Frequently asked questions about PHBs

Understanding personal health budgets

Managing the money


Financial sustainability

Understanding personal health budgets

What is a personal health budget?

A personal health budget is an amount of money to support the identified healthcare and wellbeing needs of an individual, which is planned and agreed between the individual, or their representative, and the local clinical commissioning group (CCG).

At the centre of a personal health budget is the care and support plan. This plan helps people to identify their health and wellbeing goals, together with their local NHS team, and set out how the budget will be spent to enable them to reach their goals and keep healthy and safe.

Key points:

  • The NHS stands by its promise that it is there for everyone, based on need not ability to pay.
  • The NHS care and support people receive should be safe and effective. It should be a positive experience.
  • Personal health budgets should help people who may not always get the best out of the NHS to get a better service, not make things worse.
  • They are optional. Nobody would be required to receive their healthcare in this way if they do not want to.
  • People should have as much control over decisions as they want.
  • NHS and social care organisations should work in partnership with the individual and with each other.
  • If someone is not able to have a personal health budget, they can still speak to their local NHS team about how their needs can be met in another way that better suits their needs.

How do personal health budgets fit with other personalised health and social care initiatives?

Personal health budgets, and personal budgets in social care, both aim to give people more choice and control to meet their care and wellbeing needs. We think this can improve people’s satisfaction, experience and outcomes and are looking at how to join personal budgets in health and social care together, to make them more efficient and easier for people to manage.

If someone receives a personal health budget and a personal budget for social care, then it may be possible to join the two budgets together. In some areas, the assessment, planning and monitoring processes may also be joined up.

Personal health budgets are one of a number of different personalised health and social care services being explored by the Government in England. You may come across:

  • Personal budgets in social care. For more information contact your local authority or visit the Think Local, Act Personal website
  • “The Right to Control”. Shifting the balance of power from the state to the individual and recognising that disabled people are the experts in their own lives. This is being tested by the Office of Disability Issues. For more information visit Right to Control
  • “Aiming high for disabled children”: Individual budgets for families with disabled children. This is being piloted by the Department for Education.
  • SEND pathfinders“: testing out a single assessment process and a combined education, health and care plan for children with special educational needs and disabilities. This is being piloted by the Department for Education and the Department of Health.

Why were personal health budgets piloted in the NHS?

Personal health budgets are part of a wider drive to personalise health and social care which dates back to the 1970s, with the campaign by disability groups for people to have more control over the money that was being spent on their needs. Personal health budgets build on experience in social care and personalised care planning for people with long term conditions, and are the next step in giving people more choice and control over the services and care they receive.

While personal budgets in health are new to the NHS, there are a lot of things we wanted to explore about how they will work and how they should be implemented in the NHS. This included practical issues like how to set a budget, how to support people through the whole process, and how to develop the market of products and services you can choose from, so people have real choice.

All these things were looked at as part of an independent evaluation. The evaluation team published their final report to the Department of Health in October 2012, and the Government announced national rollout in the NHS following this report.

What is the aim of a personal health budget?

The aim of a personal health budget is to give the individual more choice and control over the money spent on meeting their health care and wellbeing needs. This means that they select treatments and services that meets their needs in a way that is most appropriate for them.

Our vision for personal health budgets is to enable people with long term conditions and disabilities to have greater choice, flexibility and control over the health care and support they receive. Personal health budgets are one way of helping people to be more involved in discussions and decisions about their care.

How can I get a personal health budget?

If you are someone who would like a personal health budget for yourself or someone you care for, talk to your local NHS team who help you most often with your care – this might be a care manager, or your GP – and they will discuss personal health budgets with you. Even if a personal health budget is not right for you, you can talk to them about other ways to make sure that you get the healthcare and support that works best for you.

Currently only adults eligible for NHS Continuing Healthcare and children in receipt of continuing care have the right to have a personal health budget. CCGs have the option to offer budgets to other people who could benefit on a voluntary basis.

Managing the money

How can a personal health budget be managed?

Once a care and support plan has been agreed, the money in a personal health budget can be managed in a number of different ways:

  • 1. Notional budget. No money changes hands. The individual is informed how much money is available and talks to their local NHS team about the different ways to spend that money on meeting their needs. The NHS team will then arrange the agreed care and support.
  • 2. Real budget held by a third party. A different organisation or trust holds the money for the individual and supports them to decide what they need. After this has been agreed with the individual and their local CCG, the organisation then buys the care and support.
  • 3. Direct payment for healthcare. The individual receives the money directly to buy the care and support that they have decided they need, in agreement with their local NHS team. They have to show what the money has been spent on, but the individual, or their representative, buys and manages the services themselves.

Individuals will need a separate bank account to receive a personal health budget via a direct payment. This account must only be used for purchasing care. However, it can also be used for receiving and managing a social care budget or Independent Living Fund payments.

If someone wishes to have a budget but doesn’t want to manage it themselves, it may be possible for someone else to manage the budget on your behalf. For the carer of someone who does not have capacity to manage a personal health budget themselves, the same arrangement may also be possible. Every effort must be made to ask the person about their wishes and to keep their best interests in mind.

