Personalising Care

Using Prepaid
in Social Services

Procurement and
Efficiency Consulting
1 Acknowledgements
Ticon could not have completed this document
without our work with, and information obtained
from, the following sources:

London Borough of Havering

Devon County Council
London Borough of Brent
Westminster City Council
Social Policy Research Unit
In Control (www.in-control.org.uk)
Chartered Institute of Public Finance and
Accountancy (CIPFA)
Care Services Improvement Partnership (CSIP)
LIFT SW Regional Improvement and Efficiency
Partnership

The research and practical recommendations contained in

this white paper are intended for informational purposes
only and should not be relied upon for marketing, legal,
technical, tax, financial or other advice. All research has
been completed in good faith and Ticon cannot be held
responsible for errors or omissions made. Data obtained
from third party sources has not been verified by Ticon.

When implementing any new technology or strategies,

organisations should consult with their legal counsel to
determine what laws and regulations may apply to their
specific circumstances. Ticon are not responsible for the
use of the information, including errors of any kind, or any
assumptions or conclusions which might be drawn from its
use.

© Copyright Ticon UK Limited 2008


2 Executive Summary
Without reform of social care, there will be a
£6 billion funding gap within twenty years1.
With an increasingly ageing population and
longer life expectancies, future requirements
for social care will increase significantly. It
is estimated that within twenty years a quarter
of the population will be over sixty-five and the
number of over eighty-fives will have doubled2.
It is clear, therefore, that there are increasing
demands on the social care system in the
UK and local authorities and the NHS will need
to adapt to this new environment.
With commissioning and means testing vary-
ing by area, there have been accusations that
a so-called ‘postcode lottery’ exists within so-
cial care across the UK. A coalition of fifteen
policy institutes and charities led by the King’s
Fund and the Joseph Rowntree Foundation
called the Caring Choices Coalition de-
scribed the current situation as “unclear
and unfair”3. Whilst social care in Scotland is
currently free, it has proved to be expensive
and has provoked rationing. With a predicted
£6 billion funding gap it is hard to see how a
certain level of means testing can be avoided
in the future and therefore means testing to a
greater or lesser extent is always liable to re-
main.
One response to the challenge of consis-
tent and fair funding for adult social care
has been the advent of Individual Budgets.
With Individual Budgets, a number of different
funding streams can be integrated to provide
an individual with assessed social care needs
with a personal budget that they can use to
commission their own care. The guiding prin-
ciple being that, with guidance and support,
the individual is best placed to decide on a
care package that is right for them. Individual
Budgets work on the principal of increas-
ing individuals’ choice and improving out-
comes, without increasing the burden on
already tight resources.
1
BBC News, 11th May 2008 - http:// 3
“Postcode lottery alleged for older
news.bbc.co.uk/1/hi/uk/7394362.stm people needing care” – The Guard-
2
Ibid ian, 7th January 2008
In order to make the delivery of Individual
Budgets practical, they must not only deliver
an improved level of service to the individual
receiving them, but must be cost neutral as a
minimum as well.
This white paper goes into detail about the
issues surrounding Individual Budgets for both
the people who receive them, and the local
authority that will inevitably be the leading
funding source in most cases. Analysis is con-
ducted as to how paying the Individual
Budget onto a prepaid card, rather than
into a bank account, can assist in a more
effective and efficient service delivery for
everyone involved. Prepaid cards can in-
crease flexibility and reduce the barriers to
Individual Budgets, whilst providing local au-
thorities with a solution that is more cost-
effective and will enable them to direct more
resources into support for those with assessed
social care needs.
 Individual Budgets are a key part of the so-
cial care agenda for the current Government
 The key facets of Individual Budgets are
‘choice’ and the ability to ‘self-direct’ support
received
 Not everyone will want to receive an Individ-
ual Budget, some will prefer for Local Au-
thorities to manage their support on their
behalf
 Not everyone will want to receive Individual
Budgets as a payment directly to themselves
on a prepaid card, as not everyone will want
to receive a payment directly into a bank ac-
count
 Prepaid cards are used for disbursing Gov-
ernment payments worldwide; prepaid may
be relatively new ground for the UK but is the
method of choice in a number of countries
 Individual Budgets are a continuation of “more choice and a louder voice”5 and men-
3
the Government’s desire to increase the tioned pilot schemes for ‘Individual Budgets’
ability to self-direct support. As such, they which commenced in April 2006. The pilot
are an expansion of the current Direct Pay- schemes were completed on 31st December
ments legislation. Analysis of prepaid opportu- 2007; however, the findings of the path-
nities for Direct Payments completed by Ticon finder authorities are due for publication in
within a County Council suggested potential summer 2008, and have not been published
staff time savings of up to 135 days per at the time of writing.
year and cost savings of up to 21%4. Sav-
ings to be made from utilising prepaid cards for Fig 1: Recipients of Direct Payments in England
Individual Budgets will vary from authority to
authority dependent on the number of individu- 60,000
als receiving an Individual Budget; however, it
is clear that genuine opportunities for sav- 50,000
ings exist whilst, critically, still adding
value to the Individual Budget recipient’s
experience. 40,000

