Funding of local authorities’ children’s services Contents

1Funding pressures

5.Our report begins by considering the volume and administration of current funding from central government. We consider whether core funding is sufficient, the role of one-off grant funding and the future of the Troubled Families Programme.

Government funding

6.Local authorities’ children’s services are funded primarily through the local government core funding settlement. According to the Government, most of this funding is not ring-fenced “as a result of the Government’s policy in recent years to end ringfenced grants and give councils more control over their local income”, a position which is supported by the Local Government Association (LGA).5 In 2017–18, local authorities in England spent around £9 billion on children’s services.6 The largest area of spending was for children looked after, which accounted for around half of all spending (Figure 1). Since 2010 local authorities have seen their overall spending power, which all pays for all local government activities including children’s services, reduce by 28.6%.7 At the same time the number of children looked after by local authorities and other demands on children’s services have been increasing (see Chapter 2 for further information).8 The LGA said that this has meant that “spending on children’s social care has increased at a faster rate than any other area of council business”.9 However, it considered that while “local authority spending on children’s social care has risen, it has not kept pace with growing demand”, leaving councils having “to make difficult decisions about the allocation of scarce resources”.10

Figure 1: Children’s services net spending 2017–18 (£ billion)

Source: DfE, LA and school expenditure 2017 to 2018: Main tables; Scrutiny Unit analysis. Note – these expenditure amounts are net of income.

7.Children England told us that “cuts in funding from central government have forced local authorities to close non-statutory services such as children’s centres, parenting programmes and early help, and concentrate on those that they are legally bound to provide, including services for children in need, children in care and young carers”.11 Barnardo’s agreed that “early intervention and prevention services have taken the biggest hit”.12 This view was reflected by many local authorities.13 The Royal Borough of Greenwich described it as “a significant reorientation of spending on children’s services”.14 It was also reflected in spending data from the NAO: in 2010–11 English local authorities spent 59% of their children’s services spend on statutory services, while by 2017–18, councils were spending 75% on statutory services leaving only 25% for non-statutory services.15 Looking forward, the County Councils Network said that “in recent months a growing number of LAs have suggested that they may only be able to provide core services in the future”.16

8.Despite the diversion of funding to statutory services, we heard that the funding of statutory services is also unsustainable.17 65% of participants in our survey said that the funding was ‘definitely not’ sufficient to enable local authorities to fulfil their statutory duties while 93% said it would ‘definitely or probably not’ be enough for 2019–20 and beyond. Newcastle City Council explained that it was becoming “more and more difficult” to fund statutory services due to budget cuts, inflationary pressures and increasing demand.18 It continued:

The Government have said that austerity is over but that is not what councils are experiencing. The current level of council funding is insufficient to fund local authority services that is a council’s legal duty to provide. The fact that councils including our own are still having to find savings over the next three years to balance the medium term financial plan due to further funding cuts and pressures demonstrates this.19

9.The National Society for the Prevention of Cruelty to Children (NSPCC) also identified the prevalence of overspending local authorities as a sign of unsustainable spending cuts: “the pressure on maintaining statutory services is highlighted by the estimated £840m annual budget overspend on children’s services”.20 Indeed, the NAO found that 91% of councils overspent the budgets they had set for children’s services at the start of the year–the national overspend amounted to £872 million in total.21 For Staffordshire County Council, overspend has resulted in a reduction in reserves and the council investing £6 million into its 2018–19 budget.22 It said that “this has placed great pressure on the council’s finances and meant other services had to find additional savings on order for the budget to balance”.23 Councillor Roy Perry, Leader of Hampshire County Council and representing the LGA, told us that “all councils, regardless of politics and part of the country, have made superhuman moves to achieve those efficiencies and economies, but that route is very definitely coming to an end”.24 The Permanent Secretary of DfE told PAC that he recognised that this type of situation was unsustainable:

Councils have been increasing their spend to protect these services… Is that sustainable? No, because some councils have been drawing from reserves. Some councils have had to draw from funding for other services. You cannot carry on like that forever. That is the starting point for the next spending review.25

