In England, the approach to funding and organising personal care and support services for citizens with disabilities, as outlined in the Care Act, emphasises providing people with more choice and control via the use of Personal Budgets. The two primary mechanisms to deliver a personal budget are Direct Payments and Individual Service Funds (ISFs). Both options aim to empower citizens by enabling direct involvement in the day-to-day management of their care, but the two options do differ slightly in their administration and overall flexibility. Here’s a bit more of a detailed comparison:

Direct Payments – Definition and Purpose:

Direct Payments are sums of money paid directly to individuals by local authorities. They are intended for individuals assessed as needing help from social services under the Care Act/Mental Health Act, allowing them to purchase their care and support services directly.

Key Features:

Autonomy: Individuals have complete control over their funding to arrange and pay for their own care services.

Flexibility: Citizens can choose their service providers and how their care is delivered, offering the freedom to tailor services to specific goals and patterns of life.

Responsibility: Recipients manage the budget, pay provider invoices (if support provided via a care organisation) or the payroll for any persona assistant staff that they may employ, including fulfilling employer’s legal responsibilities (maternity, sickness, redundancy etc).

Eligibility: Available to anyone with assessed needs under the Care Act 2014 or Mental Health Act 2007 who meets the criteria for managing their budget (or having a suitable person tp do so on their behalf) as set out in The Care and Support (Direct Payments) Regulations 2014

Benefits:

Empowers personal budget holders by giving people full personal choice and control over the care they receive and how it is delivered, encourages tailored care and support solutions that fit individual lifestyles and preferences.

Challenges:

Management burden: Direct Payment holders generally handle all of the main administrative tasks, such as hiring staff, managing budgets, and ensuring legal compliance (sometimes with support from a third party organisation – often called a managed account).

Financial oversight: Direct Payment holders need to account for their spending and any contributions towards the cost of their care, and manage their budgets effectively.

Individual Service Funds (ISFs)- Definition and Purpose:

ISFs are a way of managing the funding for a person’s care where the control remains with the individual, but the money is held and managed on their behalf by a service provider (who is commissioned and contracted by the local authority).

Key Features:

Managed Funds: The care funds are held and managed by a service provider, but the individual directs how they are used (based on conversations around what matters to them).

Simplicity: Reduces the administrative burden on the individual, as the provider manages payments to staff, other providers and organisations and also covers the legal responsibilities of being an employer (where applicable).

Flexibility and Control: While the funds are managed by a provider, the individual still directs the type of care and how it is delivered (this is done alongside the provider, who takes responsibility for any decisions around use of the budget).

Eligibility: Like Direct Payments, ISFs are available to those assessed by local authorities as needing support via an allocated personal budget.

Benefits:

• Less administrative and financial management tasks for the individual.
• Retain a high level of personal choice and control over the care & support that is received.

Challenges:

Limited to local service providers who offer ISF arrangements, which might restrict choice when compared to Direct Payments.

Potential for less transparency in how funds are managed compared to directly managing the budget (although this can be offset by using third-party holding account systems such as ISF Wallet). Decisions around the use of budget are made jointly with the ISF Service Provider and so are essentially more democratic, meaning the person doesn’t have absolute control of use of their budget.

Conclusion

The choice between Direct Payments and Individual Service Funds depends largely on a persons preferences for control of their budget set alongside the local availability of ISF Service Providers. Direct Payments offer maximum control and customisation of care and support arrangements, suitable for those willing and able to manage their own affairs. In contrast, ISFs provide a more balanced approach where individuals can maintain control over their care and support decisions without as much of a burden around the financial management, which is ideal for those who prefer less direct involvement in administrative duties. Both options support the ethos of personalisation in social care, ensuring that support can be tailored to help people lead gloriously ordinary lives!.

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