30,000
One of the key challenges for Individual Budg-
ets in the future will be increasing the numbers
of people who receive self-directed support. 20,000
Prepaid cards reduce the costs of providing
the service to the local authority, and there-
fore enable more funding to be directed to 10,000
providing support services to help social
care clients to manage their Individual Budget. 0
Using prepaid cards also makes the Individual 2004 2005 2006 2007
Budget easier to manage for the service
user; therefore encouraging them to take up
the opportunity.

 On 10th December 2007, the Government

published a ministerial concordat called
Background “Putting people first: a shared vision and
commitment to the transformation of adult
social care” which formalised the shared
 The personalisation of care has been an
aim of Government for a number of years. vision across a number of Government de-
Since the Community Care (Direct Pay- partments; as well as other public sector
and non-governmental organisations such
ment) Act 1996 came into effect on 1st April
1997; local authorities in England, Wales as the NHS, Local Government Association
and Northern Ireland have had the power to and a number of care associations.
make direct payments to individuals to meet
their assessed social care needs.  The key area of “Putting People First” was
the development of a personalised adult
 In January 2006, the Government released social care system to ensure that “older
people, people with chronic conditions, dis-
a white paper entitled “Our health, our care,
our say: a new direction for community ser- abled people and people with mental health
vices”. This white paper further reinforced problems have the best possible quality of
life and the equality of independent living”
the Government’s desire to give people
which is “fundamental to a socially just soci-

4 5
Figures based on a phased introduction “Our health, our care, our say: a new
involving 100, 260 and 630 prepaid cards and direction for community services” – Depart-
860, 800 and 630 bank accounts in years 1, 2 ment of Health, January 2006
6
and 3 respectively “Putting people first: a shared vision and
commitment to the transformation of adult
social care” – HM Government, December press release, December 2007
8
2007 Ivan Lewis MP quoted in The Guardian, 18th
7
“Personal care budgets and extra £520 October 2006
million to transform care for older and
disabled people” – Department of Health
 It can be clearly seen, therefore, that personal- for all Local Authorities who will be affected by
4
isation and Individual Budgets in particular or the introduction of Individual Budgets to give
the current Government. consideration as to how they would manage
their introduction and distribution in the most
effective way. This white paper investigates
the potential uses of prepaid cards in Local
Government and looks to see how effective
prepaid cards might form part of an optimum
arrangement for local authorities and the De-
partment of Health, providers and those as-
sessed with social care needs.

Fig 3: Percentage uptake of Direct Payments (2007)11

120%

100%

80%

60%
90%
99%

40%

Fig 2: The key elements of an individual budget – a pilot 20%

model9
10%
There are a number of different social care 0% 1%
Younger people w ith physical Older people, people w ith learning
funding streams and Individual Budgets give disabilities disabilities and younger people
the option for these to be integrated so that the suffering w ith mental ill health

recipient only has to deal with one source of Direct Payments Council Commissioned

funding. Currently, a person with assessed

social care needs could receive money or ser-
vices from, for example, the Local Authority,
Supporting People, the Independent Living
Fund, Disabled Facilities Grant and more. Lo-
cal Authority social care funding does however
account for approximately 90% of all social
care funding and it is therefore likely that the
Local Authority would be responsible for direct-
ing any integrated funds10.
Once the findings from the pilot sites are pub-
lished, and if the pilot has been a success, it is
likely that the Government will further encour-
age and mandate the use of Individual Budg-
ets where possible. It is therefore important
What is a Prepaid Card?
Many people will have debit and credit cards
that they use regularly for personal purchases
of a large variety of goods and services. Pre-
paid cards are different as money is pre-
loaded onto the card and the cards would be
provided to social care clients who are recipi-
ents of Individual Budgets. The cards, or a
proxy bank account, can be ‘topped-up’ at
regular or irregular intervals and the funds are
available to spend with any organisation which