People can also manage the care and support they choose in different ways, ranging from doing it themselves through to getting help from another person or organisation to implement what’s in the care plan on their behalf.

Care plans should be regularly reviewed and updated when necessary, for example if health needs changes or something in the plan isn’t working. People can also give up their personal health budget if they do not want their care managed in this way.

What can a personal health budget be spent on?

Everyone with a personal health budget can get support to think though how they would like to use their budget to meet their health and wellbeing needs. It is the responsibility of local NHS teams to advise people, and recommend a range of organisations who can offer local support. This is often described as brokerage.

A personal health budget can be spent on any care or services that are set out in the care and support plan that has been put together with the NHS team or voluntary organisation working with the person – and this needs to be agreed by the CCG (clinical commissioning group).

There are things that it would not be right for the Government to fund such as alcohol, tobacco, gambling or debt repayment, or anything that is illegal.

A personal health budget cannot be used to buy emergency care – for example if someone in receipt of a personal health budget had an accident, they would go to A&E like everyone else – they would not use their personal health budget to arrange for it to be x-rayed, set or plastered.

A personal health budget also can not buy primary care services such as seeing a GP or dental treatment. Other services recommended by a GP, like physiotherapy, could be included.

Can people add their own money into a personal health budget?

No, people can not add their own money into a personal health budget. The personal health budget must meet all the identified health and wellbeing needs of the person. People cannot spend their own money on NHS care.

If someone wishes to spend their own money on extra services (for example, massage or more physiotherapy than is thought necessary to improve health) then they can do this. They would need to organise and pay for this, and it would be separate to the personal health budget.

What happens when the money runs out?

A care and support plan is at the heart of the personal health budget process. Once an individual’s health needs have been assessed – a care plan is developed in partnership with their NHS team which outlines the health and wellbeing outcomes someone wants to achieve and how the budget will be used to meet these. People know in advance their indicative budget – which helps them plan and once the plan has been agreed the final budget is agreed, this may be more or less than the indicative budget depending on the agreed plan. The final budget must cover the full cost of the care plan and any changes to the plan need to be agreed. People have regular contact with their NHS team, so if their situation changes there is a review and the care plan and budget changed to make sure it continues to work for them. A personal health budget will not include all the NHS care a person may need, things like attending Accident and Emergency, hospital stays, GP appointments or medication are not included and nobody who has a personal health budget would ever be denied NHS care.

People should get the help and support they need to manage their budgets, if they don’t want to have a direct payment, the commissioners or third parties can do this for them. People with limited capacity have a representative who takes responsibility for money management.


How have personal health budgets been evaluated?

A large scale independent evaluation was published in 2012. Some areas are continuing to monitor the results of personal health budgets via a national survey.

Personal health budgets were piloted between 2009 and 2012 by over 60 primary care trusts. People offered budgets in the pilot included those receiving NHS Continuing Healthcare, people using mental health services and people with a range of long-term conditions. 20 in-depth pilot sites took part in an independent evaluation[1]. This was a controlled trial involving over 2,000 people, of whom around half had a personal health budget and the remainder were in a control group. The evaluation looked at outcomes, costs and cost-effectiveness. The study looked at a 12 month period before and after the person took up a personal health budget. The is available at The evaluation team has been commissioned by the Department of Health to explore the longer-term impact of personal health budgets.

In addition a number of sites have begun to take part in the national personal budget survey[2] using the personal outcomes evaluation tool (POET) to monitor results as part of routine reviews. The tool measures user experience of personal health budgets and the impact on the lives of people and family members. The latest report was published in May 2013. It is based on responses from 195 personal health budget holders and 117 carers across 12 sites. While this is a small sample, the survey provides useful feedback on how personal health budgets are working in practice.

The researchers have an FAQ section on the PHBE website which addresses queries about the research methodology.

Do personal health budgets improve outcomes?

Yes. When implemented well, people have better quality of life.

The evaluation showed that personal health budgets improve care-related outcomes (such as being able to carry out activities of daily living and feeling in control) and psychological well-being. Personal health budgets made no difference to health status – but there was evidence (see below) of reduced inpatient costs which suggests potentially that people were able to manage their condition better, and have fewer crises.

In the national personal budget survey, over 70% of people taking part said that having a personal health budget has had a positive impact on their independence

Do personal health budgets increase costs?

No. Overall they were cost neutral (even saving money for some).

The evaluation found that for the whole sample personal health budgets did not substantially increase overall costs. Total costs on average increased by £800 for the personal health budget sample across the study period, compared with about £1,900 in the control group. This reduction in cost against trend of just over £1,100 associated with the use of personal health budgets was not however sufficiently strong for to be confident that it was not just due to chance in the sampling of people in the study. It can be concluded that there was a neutral cost effect.

The change in cost against trend is the most appropriate indicator of the cost implications of personal health budgets. The overall spend on care was around £5,000 higher in the personal health budget group compared to the control group after people in each group had experienced their care option. But the people in the personal health budget group had costs of some £6,100 more than those people in the control group prior to getting a personal health budget. In other words, those people in the personal health budget happened to already have higher care needs.

