The Power of Freedom: How personal budgets for social services are transforming lives

27 August, 2021

Government policies should be judged by the outcomes they deliver for people who need public support.

This report has described a fundamentally different funding model for public services which gives control and responsibility to recipients of support services.

Traditional models of publicly-funded disability support treat recipients as dependents, with services delivered by people employed by a third party. The company, under contract with MoH, not the services recipient, has the final say on who delivers services on what terms. If the disabled person needs different services or wants to buy unfunded equipment or other things to support them, they must ask permission.

IF uses personal budgets to put the recipients of disability support in control. IF turns services recipients into paying customers. The result is a transformation in the quality of services and quality of life for recipients and their families. Spending must be within well-defined limits, giving individuals flexibility to tailor support to their needs with the confidence their needs will be met.

Relative to traditional funding models, research suggests IF offers large well-being gains through greater flexibility and responsiveness to needs, and higher quality of service. It is less clear whether IF also delivers fiscal benefits.

IF’s benefits over the traditional services model are due to:

  • Dignity from control over who comes into your home.
  • Independence.
  • Better services flexibility.
  • Increased services reliability.
  • Clear decision rights which make spending permissionless.
  • Encourages recipients to make best use of available funds, and
  • Greater continuity – the same person delivers services each time.

Giving control of public funds to private individuals carries clear risks for officials accountable for public spending. The Ministry of Health deserves credit for working to solve the problem of having accountability for the specific uses of public funds assigned to a private citizen.

IF is a significant innovation in public finance: assignment of decision rights over public funds to private individuals while maintaining accountability for public spending.

The personal budgets model has ready application to Aged Care, which with only a few exceptions District Health Boards (DHBs) have so far declined to do. Aged Care continues to operate almost exclusively under the traditional funding model.

We launched the report with a public webinar with members of the disability community and Rt Hon Sir Bill English, Chair of Manawanui - the largest individualised funding support service. You can watch the webinar below.

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