9 10
Taken from “Opportunity Age – “Individual Budget Integration – An of Health, 19th July 2007 – www.in-
Meeting the challenges of ageing in exploration of the possible scope of control.org.uk
the 21st century” – Department for Individual Budgets” – In Control 11
CIPFA statistics, 2007
Work and Pensions, March 2005 report produced for the Department
 is able to accept card payments, or can be
5
released to cash.
“A Multi purpose prepaid card is a
stored value card which can be
used for a wide range of payment
purposes and which has the poten-
tial to be used on a national or inter-
national scale, but which may some-
times be restricted to a certain
area.”
- Definition from the European Central Bank
An organisation can gain more control over
spending as they are able to specify how the
cards are used and is able to put a stop on the
cards at any time. For example, should an
organisation wish to block usage on a particu-
lar type of merchant, the cards would not be
able to be used to make payment to that type
of supplier.
Whilst Individual Budgets by their very nature
have a large amount of flexibility, there would
be certain categories (such as betting/track/
casino/lotto) where the cards could be legiti-
mately blocked. The withdrawal of cash using
the card could also be blocked if required (for
example if all likely purchases could be made
using a card transaction), or set a maximum
percentage of the total funds on the card which
could be withdrawn as cash each week or
month.
Prepaid cards can also aid an organisation if
they need to recoup funds loaded onto the
card at a later date (for example if there is no
longer a requirement for an individual to re-
ceive an Individual Budget any longer). The
card can be cancelled at any time and any
funds remaining on the card will be returned to
the organisation without a potentially lengthy
recouping process.
12
Communities and Local Govern-
ment, Finance Key Stats
13
FSA figures, 2005
14
Family Resources Survey, 2005-6
The Market
The prepaid market in the UK is not as devel-
oped as the market in other countries. In
countries such as Australia, the US, the Philip-
pines and the Dominican Republic, prepaid is
an established method for governments to
make financial disbursement to their citizens.
Whilst Central Government may appear to be
the natural entry point with schemes filtering
down through the public sector; citizen-facing
organisations such as public health and Local
Government have been the key driver for the
uptake of prepaid cards. Local Government in
England alone is estimated to have revenue
expenditure of £123bn12. Whilst much of this
expenditure is not suitable for use with a pre-
paid card, it does give an indication of the size
of the market opportunity which is relatively
untapped.
Prepaid cards can be used across a range of
areas; in fact anywhere where disbursements
are made. Prepaid cards are currently being
used in one County Council for the disburse-
ment of Direct Payments but the opportunities
stretch across a range of different services
including individual budgets, revenues and
benefits, asylum seekers and the use of petty
cash.
In other countries, such as the US and the
United Arab Emirates (UAE), a key driver for
the use of prepaid cards has been the fact that
they can be utilised for a portion of the popula-
tion known as the ‘underserved’. This is a
combination of the ‘unbanked’, those who
have no access to a bank account; and the
‘under-banked’ who have poor credit ratings
and have minimal and costly access to bank-
ing facilities. Although 92% of UK adults have
access to a bank account,13 there are still 2
million adults without a bank account14 who
could benefit from using a prepaid card.
Certain groups are represented significantly
more than others in these figures. The HM
Treasury Report “Banking the Unbanked” cites
evidence that those without access to a bank
 Figure 4: Worldwide Examples of Prepaid Cards in Use15
6

Country Unbanked Population* Programme Example

Philippines 60% Distribution of social benefits

United Arab Emirates 54% Payroll card

United States 10% Social security payments

United Kingdom 8% Direct Payments

*approximate
 Prepaid cards can therefore give access to
the electronic economy and start a banking
account are likely to be on a low income, the
relationship for many disadvantaged citi-
long-term inactive or unemployed, the elderly,
zens.
lone parents and council and housing associa-
tion tenants16. Individuals with assessed so-
 Using cards is also a much more efficient
cial care needs are likely to feature heavily
method of transacting and recording those
amongst this list.
transactions. Monthly statements are pro-
vided by the card issuer and, where mer-
chants are able to provide it, full VAT data
Why Prepaid Cards? means that receipts no longer need to be
obtained.
Prepaid cards can be given to individuals to Fig 5: Use of prepaid for continuous payments dependent
disburse benefits and social care payments, on clinical assessment
and are therefore ideal for use with Individual
Budgets.

