Local councils could be stripped of their control over the 7bn adult social care budget under proposals being explored for the forthcoming social care green paper.

Instead, adult social care funding could be paid via the benefits system as direct payments to individuals. A Department for Work and Pensions agency would distribute the money; councils would provide only an information service, advising people on how to spend their allocations.

A source close to the discussions told HSJ: “It makes a lot of sense in terms of the direction things are going in with individual budgets. It would remove the perception of a postcode lottery and give more certainty over what individuals could expect to receive, helping them plan their own savings.”

The proposal is one of many, but the role of the DWP is important because health ministers hope that£3.7bn worth of DWP benefits can be acquisitioned for social care.

At present councils fund the majority of social care services from their core grant, but the amount allocated for care is not ringfenced. Demographic pressures have led to councils restricting services to those in the greatest need. Ministers have said a new system that offers more help to all and incentivises individual savings for old age is necessary.

NHS Confederation deputy policy director Jo Webber said it was important all options were considered. If councils did lose most of their care funding, they would still have an important role in ensuring there was sufficient local capacity to supply residents’ needs and to provide wider care-related services such as housing, she said.

Ray Jones, professor of social work at Kingston University and St George’s University of London, said the proposal would change the dynamic between primary care trusts and councils, as the “buying power” would be with care users.

The proposal comes as the NHS prepares to launch pilots for individual health budgets for people with long-term conditions. Julian Forder, professor of economics at the Personal Social Services Research Unit, said the case against a greater role for the DWP was that direct payments were still in the minority and a benefit-like entitlement to social care would imply an unlimited spend for the Treasury.

For more analysis, see this week’s leader