« Previous | Contents | Next »
Listen
Section 9: FINANCING DIRECT PAYMENTS
214. This section of the guidance is primarily for managers and other senior managers to enable them to become proactive in direct payments delivery. It outlines some of the complexities of financial planning and financial management in redirecting resources to modernise and further improve the quality of care that people receive.
215. Direct payments options are crucial to a modern person-centred approach to care service delivery, and local authorities have a duty to provide them to those who are eligible and wish to receive them. The Community Care (Direct Payments) (Scotland) Regulations 2003 ( SSI 2003 No. 243) brought direct payments effectively into the mainstream of service delivery, and signalled that they are here to stay. Annex A gives the legislative context for direct payments.
216. Properly mainstreaming direct payments will make self-directed care a standard option for users, increasing their demand as understanding and confidence to participate builds amongst recipients. The projected demand in some places suggests an annual average 50% increase in uptake. Direct payments need to be seen, not as a threat to local authority services, but as a route to meeting its modernising policy objectives. It is expected in future that outcomes from the use of direct payments will be measured as part of the Joint Performance Information and Assessment Framework ( JPIAF).
Mainstreaming direct payments finance
217. The key message is that over time the resources need to follow the policy direction of enabling more people to manage their own care. This will lead to significant changes in financial management in many local areas. Local authorities will require to establish specific plans and take-up targets to significantly increase the number of people receiving direct payments year on year. The strategy for carrying this out should also be explicitly established and discussed with service providers.
218. Financing direct payments should be part of mainstream funding activity at local authority level and not simply managed on a temporary or ad hoc special project basis. Local change models need to be developed to fund direct payments using existing budgets, transferring funding to direct payments from equivalent care services, or services people would have had if direct payments had not existed.
219. Experience has shown that financial management of direct payments is potentially easier where there are more flexible and user-focussed approaches in all services through:
- budgets devolved to a local level;
- higher levels of external spot purchasing/contracting ( i.e. one-off purchasing to meet individuals' needs);
- a user focus to care planning and person-centred service delivery;
- established person-centred budgets.
220. Long term financial planning will enable flexible use to be made of available monies to achieve changes in the balance between different forms of care delivery. It will anticipate some additional demand as new users come forward to access the direct payments option, as well as that from some existing users with needs, currently unmet, which could be met through direct payments.
Recommendations for longer term financial planning
221. Most of the funding for direct payments will require to be found from existing budgets, and the ways to do this successfully will include:
(i) Incremental resource virement
222. On a year on year basis local authorities should organise their budgets so that a percentage of their existing budgets for traditional services can be moved to fund direct payments. Systems need to be set up to change staffing establishments or reduce purchasing budget levels incrementally to enable virement of funding into the cost centres which finance direct payments. The release of resources from home care, purchasing budgets and spot contracts need to take account of the present and projected demand for direct payments. The strategy for achieving this should be explicitly established and discussed with service providers.
(ii) Broader service strategies for change
223. It is more difficult to release funding from buildings-based services, and services which are the subject of block contracts. Individual direct payments packages may be difficult to fund from any one fixed service, so what is needed to finance direct payments schemes is a planned change in the balance of funding, shifting a proportion of budgets from fixed services to more flexible purchasing budgets.
224. Buildings-based services and block contracted resources may require an overall re-provisioning strategy that might include targeting specific numbers or groups of service users. It will take account of the effect on care standards and unit costs. The potential to release finance incrementally from building based resources will require finance managers to draw on the experience they have gained over the last 20 years in shifting the balance of care from institutional resources across wide areas of service. For example, partial leaseback from building-based services may provide an option for release of funds in some cases. There may be opportunity to use long-term care budgets where direct payments are seen as a cost effective way to support people in their home environment and so keep some people who wish to avoid it, out of care home provision.
225. Block contracts give service providers valuable security in developing and managing resources, but this approach can also run contrary to a user-focused approach to care delivery. Whilst block contracts will remain an important feature of the care market, local authorities and providers need to review their block contracts and make adjustments within the spirit of the direct payments legislation. This includes block contracts for housing support under Supporting People funding.
Extra direct payments resources
226. Direct payments are a means to individually purchase the support that would otherwise be arranged by the local authority, so they must be met from within existing overall resources. However in recognition of additional costs incurred whilst direct payments schemes are developed in tandem to more traditional services, the December 2005 Spending Review allocated an additional £1.8 million expenditure during 2006 to Scottish local authorities and £2 million annually thereafter to bring direct payments fully into mainstream service provision. The Executive expects the following local services to be funded from this money:
- local support that is ideally independent and user-led (see section 6)
- pre-assessment and care management training for direct payments recipients and their PAs (see section 2).
- a designated local authority lead officer to take forward local roll out of self-directed care, including training and helping win hearts and minds of local authority colleagues: care managers, area managers, finance managers, and directors of service (see section 6).
Long term best value and quality of life
227. Local authorities are required to operate within the principles of cost effectiveness and long-term best value. It is not appropriate to do a simple cost comparison with existing services when assessing cost effectiveness. Both 'cost' and 'effectiveness' need to be assessed, and effectiveness needs to take account of the quality of life of the user in the short and longer term.
228. Research suggests that on average direct payments packages are cost effective when compared to other forms of home or residential care if the full cost of each is taken into account, including administrative and other general overheads that may require careful attention to provide a true cost. There may be start up costs for setting up a direct payments package (especially if the person decides to employ his or her own staff) which may decrease once arrangements are in place. But even if this necessitates a slightly higher initial investment there may be long-term benefits and savings achieved such as delaying the need to enter residential care.
229. Long-term benefits are not just about money, though. The Changing Lives 28 emphasis on personalisation and the direct payments legislation provides the ethos and momentum for continuing down routes to individualised care encouraging independent living. Financial prioritisation and local community care planning should recognise and place true value upon the independence and empowerment of service users. Direct payments users, their care managers, carers and other support staff, attest to the value they can add in terms of flexibility, choice, control and social inclusion. It delivers the means to live life in a more spontaneous manner, similar to the way non-disabled people live and often take for granted.
230. Equity and budget control may require some cost ceilings but judgements of long term best value should take account of individuals' quality of life and allowance be made for exceptional circumstances. For this reason, cost ceilings for direct payments based on equivalent residential care costs can be very limiting to users who, with appropriate support are able to live rich and independent lives in their own homes.
« Previous | Contents | Next »