 Prepaid cards can be either single-use, or

can be re-loadable, depending on the cir-
cumstances. For example, where continu-
ing payments for a healthcare patient rely
on a clinical assessment, the patient could
be issued with a single use card that is re-
placed as long as their condition requires
that they receive financial support.

 Re-loadable cards would be utilised in the

more common areas of long-term adult so-
cial care, such as where a condition is es-
tablished and stable, and payments are
regular and generally ongoing over a period
of time. Individual Budgets are an example used by In
Control of what they call a ‘Conditional Re-
source Enhancement’ (CRE). CREs “refer to
 Prepaid cards do not require a banking rela-
the general approach of giving people control
tionship or credit approval and can therefore
of resources, but subject to certain condi-
be used by individuals who would not nor-
tions”17. Individual Budgets are designed so
mally be able to access banking or card fa-
that social care clients can, with support if nec-
cilities.

15
Figures sourced from Visa Europe
16
“Banking the unbanked: banking
services, the Post Office Card Ac-
count and financial inclusion” – House
of Commons Treasury Committee,
November 2006
17
“Individual Budget Integration – An
exploration of the possible scope of
Individual Budgets” – In Control report
produced for the Department of
Health, 19th July 2007 – www.in-
control.org.uk
7 essary, design their own care package. Whilst
this gives them control of their own resources,
the money is not a ‘gift’ – it is a disbursement
which is tied to their social care needs and
there is therefore a need to account for how it
is spent.
(also known as level three data or VGIS), there
is no longer the requirement to obtain and
store a receipt for up to seven years. The indi-
vidual also no longer needs to manage sepa-
rate cash funds for their personal and social
care expenditure.

Traditionally, with Direct Payments, recipients

have been required to open a new bank ac- Fig 6: Headline financial and reporting process for Individ-
ual Budgets received into a bank account
count to receive funds into. The Local Author-
ity needs to be able to monitor how the Direct
Payments have been spent and to do this they
require a combination of transaction receipts
and a copy of the individuals’ bank statement.
As there are data protection issues surround-
ing a Local Authority being able to see an indi-
vidual’s transactions outside of those directly
related to the Direct Payment, there is a re-
quirement for a separate simple bank account
to be setup. Individual Budgets are much the
same as Direct Payments. Whilst there is
more flexibility on how they are used, as the
individual can agree their own care plan rather
than being assessed for the goods and ser-
vices they require and then self-commissioning
those from their chosen providers, they are still
required to account for their expenditure in the
same manner.

By using the prepaid card, the Local Authority

will be able to access a statement of the trans-
actions which have been made electronically
which means, for example, that they do not
require the Individual Budgets recipient to re-
member to post bank statements on a regular
basis.

Full visibility of spend is important from an au-

dit and control perspective and helps to reduce
the risk of fraud, whilst still allowing the individ-
ual to make their own choices in the main on
how they spend their Individual Budget.
Should a Local Authority seek to integrate dif-
ferent funding streams into the Individual
Budget then the card can receive funds from
different sources.

Prepaid cards are also more convenient for the

Individual Budgets user as well. When buying
goods and services from organisations that are
able to provide full VAT data on transactions
 Fig 7: Headline financial and reporting process for Individ- the card for managing their Individual Budget.
8 ual Budgets received onto a prepaid card
Any other cards they hold and cash can there-
fore be used as they wish, rather than them
have to think about how they manage it and
keep it separate.

The use of a prepaid card can be restricted by

merchant category, or merchant category
group (see fig 7, left). The amount of cash
which can be withdrawn using a card can also
be proportionally blocked. Inappropriate cate-
gories (such as gambling) can be blocked
whilst still maintaining the flexibility which Indi-
vidual Budgets are designed to provide.

Whilst the card usage is likely to be monitored

in line with CIPFA accounting guidelines, the
purpose of the Individual Budget is to allow
recipients to design their own care package.
This means that whilst the most inappropriate
categories can be blocked, there is still flexibil-
ity for individuals to spend their Individual
Budget in a wide range of areas.

Whilst it may seem potentially unpalatable ini-

tially, there has to be a certain element of trust
on behalf of the Local Authority that the indi-
vidual will manage their budget responsibly,
whilst still maintaining a level of retrospective
control from being able to view card state-
ments. The advantage of using the prepaid
card in this way is that there is a complete re-
cord of all card transactions provided by the
bank so any inappropriate transactions can be
quickly identified and action taken to resolve
the issues.