10.The Government told us that “local authorities have sufficient funding to fulfil their statutory duties, and that they are prioritising between statutory and non-statutory services as needed” though the Parliamentary Under Secretary of State for Children and Families acknowledged that local authorities were faced with a “challenging financial environment”.26 Nevertheless, he suggested that councils could be doing more to manage overspending:

Two-thirds of local authorities are spending more than they budgeted for. We talked earlier about where the demand pressures are coming from… but it is worth reminding the Committee, that a handful of very complex needs can have a disproportionate impact on budgets. Some local authorities have invested really well, and the outcome is that they manage risk a lot better and reduce the number of looked-after children.27

Anne Longfield, Children’s Commissioner for England, supported the view that children with complex needs can unpredictably impact budgets, saying that there will always be some overspend, even for high-performing local authorities, “because high-cost individuals with complex needs will come and you cannot predict that”.28

11.The Chancellor of the Exchequer announced additional social care funding in the Autumn Budget 2018: £410 million for adult and children’s social care in 2019–20 and £84 million for the Children’s Social Care Innovation Programme over five years.29 The Parliamentary Under Secretary of State for Children and Families explained that this funding had been made available because of the pressures facing local government.30 However, this was criticised by ADCS who said “this will not even allow us to stand still”.31 The local government settlement for 2019–20 will see a real-terms increase from £41.1 billion in 2018–19 to £46.4 billion.32

12.Current funding levels are unsustainable. More and more local authority spending is being directed at a handful of statutory services. The Committee will be considering the impact of this on other services in its forthcoming inquiry on local government finance.

One-off grant funding

13.Alongside core grant funding, additional time-limited or project-focused funding has been made available to local authorities such as the Troubled Families Programme. The Parliamentary Under Secretary of State for Children and Families told us that this one-off grant funding enables the Government “to respond much more flexibly to new and emerging needs and evidence” and provided reassurance that “grant funding will never replace core funding”.33 However, notwithstanding our later comments on specific programmes, we heard widespread criticism of the use of such funding. ADCS summarised the concerns we heard:

In recent years, small, time limited pots of money to address single issues have become the norm in children’s services. This piecemeal approach to funding is unhelpful…

Whilst it may be true that the children and families in the areas that secure funding will benefit, the nature of grant funding does not guarantee sustainability beyond the lifespan of the initiative and moreover the majority of the population do not benefit from this investment. This competitive approach to investment absorbs significant resources locally and all too often the skills of the bid writer determine success, not the needs of the local population. It would be preferable if all LAs [local authorities] were allocated funds to try new ways of working, not just a select few.34

14.In the context of the Children’s Social Care Innovation Programme, Stuart Gallimore expanded on ADCS’s call for all local authorities to be allocated funding, telling us that over half of the funding had been distributed to just 11 councils and that 54 local authorities had received no additional grant funding from DfE.35 The Parliamentary Under Secretary of State for Children and Families said that while this sounded “worrying”, it did not reflect the fact that “95% of local authorities have engaged with the programme, either through being funded to deliver a project, partnering on a project, applying for funding or attending one of our learning events”.36

15.Coventry City Council agreed with ADCS’s concerns about the application process for one-off grant funding, suggesting that it may disadvantage some councils:

We have also been concerned at the number of short term grant funding streams that have a very quick turnaround for applications. This adds to the pressure in the system, and does not help service planning, or enable us to work with partners in relation to securing funding. This also often means that better performing Local Authorities, with more capacity, have a better chance of securing the money.37

16.Concerns were also raised by Bolton Council that “short-term and uncertain grant funding makes staffing recruitment difficult and long-term planning impossible”.38 Devon County Council said that the uncertainty of the continuation of the Troubled Families Programme “could lead to good, experienced staff seeking alternative employment before the end of the grant period, seriously compromising the delivery of the service”.39

17.Councillor Perry acknowledged that councils would continue to access this type of funding despite its flaws: “No local authority is going to say, “No, we do not want it”, but it is no way to have a long-term solution to the problem”.40 However, a number of suggestions were made about how one-off grant funding could be improved. The County Councils Network called for grant-based programmes to have longer timescales to provide greater certainty to councils on what services they can provide.41 ADCS agreed that a long-term approach was necessary, stating that “supporting children and families with complex and overlapping health, social care and welfare needs requires a resource intensive, long-term response”.42