For the subgroup of people who were given budgets of over £1,000, there was an overall cost reduction of £3,100 per year compared to control group. This suggests that high value personal health budgets reduce total costs relative to conventional service arrangements.

What was the impact on use of health services?

People with personal health budgets had a reduction in inpatient hospital costs over the study period compared to control group

People taking up personal health budgets experienced a greater reduction in hospital costs over the study period than people in the control group (by £1,360). This was mainly due to a reduction in inpatient hospital care. Both these effects were strong enough to conclude that they were meaningful differences.

This greater reduction in hospital costs for the personal health budget group occurred for all patient groups. As regards individual sub-groups, despite the smaller sample sizes the reductions were significant enough within the mental health subgroup (£3,050) and for the NHS Continuing Healthcare subgroup (£4,040) to conclude a meaningful effect in both cases.

In overall terms, people taking up personal health budgets made less use of hospital care, and instead made more use of community-based health services, and wellbeing services which are not usually provided by the NHS.

Are personal health budgets cost effective?

Yes. Overall personal health budgets were shown to be cost effective.

The evaluation looked at the overall benefit of personal health budgets compared to conventional health services, taking into account both changes in cost and outcomes. The approach used is known as net monetary benefit. This involves calculating the total benefits (including the value on non-monetary benefits such as quality of life), and then subtracting the costs.

The net benefit averaged £2,300 more for the personal health budget group compared to the control group.

On average, the net monetary benefit was higher for some subgroups: £4,340 for those with budgets over £1,000, £4,880 for the mental health subgroup and £9,840 for the NHS Continuing Healthcare subgroup.

While the benefits were higher for some sub-groups, the evaluation did not provide evidence that rollout should be restricted to these groups; personal health budgets were shown to be cost effective for the whole sample.

Financial sustainability

How should the NHS implement personal health budgets to get the best results?

The most important success factor is having flexibility in how the budget is used and managed.

The evaluation shows that implementing personal health budgets correctly is important. NHS England is providing support to CCGs to help them follow best practice.

The sites taking part in the evaluation took different approaches to implementing personal health budgets. The best outcomes were achieved where people were given:

  • choice and flexibility over how to use budget, and
  • a choice of how to manage their budget, including the option of a direct payment.

In addition, there was evidence that personal health budget worked best when people knew the budget level before the care planning process began and had control over a larger amount of money. Personal health budgets led to better outcomes, overall costs savings and were more cost-effective where the budget was set at £1,000 or more.

Personal health budgets resulted in worse outcomes when use of the budget was restricted and people had less choice over how the resource was managed. This finding suggests that poor implementation will lead to worse results – in particular it is important to avoid restrictions on use and management of the budget.

The 2013 national personal budget survey found that several factors were associated with better results, including:

  • having had the budget for more than a year
  • having a direct payment
  • knowing the amount of your budget

Do personal health budgets increase demand?

There was no evidence to show this.

The experience of related initiatives in other countries has led to concerns that personal health budgets could lead to increased demand on the NHS. While the NHS can currently offer personal health budgets to anyone, the right to ask for a personal health budget is currently restricted to a small group of people with high needs who receive continuing care.

The evaluation did not look specifically at the demand for care, but rather their actual use of care services and support. In this respect, as noted above, there was a neutral effect on costs associated with the use of personal health budgets.

People offered personal health budgets in the evaluation already made high use of health and social care. The average total cost of the services used in the 12 months before a personal health budget was £21,900. The overall use of services did not increase for people taking up a personal health budget, while use of hospital reduced substantially.

Will personal health budgets be financially sustainable and what will be the impact on other services?

Personal health budgets are not about new money but rather about using money that would have been spent on a person’s care differently, in ways that work for the individual. They should be seen as part of the wider drive to rebalance health funding with more care being delivered in the community.

The evaluation showed that personal health budgets result in a switch away from spending on acute care, towards community-based services and support, from unplanned reactive care to a more proactive approach.

This is in line with current goals and priorities for the NHS, in particular to prevent unplanned admissions. Personal health budgets need to be introduced in a sustainable way and this will require CCGs to include them in their normal strategic planning processes.

How can personal health budgets promote co-production?

The evidence so far shows that people with personal health budgets are playing an active role in developing their care plans and are finding new ways to meet their needs.

One of the central aims of personal health budgets is to enable people to play an active role in managing their health. This can also be described as co-production – working together with health professionals as an equal partner, deciding together how best to achieve your goals. This may lead to people using their budgets in innovative ways rather than relying on services that the NHS would normally provide.

The evaluation showed that better results were obtained when people taking up personal health budgets were able to have choice and flexibility over the use of the budget. When given the choice, people began to use their budgets differently, with a shift towards well-being- related services (such as leisure, equipment and complementary therapies). On average, people with a personal health budget in the study spent £560 over 12 months.

The 2013 national personal budget survey found that most people taking up a personal health budget reported positive experiences:

  • More than 60% said that their views were fully taken into account in their support plan.
  • More than 60% of respondents felt that it was easy or very easy to be in control over how to spend their personal health budget.
  • More than 80% felt confident that their needs would be met with their personal health budget.