“Such approaches support the de-

velopment of creative and cost ef-
fective uses of money, and allow lo-
cal authorities to develop different
relationships with individuals who
need social care, based on partner-
ship and trust”18
- CIPFA

Having a card for their social care expenditure In any case, the use of the Individual Budget is
ensures that the individual keeps the appropri- tied to a care plan with a focus on outcomes.
ate funds separate as they know to only use A social care professional would therefore

18
“Direct Payments and Individual
Budgets – Managing the Finances” –
CIPFA, 2007
 need to be the final judge on whether the ex- Security
9
penditure made is acceptable to meet those Prepaid cards are more secure and help to
outcomes. Whilst prepaid card statements reduce the risk of fraud. Chip and PIN security
would be received in Accounts Payable, any means that only authorised individuals are
unusual expenditure would be validated within able to use the cards and no value is stored on
Adult Social Care, in consultation with the Indi- the card itself. In this way a stack of cards can
vidual Budget user if necessary. be kept onsite which have no value until they
have funds credited to them.
Fig 8: Merchant Category Groups (taken from
www.visaeurope.com)
Cards can be remotely blocked if required and
MCG
† Category Description funds re-credited to the main account. This
1 Building Services enables overpayments to be reclaimed quickly
2 Building Materials and efficiently and means that if a card is lost
3 Estate and garden Services or stolen, no money is lost.
4 Utilities and Non Automotive Fuel
APACS (the UK payments association) figures
5 Telecommunication Services
for 2007 (see Fig 9, right) show that “Chip and
6 Catering and Catering Supplies
PIN continues to have a hugely positive effect
7 Cleaning Services and Supplies
on card fraud committed in the UK. Over the
8 Training and Educational
past three years, losses on face-to-face trans-
9 Medical Supplies and Services
actions on the UK high street have fallen by
10 Staff - Temporary Recruitment two-thirds from £218.8million in 2004, to
11 Business Clothing and Footwear £73million last year [2007]. Thanks to chip and
12 Mail Order / Direct Selling PIN the 2007 figures also show that fraud on
13 Personal Services lost and stolen cards (£56.2million), and mail
14 Freight and Storage non-receipt fraud (£10.2million), are at their
15 Professional Services lowest levels for ten years”19.
16 Financial Services
17 Clubs/Associations/Organisations
18 Statutory Bodies Fig 9: Card fraud data: 2004 - 200720
19 Office Stationery, equipment and supplies
20 Computer Equipment & Services £250 10%

21 Print and advertising 0%

22 Books and Periodicals £200 -10%
23 Mail and Courier Services
24 Miscellaneous Industrial/Commercial Supplies -20%
£150
25
£ M illio n s

Vehicles, servicing and spares -30%

26 Automotive Fuel
-40%
27 Travel - Air/Rail/Road £100
-50%
28 Auto rental
29 Hotels and accommodation £50 -60%
30 Restaurants and Bars -70%
31 General Retail and Wholesale
£0 -80%
32 Leisure Activities
2004 2005 2006 2007 Total
33 Miscellaneous
34 Cash UK retailer (face-to-face transactions) UK cash machine fraud
Fraud on lost or stolen cards Year on Year Change (retailer)
†Merchant Category Groups (MCG) are made up of 711 Year on Year Change (cash machine) Year on Year Change (lost/stolen)
individual Merchant Category Codes (MCC). Dependent
on the programme, prepaid cards can be blocked to either
MCG or MCC level