18.The Children’s Society argued that improved co-ordination between Government departments in terms of the funding pots that are available could result in local authorities being better able to address challenges.43 While not commenting in the context of one-off grant funding, questions about the disconnect between MHCLG leading on the funding of children’s social care and DfE leading on the policy framework and delivery were raised in PAC’s recent report.44 PAC concluded that “there is little evidence of strong cross-government collaboration in improving children’s social care” and that “this can only be a hindrance to improving services”.45 It called for DfE to “develop and lead a cross-government strategy for raising quality in children’s social care, with a cross-government approach agreed by December 2019”.46

19.Rather than improve the administration of one-off grant funding, Oxfordshire County Council said the grant funding would likely be better used to top-up mainstream funding or should be ring-fenced:

While there will always be a case for piloting some policies and interventions, we would support a reduction in the amount of funds which are distributed on a “bidding” basis, with more moved into mainstream or ringfenced funding, reducing the administrative burden on local authorities of the bidding process, and giving greater certainty over future funding levels.47

20.While Professor Ray Jones, Emeritus Professor of Social Work at Kingston University and St George’s, University of London, raised concerns about one-off pots of funding, he cautioned that “if you just put money into the general pot, it will be used to deal with the crisis that we are in at the moment but it will not help to turn the ship around”.48

21.Although additional funding available through one-off grants is welcome at a time of increasing financial pressure, and there is value in flexible responses to the challenges facing local authorities, there is no place for it to be seen as a replacement of reduced core funding. We are pleased that the Government recognises this.

22.Local authorities would benefit from greater long-term certainty about the additional funding available. It would also be beneficial for Government departments to work together to a greater extent in order to pool funding and expertise when designing additional funding pots. When designing one-off grant funding, we urge the Government to take a long-term strategic cross-government approach. We ask that this constitutes an essential part of the cross-government strategy for improving children’s social care which the Public Accounts Committee recently endorsed and we also support.

23.The application process for one-off grant funding should not be overly burdensome on, nor disadvantage some, local authorities. The Government should review by December 2019 the application and administration of its one-off grant funding to ensure that they do not place an unreasonable administrative burden on councils, and that capital and support is reaching all local authorities either directly or indirectly if they wish to participate in specific programmes. The lessons learnt from this review should be implemented in the design of all future one-off grant funding. We comment specifically on the Innovation Programme in Chapter 4.

Troubled Families programme

24.A key funding source for local authorities’ children’s services is the Troubled Families Programme which has been backed by almost £1.4 billion of Government money since its inception in 2012. While its efficacy has previously been called into question,49 the most recent programme evaluation is more positive.50 We repeatedly heard concerns about the ending of the programme, which is expected in 2020.51 Devon County Council stated that “there is no resource elsewhere in the Council that could plug the gap left by the Troubled Families Grant which is in the region of £2 million”.52 A response to our social worker survey described the ending of this funding as a “cliff edge for early help services which are already creaking under the weight of a 113% increase in early help assessments”. Cambridgeshire County and Peterborough City Councils (CCPCC) broadly agreed, telling us that as a consequence the non-statutory early help services would likely end:

This grant is due to end in 2020; without this funding prevention and early help services will be very much reduced in Cambridgeshire [where services have until now benefited from a higher level of core funding] and reduced to almost nothing in Peterborough. This situation, if it were to come about, would lead to poorer outcomes among vulnerable children and young people, with accompanied negative impact on social mobility.53

25.Stuart Gallimore of ADCS told us that the continuation of the programme “in some way, shape or form… is important”.54 This reflected calls from West Sussex County Council which said that it, as well as other local authorities from across the country, had “made strong representations to central government about the continued need for an equivalent programme”.55

