"The NHS will last as long as there are folk left with the faith to fight for it"
Aneurin Bevan

Friday, 17 August 2012


Imagine for a moment that you are in charge of rolling out a scheme where all the patients with long term conditions (LTCs) in the locality are given a budget to pay for their healthcare. How would you calculate how much to give each patient?

Few patients with an LTC will have a single condition, so you will need to calculate how much the treatment for each condition will cost. But even if two patients have the same, single condition, it is unlikely that their treatment will cost the same because one may be more severely affected than the other, or there may be some other factor involved, like age. Once you have a rough idea how you would calculate a budget, hold on to that idea and read on.

Calculating a personal budget is not simple. But it is happening right now for social care.

A week ago I talked to a social worker friend who was the manager who introduced personal social care budgets in her area. Initially she was enthusiastic about them because they offered a way to personalise care: the service users would have more choice about how the care was delivered and would be more involved in the decision-making. This was during the last government when there was money to pay for options like personalisation. Now my friend is scathing. Personal budgets are no longer a vehicle to personalise care. The reason is that for all of their benefits, personal budgets are not resilient to cuts, indeed, they may even make cuts easier to apply, and this results in service users getting worse care.

I asked my friend how the budgets were calculated. She said that each service user is assessed and their needs are collated. They used a points-based system where different needs accrued different numbers of points, and the more severe the need, the more points were allocated. For each service user, the points are summed and then converted to money to create the service user's direct payment.

I asked how this worked. She said "first we take the budget agreed this year by the local authority and top slice by 20%..." I stopped her there: "what's the 20% for?". he went on, "...that's for cuts. Then we divide the remaining budget by the total number of points for all service users and that gives us how much money each point is worth".

There are a couple of points to raise here. The first is that the process is equitable: each service user gets a share of the budget and their share is proportional to their needs. However, note the word proportional: the service user does not get the money they need, just a proportion. This leads us to the most important point. If personal budgets are to allow service users to personalise their care, they would be calculated on the cost of the service users' needs. A points system would not be necessary, since the social workers would simply aggregate the costs of the services the service user needed and that should be their budget. The fact that a points system is used is an acceptance that service user needs cannot be fully funded. Direct payments are dependent upon the budget allocated by politicians, with a lesser dependence on the service users' actual needs. Politicians determine personal budgets, not social workers.

If this is not bad enough, the meagre budget being allocated by local politicians is expected to be reduced by 20% every year. This is a reduction forced upon local authorities by central government in its deficit reduction plan. Personal social care budgets are being cut to reduce the deficit. Clearly the budgets do not cover the costs of the care the service user needs, so I asked the obvious question of where the rest of the money comes from. I got the obvious answer: the service users either pay the difference themselves, or ration their care. The sorts of optional care that were used to "sell" personal budgets to the public (like horse riding lessons for disabled kids) are no longer affordable. Personal budgets have been cut too much to fund them. Indeed, my friend told me that the cuts are biting so deep that personal budgets do not even cover basic needs. It is getting to the point where people are seriously calculating the maximum amount of time it is reasonable to allow someone to remain in a soiled incontinence pad.

The points-based system means that what little money is available is shared equitably, but it also makes it easer for the cuts to be made since removing an entire service would create a political storm.

Now imagine you are a manager allocating personal health budgets. You are in the same situation that social care is in at the moment: the budget, not the patients' needs, determines the direct payment you can make. Does this change how, at the top of the page, you thought that personal budgets would be allocated? I am completely against personal health budgets: they allow the government to make cuts to our healthcare, and as cuts get deeper ()as they will) personal health budgets will legitimise top-up payments by patients. No one voted for this at the last election.


  1. Richard - interesting post. I'm curious, though as to how you would accept or suggest rationing be done. You could well argue that at an individual level, there is currently no rationing - if I go into a hospital and require hundreds of thousands of pounds of care, I will receive it. But at the system level, there is clearly rationing (by time) of care, and the budget is also set by politicians as opposed to need. Is this a more acceptable way to ration, in your view?

  2. Well you do not go into hospital and require hundreds of thousands of care, you are *referred* to hospital by a GP. That is where the rationing lies, the GP determines if you need the healthcare.

    The problem with personal budgets is that they are more costly because of administration and because when you give patients the choice, they may not choose the most cost-effective care (hence why we give that decision making task to qualified doctors - GPs). If personal budgets do not cover basic needs, as is the case in social care, the patient will end up paying the difference. This makes no economic sense because this is not new money. The money that pays for the NHS already comes out of our pockets through taxes (ie out of our pay packet), so why is it regarded as being new money if it comes out of our pockets as a top-up after tax? Further, such top-ups will target the sick, and I would like to see any politician honestly argue that the one section of society that has not been taxed enough is the sick!

  3. 1. There is nothing objective about needs. That are just somebody else's idea of what is required.
    2. Your fundamental objection to the scenario you outline is that the budget is being cut. That's nothing to do with personalisation. If services were directly provided there would just be less services after cuts. Why would that be better? Under personalisation users decide what to do with their reduced budget, rather than the service provider. Its not great, but isn't it better than the other way round?

    1. Personal budgets are nothing to do with personalisation. Why can't a service user say "I would prefer this personal assistant rather than that one", or "I get nothing from going to the day centre, but I would benefit if you could get me transport to the whist club". There is no reason why that cannot happen under the existing system. Personal budgets is just one way to do it.

      "Under personalisation users decide what to do with their reduced budget, rather than the service provider"

      Martin, collectivism! If the personal budget is cut for 100 service users what is the likelihood of them all getting together and fighting those cuts? Personalisation is individualism. That may mean that they get a more personal service when things work, but as individuals they are isolated. If a local authority announces it is cutting a service used by 100 people it is far more likely that someone will fight against it successfully - collectivism works!

      In my area day centres are closing and disabled users are given a personal budget to make up for it. What is the chance of those service users getting together and hiring the staff and premises so that they have a day centre again? Now - not likely. But next year when that personal budget is cut, there will be no point because the aggregated money will be inadequate.

  4. David Cameron has just pledged to protect NHS.