19
APACS press release, 12th March
2008
20
Ibid
10 Cards offer greater security for their users and
are subject to the same banking practices as
everyday credit and debit cards in that fraudu-
lent transactions will be refunded21.
Prepaid cards also reduce the administrative
burden for an organisation. Card statements,
approval and reconciliation are all automated;
reducing manual intervention, therefore reduc-
ing the time spent reconciling expenditure and
reducing the margin for error. The time saved
enables public sector organisations to operate
more efficiently and can lead to reduced wage
bills, or a reduction in the reliance on tempo-
rary staff.
Public sector organisations have stringent gov-
ernment targets to meet with regards to elec-
tronic trading, efficiency and sustainability.
Using prepaid cards makes processes more
efficient and can help to deliver the cashable
savings required by the Comprehensive
Spending Review (CSR07). Cards can also
help to improve Local Councils’ ‘use of re-
sources’ as part of their Comprehensive Area
Assessment (CAA).
The Business Case for
Prepaid
Whilst expanding Individual Budgets may be
desirable and improve the outcomes for those
involved; there is always a financial considera-
tion which needs to be considered in light of
budgetary constraints. The obvious sugges-
tion is that the UK has a tradition of free per-
sonal banking, whilst prepaid cards attract
charges – the nature of which depend on the
arrangement that the Local Authority has with
their card provider. Whilst inevitably there will
be up-front costs associated with prepaid
cards that are not associated with bank ac-
counts, the ongoing administration and costs
are significantly lower.
Charges applied to prepaid cards will vary
from bank to bank. Charges can be made on
each card for a range of options dependent on
21
If gross negligence on the part of the
cardholder is shown which has led to
fraudulent activity, banks will gener-
ally not be liable to reimburse losses
a council’s priorities. For example: an issuing
fee per card, a monthly fee, a fee for the man-
agement information software, cash with-
drawal charges, transaction fees and fees to
view statements can all be levied.
Key Factors for Local Authorities
So as to ensure that costs can be controlled
and budgets can be set with a greater degree
of security, Local Authorities will generally
seek to come to an arrangement based on
fixed fees such as a card issuing fee; rather
than fees which can vary, such as fees per
transaction. Private sector companies may be
willing to conduct a risk assessment on the
likely usage of a card and therefore the costs
which are likely to arise from its use and then
compare an average of this against a fixed
price deal.
Work completed by Ticon has demonstrated a
clear steer from the public sector that they are
not willing to enter into ‘open ended’ agree-
ments where costs are in the hands of mem-
bers of the public, and therefore cannot be
controlled. Assuming a fixed price arrange-
ment for a prepaid card programme for Individ-
ual Budgets, the administration involved in
managing the card has to deliver savings to an
equivalent value or better. Fortunately, there
is evidence so far that suggests it is.
Ticon’s research into a council’s Direct Pay-
ments scheme suggested potential staff time
savings of approximately 135 days and an
overall financial saving of 21% over three
years.22 Whilst there are subtle differences
between the administration of Direct Payments
and the likely future direction of Individual
Budgets, the guiding principles remain the
same. “People have independence and
choice but they also have a responsibility. It is
reasonable to ask people to account for how
they have spent their Individual Budget money
in achieving their support plan outcomes.”23
23
“Direct Payments and Individual
Budgets – Managing the Finances” –
CIPFA, 2007
11 Turning Time Savings into Cashable
Savings
Future Developments
In order to estimate the time savings likely to
be gained from using prepaid cards it is neces- Individual Budgets are at a crossroads at pre-
sary to examine key, regularly performed, sent. There is clear indication from the Gov-
tasks in the process for administering Individ- ernment and from health and social care pro-
ual Budgets. Such tasks include monitoring fessionals that personalised care and self-
expenditure and reconciling receipts and re- directed support are here to stay and that Indi-
turns. The amount of time that can be saved vidual Budgets are to further encouraged in
when reconciling statements and transactions Local Authorities. Even a change in Govern-
will be significantly affected by the use of a ment seems unlikely to alter the path to Indi-
reconciliation solution that will upload data to vidual Budgets; offering Individual Budgets to
the financial ledger. Time savings in the recon- those with stable, predictable long-term condi-
ciliation process are therefore attributed to tions is one of the Conservative Party’s
functionality available in the planned card pledges.24
management software solution.

Time savings can only be recovered as cash- Integration of Funding Streams

able savings if either temporary or full-time What is not clear from current reports coming
staff members are removed from the organisa- out on Individual Budgets is whether there be
tion. Non-cashable savings can be recovered a place for the integration of funding streams.
by applying a per transaction efficiency saving, Some funding streams may in theory be sim-
or by re-allocating staff to a citizen-facing ser- pler to integrate, such as Local Authority social
vice, such as support services for Individual care funding and the Independent Living Fund
Budgets. If the intention is to recover cashable (ILF) funding as ILF rules determine that every
savings, it will be easier to recover savings in ILF recipient must also be in receipt of social
departments where a higher volume of com- care funding. Other funding streams may align
mon tasks are concentrated amongst fewer to a greater or lesser extent with social care
individuals, such as Accounts Payable. funding, but all others have the potential to be
mutually exclusive.25

Tasks that are undertaken infrequently within Prepaid cards do not have the functionality for
departments will require significant effort to having separate funding streams sitting mutu-
consolidate to a level that will allow for staff ally exclusively on the card with separate re-
numbers to be reduced. strictions, although they are able to receive
funds from different sources. In this way users
Fig 10: Basic example of how benefits could be recovered can top up funds themselves if they wish, or
through using prepaid cards receive funds from different sources all in one
place.