26.The Children’s Commissioner for England, Anne Longfield, agreed that the Troubled Families Programme needed to continue but said it should be changed: “It absolutely needs to continue, but it needs to be reshaped and probably to have more of a focus on early years and children as part of that”.56 The Minister for Local Government suggested that change was likely. He told us that he was “personally very keen to see something like the Troubled Families programme continue” and that when the third evaluation report and the evaluation data was published, the Government would start considering what should follow the Troubled Families Programme.57 While he told us that we can count on him to make a strong case to HM Treasury on continuing the programme, he noted that nobody “other than the Chancellor can give anyone any guarantees about what will happen after this current spending review ends”.58

27.It is critical that the Troubled Families Programme continues given that many local authorities are reliant on the funding it provides to deliver non-statutory early help services. The Government must announce a successor programme in advance of the 2019 Spending Review to provide local authorities with certainty over their long-term funding streams beyond 2020.

5 MHCLG and DfE (ACS0065)

6 House of Commons Library, Local government finances, October 2018

9 Local Government Association (ACS0037)

10 Local Government Association (ACS0037)

11 Children England (ACS0013)

12 Barnardo’s (ACS0032)

13 See among others Staffordshire County Council (ACS0030), County Councils Network (ACS0035), Local Government Association (ACS0037) and Barnsley Metropolitan Borough Council (ACS0061).

14 Royal Borough of Greenwich (ACS0059)

15 NAO, Pressures on children’s social care, January 2019. See also data from Newcastle City Council (ACS0045).

16 County Councils Network (ACS0035)

17 See among others Cambridgeshire County and Peterborough City Councils (ACS0007), Children England (ACS0013), Rainbow Trust Children’s Charity (ACS0018) and Hampshire County Council (ACS0033).

18 Newcastle City Council (ACS0045)

19 Newcastle City Council (ACS0045)

20 NSPCC (ACS0053)

22 Staffordshire County Council (ACS0030)

23 Staffordshire County Council (ACS0030)

25 Q124, Transforming children’s services transcript, HC 1741, 4 February 2019

26 Q196 and MHCLG and DfE (ACS0065)

29 HM Treasury, Budget 2018, 29 October 2018

31 Association of Directors of Children’s Services (ACS0038)

32 MHCLG and DfE (ACS0065)

34 Association of Directors of Children’s Services (ACS0038). Among others, see also Cambridgeshire County and Peterborough City Councils (ACS0007), British Association of Social Workers (ACS0026) and Durham County Council (ACS0041).

35 Q132. See also Association of Directors of Children’s Services, Safeguarding Pressures Phase 6, November 2018.

37 Coventry City Council (ACS0050). See also Cambridgeshire County and Peterborough City Councils (ACS0007).

38 Bolton Council (ACS0019)

39 Devon County Council (ACS0003)

41 County Councils Network (ACS0035)

42 Association of Directors of Children’s Services (ACS0038)

43 The Children’s Society (ACS0068)

44 Public Accounts Committee, Eighty-eighth Report of Session 2017–19, Transforming children’s services, HC 1741.

45 Public Accounts Committee, Eighty-eighth Report of Session 2017–19, Transforming children’s services, HC 1741.

46 Public Accounts Committee, Eighty-eighth Report of Session 2017–19, Transforming children’s services, HC 1741.

47 Oxfordshire County Council (ACS0039). See also West Sussex County Council (ACS0022).

49 MHCLG, National Evaluation of the first Troubled Families Programme 2012 to 2015, October 2016. See also Dr Michael Lambert (ACS0008).

51 Among others, see West Sussex County Council (ACS0022), Essex County Council (ACS0042), Wigan Council (ACS0044), NSPCC (ACS0053), and Association of Directors of Children’s Services, Safeguarding Pressures Phase 6, November 2018.

52 Devon County Council (ACS0003)

53 Cambridgeshire County and Peterborough City Councils (ACS0007). Among others, see also Children’s Commissioner for England (ACS0058), Barnsley Metropolitan Borough Council (ACS0061), Royal Borough of Greenwich (ACS0059) and County Councils Network (ACS0035).

55 West Sussex County Council (ACS0022). See also Royal Borough of Greenwich (ACS0059).

58 Q201 and Q203

Published: 1 May 2019