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NHS Personal Budgets - A Failing Strategy Driven By Neo-Liberal Ideology

In 2009, the flagship ‘personal budgets’ policy in social care moved into the NHS. Starting with a three year national pilot, ‘personal health budgets’ (PHBs) have been offered to a restricted range of NHS patients.

Government claims the strategy has been a great success and now plans to extend the range of people to be offered a PHB. This includes people who have both a local authority personal budget (PB) and a PHB. This is seen as the key plank to deliver integration of health and social care.

On the surface, the plan looks self evidently positive. But scratch beneath it and things are very different. What emerges is a wrong headed strategy, fired by the neo-liberal ideology that says market based choice is the antidote to controlling professional behaviour. It is a failing strategy but sustained by a campaign of misinformation. Here is why.

What is a PHB?

NHS England says that an essential element of a PHB is patients ‘knowing how much they have available for healthcare and support’. If people are financially empowered to enter the market and make their own purchasing choices – subject only to a professional agreeing - their support will be personalised to their needs and wishes.

It’s a concept taken directly from social care. Virtually all service users are now said to have a ‘personal budget’. However, the National Audit Office found in 2016 not only that not all councils were providing an up-front allocation, where they were service users were not being told what it was as the calculations were ‘inaccurate and unhelpful’. The up-front allocation is a phantom.

Meanwhile the Care Act of 2014 introduced the term ‘personal budget’. But it created a completely different meaning. A ‘personal budget is no more than the financial value of the services the council decides to provide.

The net effect is that the personal budget strategy has not made a jot of difference in social care. The up-front allocation has a similar phantom existence in the NHS.

What is the evidence for the success of PHB’s?

Government relies on the evaluation of the national PHB pilots in 2012. A cohort of patients said to have a PHB were compared with a cohort that received services in the traditional manner. The cohort with a PHB achieved better outcomes than the other group. This was taken by Government as evidence that PHB’s worked.

But this ignored key evidence in the evaluation. Not all the PHB pilot sites even attempted an up-front allocation. But they achieved the same level of improved outcomes as those that did. This led the evaluation team to suggest it is ‘the greater choice and flexibility that is more important thanknowing the budget level’. 

So where did the greater choice and flexibility come from? The pilot sites were supported with substantial sums of cash, some £100,000 each site for each of the three years. The cash enabled a range of extra and one-off services not available to the control group. The value of the services to the PHB group was some 40% greater than the control group. While some of this may be attributable to the PHB group having higher needs, it cannot be assumed it all was.

What do people with PHB’s purchase?

The strategy rests on the belief that PHB’s are an alternative way of meeting health care needs. But this isn’t the case. The great bulk of the spend is on what is demonstrably social care – home care, personal assistants, respite care and leisure needs. There is a smattering of spend on the type of services we would expect health clinicians to recommend, but they are of the fringe variety that the mainstream NHS has decided not to commission.

How is the belief sustained that PB’s and PHB’s work?

Given the above, how can Government believe these strategies are working? It very much helps that they want to believe it. But they have been fed by a smoke and mirrors campaign.

The campaign would not be possible without some successful case stories. They come in the form of a very small number of service users who – either themselves or their families on their behalf – have the skills, time and energy to take a cash payment and manage their own support system. They employ their own staff – personal assistants – and the payment is sufficient for them to meet the full range of their needs. This has been happening since 1996 through the Direct Payments Act.

Proponents of the personal budget strategy portray these cases as evidence of the success of their own strategy. This is demonstrated in a case cited as evidence of how ‘personal budgets’ work for learning disabled people, one of the groups it is planned to extend PHB’s to. Hannah is a young woman with high care needs. She had regulated, agency carers, but this didn’t work as Hannah continued to make unsustainable demands on her mother.

The solution was for Hannah’s sister to become her full time carer. A direct payment, sufficient in size so Hannah could have a full and interesting life, made this possible. Of course the family call it their ‘personal budget’, its what they were told it was. But there is no mention of any up-front allocation or market based choices that are the supposed hallmarks of ‘personal budgets’. The personal budget strategy has added absolutely nothing.


Jeremy Hunt has recently affirmed that giving people control of their services is a key objective. If he is serious about that, he must abandon the bogus PB/PHB strategy and address the real problems that prevent people having control. It will mean facing up to some challenging issues.

He has also said integration of health and social care is a key objective. If he is serious about that, he will have to recognise that simply extending the reach of the NHS into social care is no answer. It avoids the real challenges.

Further, it will worsen the NHS and social care divide. The strategy will increase the NHS providing for free exactly the same service local authorities charge to provide. It will exacerbate the unfairness and opaqueness of the health and social care system.