The general feeling appears to be that funding

integration is not critical for the success of Indi-
vidual Budgets. What is critical is the need to
increase the take-up of Individual Budgets and
self-directed support in general, and to relax
the rules on what the money can be used for in
order to help individuals determine a creative
package of care which best meets their de-
sired outcomes.

22
based on a phased introduction involving
100, 260 and 630 prepaid cards and 860, 800
and 630 bank accounts in years 1, 2 and 3
respectively
24
Conservative Party, “The patient will see
you now, doctor: How the next Conservative
Government will create an NHS personal to
all”, September 2007
25
“Individual Budget Integration – An explora-
tion of the possible scope of Individual
Budgets” – In Control report produced for the
Department of Health, 19th July 2007 –
www.in-control.org.uk
 Prepaid cards have the flexibility to manage
12
Individual Budgets whatever the future of fund-
ing integration and it is clear that no final deci-
sion will be made on integration before legisla-
tion is confirmed.
The Challenge of Increasing Uptake
Currently, only a fraction of those entitled to
receive Direct Payments or Individual Budgets
have taken them up. Challenges to increased
uptake include mixed publicity across different
authorities, with some embracing them as a
‘first option’ and others waiting for a specific
request before they are offered.
A report by the Audit Commission, “Choosing
Well”, found that Direct Payments were a net
cost for all of the ten councils studied.26 This
extra cost or even the perceived extra cost of
delivering Direct Payments and Individual
Budgets is likely to mean local authorities are
more reluctant to offer them. There is also a
case for saying that many assessed social
care users do not want to design and run their
own care packages.
“In relation to Direct Payments, one
reason for the low uptake under the
current legislation is that they are
hard work. Some disabled people
will be keen to recruit and employ
carers, pay for transport and activi-
ties outside the home. For many
others the stress and strain of
arranging a care package is just too
much.”
- Stephen Cragg27
Prepaid cards can help to drive the uptake of
Individual Budgets as they help to deal with
both issues:
1) Re-allocation of Funds to Support
Services
If Local Authorities can provide Individual
Budgets more cost effectively, and with fewer
26
“Choosing Well: Analysing the costs and
benefits of choice in local public services” –
Audit Commission, May 2006
27
Stephen Cragg writing in The Times,
January 29th 2008
28
“Shifting the Balance of Health Care to
Local Settings: The SeeSaw Report” – King’s
Fund / Loop2, 2008
29
“Choosing Well: Analysing the costs and
benefits of choice in local public services” –
resources applied, they can reallocate those
resources to deal with the important area of
support for service users. How to shift care
‘closer to home’ in practice was considered in
the SeeSaw project, a simulation-based pro-
ject led by the King’s Fund in conjunction with
Loop2.28
A greater uptake of Individual Budgets will in-
evitably lead to a reduction in the council’s
own commissioning resource requirements.
These resources can be transferred to provid-
ing the support to enable individuals to com-
mission their own care, and help them to over-
come the difficulties that anyone would face in
potentially becoming an employer for the first
time.
Whilst “Choosing Well” found that the cost of
extra support outweighed the savings made by
taking away commissioning responsibilities,29
the extra savings from utilising a prepaid card
will mean that prepaid cards can deliver a cost
saving.
2) Easier to Manage
With the increased number of people who will
have access to a prepaid card as discussed
earlier, it increases the number of people who
will have access to, and can receive, Individual
Budgets. Prepaid cards make the process
less onerous for accounting for expenditure, as
statements go directly to the council, and can
be used more flexibly as they can either be
used to pay for goods and services directly, or
can be used to make cash withdrawals. There
will therefore be fewer issues which are likely
to put potential Individual Budgets recipients
off, therefore driving a greater uptake.
Prepaid as a Choice, Not a Panacea
Despite the advantages of prepaid cards, they
are not suitable for everyone. Some people
will feel particularly uncomfortable using a
card, or will struggle with the chip and PIN re-
quirements and some people will still want the
council to commission their social care for
them.
Prepaid cards will never be suitable for 100%
of Individual Budgets recipients although there
Audit Commission, May 2006
 is clearly scope to significantly improve on the
13
1% of expenditure accounted for by Direct
Payments for older people, people with learn-
ing disabilities and younger people suffering
from mental ill health.30
Conclusion
Based on early research into the Individual
