, ensuring that lived experience directly informs policy and practice.
• Establish online platforms where people can share their experiences, compare ISF providers, and troubleshoot common challenges.

3. Facilitating Cross-Council Collaboration

• Many councils are still in the early stages of ISF implementation. By working together, they can avoid duplication, share insights, and scale successful models.
• Develop cross-council ISF learning hubs, allowing local authorities to:
  • Share contracting frameworks and provider monitoring tools.
  • Standardise ISF reporting templates to reduce administrative burdens.
  • Conduct joint research into the impact of ISFs on long-term care costs and individual well-being.

Moving Forward

A well-designed ISF infrastructure ensures that:

1. Providers are held accountable for delivering high-quality, transparent, and flexible services.
2. Financial models support long-term sustainability, encouraging independence rather than dependency.
3. Knowledge sharing and collaboration drive continuous improvement, ensuring that ISFs remain innovative and responsive.

By embedding strong governance, financial sustainability, and shared learning, councils can create an ISF system that is resilient, effective, and genuinely empowering for individuals.

Conclusion and Recommendations

The successful development of an Individual Service Fund (ISF) market depends on proactive commissioning, structured provider development, and a strong commitment to person-centred approaches. ISFs have the potential to transform social care by giving individuals greater control over their support, but they will only succeed if local authorities take a strategic and intentional approach.

This guide has outlined a framework for building a sustainable ISF system, focusing on tiered provider development, strategic commissioning, individual empowerment, and long-term infrastructure sustainability. To achieve these goals, commissioners must embed ISFs not just as an option within the system, but as the default mechanism for flexible, personalised care.

Key Recommendations for Commissioners

To establish and sustain a strong ISF market, local authorities should focus on the following priority actions:

1. Establish a Tiered Market Framework

• Implement a structured provider framework that differentiates between:
  • Partnership Providers (Tier 1) – Fully ISF-ready providers that lead the market.
  • Community Model Providers (Tier 2) – Emerging ISF providers supported to transition.
  • General Support Providers (Tier 3) – Traditional providers that must modernise or phase out.
• Use clear criteria and financial incentives to ensure that providers move towards person-centred, flexible models.

2. Shape the Market Through Strategic Commissioning

• Make ISFs the default commissioning route, directing new referrals to ISF-ready providers.
• Phase out providers unable or unwilling to adapt to ISF principles.
• Offer capacity-building support to help providers develop the infrastructure needed for flexible, outcome-driven service delivery.

3. Ensure Individuals Have Meaningful Control

• Expand funding options, including Direct Payments, Individual Service Funds, and Notional Budgets, to allow individuals maximum flexibility in managing their support.
• Embed fading support as a core principle, ensuring that ISFs promote independence rather than becoming another passive care model.
• Provide accessible guidance, advocacy, and peer support, ensuring individuals and families understand and can navigate the ISF system.

4. Build a Sustainable ISF Infrastructure

• Develop clear governance and quality standards to hold ISF providers accountable for financial transparency and service flexibility.
• Shift towards outcome-based commissioning, rewarding providers for increasing individual independence rather than simply delivering hours of care.
• Encourage the development of micro-enterprises and community-led providers, ensuring a diverse and innovative ISF market.

5. Foster Knowledge Sharing and Sector-Wide Collaboration

• Establish local, regional, and national ISF networks, allowing commissioners, providers, and individuals to share good practice.
• Develop real-time monitoring tools and citizen-led oversight panels to ensure continuous improvement and provider accountability.
• Work across councils to standardise ISF processes, reducing administrative burdens and accelerating the adoption of best practices.

The shift to Individual Service Funds represents a fundamental change in commissioning, moving away from rigid, provider-led models towards dynamic, individual-led support. ISFs only succeed when commissioners take an active role in shaping the market, supporting high-quality providers, and embedding a culture of independence-building.

By following the recommendations in this guide, local authorities can develop a thriving ISF system that empowers individuals, supports providers to evolve, and delivers a more flexible, sustainable, and person-centred approach for people who draw upon social care.

Chris Watson
Chris Watson is the founder of Self Directed Futures, the Chair of SDS Network England and co-founder of LDA Commissioners Network. With extensive experience in strategic commissioning and change management, Chris advocates for innovative, community-led approaches to adult social care.