Personal budgets are unlikely to generate significant cost savings for local authorities and their implementation poses major financial challenges and risks, the Audit Commission warned today.
In a study based on eight councils, the watchdog found that personal budgets would not deliver savings but they could improve outcomes for service users and therefore constituted value for money.
However, it said councils had not considered in detail the likely financial impact of personal budgets over the medium to long-term, and that resource allocation systems, which determine the value of personal budgets, needed to be designed to ensure personal budgets were financially sustainable.
Council finance and management systems also needed to be changed to ensure they could monitor spending on personal budgets, the report said. It warned this was becoming increasingly difficult as more users chose to take personal budgets as direct payments that they spent themselves.
The report, Financial Management of Personal Budgets, also advised councils to develop policies on whether to claw back unspent money from budgets held by users or to roll these forward to future years.
The commission also highlighted the financial risks to block contracts held with providers and in-house council services, where personal budget users elected not to use these. It said councils needed to identify the block contracts most at risk and review in-house services.
To gauge the value for money of personal budgets, councils needed to find ways of measuring outcomes for service users through support plans and care reviews, while also finding ways of assessing how personal budgets were contributing to wider council objectives.
The commission warned that some authorities were lagging behind others in implementing personalisation, sparking concerns that cuts to council funding from government next year would leave them without the capacity to push through the required changes.
Gail Cartmail, assistant general secretary for public services at the union Unite, warned: "Faced with drastic spending cuts, how will councils lagging behind with their social care budget programmes build the capacity to catch up?"
The commission's managing director for health, Andy McKeon, urged councils to use what was left of their social care reform grant - paid from 2008-11 to help authorities implement personalisation - to make the required changes to systems before authorities face big cuts in funding next year.
"It's going to be tougher for them in the coming climate to introduce the underpinning changes to systems. Social services budgets are under pressure this year but the [social care reform grant] is available and it's really important to make the most of it." He said councils that were further behind in implementing personal budgets could also learn from the frontrunners.
A Department of Health spokesperson said: "Some councils are excelling with the roll out of personal budgets, but others are lagging behind. This report should help those councils that still need to get to grips with their financial systems to pick up the pace of reform."
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The state of personalisation