Budget pilot projects and current thinking on
Direct Payments, there appears to be an op-
portunity to utilise prepaid cards to deliver
choice for assessed social care users who re-
ceive or wish to receive Individual Budgets and
a more efficient process for Local Authorities.
The public sector in the UK is only just begin-
ning to see the benefits of using prepaid. The
experience of other countries suggests that
prepaid can successfully deliver financial,
process and social improvements across the
full spectrum of disbursements and there is
nothing to suggest that this success cannot be
repeated with Individual Budgets in the UK.
As Individual Budgets generally go to low in-
come individuals and families with additional
needs, the use of prepaid cards can also have
a positive effect in the community. Individuals
who would not normally be able to obtain a
card, or even develop a banking relationship
are given access to both, in a responsible
manner as the prepaid card cannot go over-
drawn and is not a credit facility.
Support in Support for
the home social
inclusion
Examples of Equipment to Joining a dating Having driving
permitted reduce the agency lessons
uses risks of falling
Can a pre-
paid card be
used?
30
“Direct Payments and Individual phased introduction involving 100,
Budgets – Managing the Finances” – 260 and 630 prepaid cards and 860,
CIPFA, 2007 800 and 630 bank accounts in years
31
Figure of 135 man-days based on a 1, 2 and 3 respectively
Local Authorities will benefit from a more se-
cure, efficient, cost effective and sustainable
solution for their disbursement of Individual
Budgets. Expenditure is fully traceable and
visible, with improved management informa-
tion provided, thus saving time for both the
person who receives their Individual Budget as
they have less information to complete, store
and return each month.
The benefits of prepaid are not simply ‘soft’,
unquantifiable benefits; there are financial in-
centives for Local Authorities to introduce pre-
paid cards as well. Time savings of over one
hundred man-days31 in Accounts Payable and
a reduction in the opportunity cost of lost inter-
est point to genuine cashable savings which
can be made through a well-run prepaid card
scheme for Individual Budgets.
Whilst monitoring the way the Individual
Budget is spent becomes easier, it should still
be done within CIPFA guidelines.
There is a need to focus the monitoring of ex-
penditure using an outcomes-based approach.
To a large extent the end will justify the means
so it is important that the monitoring of expen-
diture is not solely completed by finance offi-
cers. Social Care professionals will need to
have a say in the appropriateness of any
Fig 11: Permitted uses of Individual Budgets and the rele-
vance of prepaid to those uses (adapted from CIPFA guid-
ance)
Supporting Supporting Other support
people to general well-
access work being
Help with yoga Trying out a
lessons new activity
(e.g. horse rid-
ing)
32
“Direct Payments and Individual
Budgets – Managing the Finances” –
CIPFA, 2007
14
expenditure and will need to make a profes-
sional assessment on whether the expenditure
is legal, and assists in meeting the outcomes
defined in the care plan.
“A new balance needs to be struck
to maintain accountability whilst en-
couraging people to find more cost-
effective and creative ways of utilis-
ing the resources available to
them.”
- CIPFA32
Finally, it is important to note that any cost
savings identified in the use of prepaid cards
do not necessarily equate to a cost-cutting ex-
ercise. CIPFA recognise that to enable higher
number of people to direct their own support,
Local Authorities will need to invest more in
support services33. Any savings achieved
through the use of prepaid cards can therefore
be reinvested into providing the necessary
support for the probable increase in the num-
ber of individuals directing their own care
packages as a result of Individual Budgets leg-
islation.
33
“Direct Payments and Individual
Budgets – Managing the Finances” –
CIPFA, 2007
About Ticon
Ticon have provided improvement support to a
wide range of clients, across a range of areas,
including Children’s and Adults’ services. Our
consultants have worked with a range of offi-
cers, members and external stakeholders and
are specialists at delivering sustainable im-
provement support within Local Government.
Ticon’s team has extensive experience in pro-
curement and e-procurement, including an
excellent knowledge of the Local Government
Sector and e-procurement technologies. Our
consultants have experience of providing train-
ing, support and improvement advice to a wide
range of Local Government bodies working
with a senior officers and members on a wide
range of projects.
Please contact Ticon if you are interested in
finding out more about our services related to
prepaid cards and adult social care:
 Improvement support
 Business case production
 Options assessment
 Implementation support
 Guidance
stephen.jones@ticon.uk.com
0207 8361999