Funding of local authorities’ children’s services Contents

2Other pressures

28.Our second chapter considers other key drivers of increasing financial pressure on local government. We explore the extent of the increasing demand that councils are dealing with and the additional responsibilities and duties they are delivering.

Increasing demands on children’s services

29.The number of children looked after by local authorities in England is the highest it has been in a generation.59 The latest statistics show that at the end of March 2018 there were 75,420 looked after children in England - a 4% increase on the previous year and an increase of 27% in the ten years since 2008 (see Figure 2).

Figure 2: Numbers of looked after children in England - 2006 to 2018

Source: DfE Statistics: looked-after children; Scrutiny Unit analysis

This increase is higher than the increase in the child population. In 2018 the numbers of under 18s who were looked after stood at 64 per 10,000 compared to a rate of 54 per 10,000 in 2008 - an increase in the rate of looked after children of around 19% (Table 1). A recent report by the NAO showed that the trend of increased rates of children in care goes back over 20 years.60

Table 1: Children looked after per 10,000 children as at year ending 31 March 2018

























Source: DfE, Statistics: looked-after children

30.Around half of all local authorities’ expenditure on children’s services is for children who are looked after (see Figure 1 in Chapter 1). This is not surprising given that local authorities are providing foster care or residential care for most of these children. This means that increases in the numbers of children in care have a significant financial impact on councils. The NAO notes that:

The area in which recent increases in children’s social care activity has most significantly affected costs for local authorities is the increase in the number of children they have in care.61

31.As well as the numbers of children being looked after going up, the cost of looking after each of these children is also increasing. For example, the NAO says that there has been a “notable increase in the number of older looked after-children”. Local authorities told the NAO that these older children were harder to place into foster care and were therefore more likely to go into more costly residential care.62 Evidence from Andrew Isaac, Chair of the Children’s Services Development Group (CSDG), concurred with this: he noted that “the dynamics of the children’s market are changing to be older children with far more significant needs”.63

32.Whilst the rate of looked after children has been steadily increasing each year, other child protection activity has gone up even more significantly over the last ten years. ADCS stated that in the ten years to 2017–18 the “number of children subjects of child protection plans increased by 87%”.64 Professor Jones highlighted that the number of child protection investigations, also known as Section 47 investigations, had more than doubled (an increase of 122% since 2009–10) as had the number of public law care proceedings (an increase of 125% since 2007–08). Professor Jones considered that “child protection activity has increased and come to dominate, and indeed overwhelm, local authority children’s social services”.65

33.The Government noted that “numbers of children in care and on child protection plans has risen since 2013 at a rate that outstrips the growth of the child population” and recognised that “spend on these higher-need, and therefore higher-cost, services are placing additional financial pressures on the sector”.66

34.Demands on children’s social services have been increasing each year for well over a decade. The number of looked after children in England has increased by 27% over the last ten years and is now at its highest level for a generation. The National Audit Office have reported that the increase in the number of children in care is the area of activity which has “most significantly affected costs” for local authorities. Local authorities have also seen even more significant rises in other activity such as child protection plans and investigations plans. These demands on statutory services are undoubtedly putting financial pressure on councils.

Growing responsibilities

Additional statutory duties

35.The number of statutory duties placed on local authorities’ children’s services in England has increased in recent years. While the Government identified 200 duties in 2011, ADCS conducted research in 2018 which found that that number had grown to almost 300.67 Resourcing for delivering those additional responsibilities is seen by some local authorities to have been insufficient or unforthcoming.68 North Yorkshire County Council explained the impact of extending local authority responsibility to care leavers from 18 up to the age of 25:

The extension of responsibility to care leavers up to the age of 25 will place additional cost onto the local authority. We estimate that our Leaving Care service will see caseloads increase by one third to around 400 active cases over the next few years, compared to approximately 300 cases that we have previously been supporting. No additional funding has been provided to assist with the necessary additional staffing.69

The President of ADCS and the Director of Children’s Services at East Sussex County Council, Stuart Gallimore, agreed:

Who would argue that we should not be involved, where they want us to be, in the lives of our looked-after children up to 25? It is what those of you on this panel who have children will do. You do not shut the door at 18 when your child goes off to university, an apprenticeship or work. You remain involved in their lives. We would want to do that, but the money we were given to do that was woefully inadequate… It does not take very much to suddenly see a significant increase in cost in any local authority.70

ADCS’s written submission to our inquiry explained that “the new burdens funding to support the expansion of this role was based on a relatively crude estimate of advisor’s time and did not consider any of the additional services or practical support care leavers may require as they transition to independence”.71

36.The Government disputed criticism of its funding of new burdens, which it describes as “new duties, powers, targets and other bureaucratic burdens” which are placed on local authorities.72 It told us that when new duties are introduced, “extensive research” is conducted with local authorities and that it does “follow through with funding” to make sure that “the pressure on council tax is kept down”73 The Minister for Local Government, Rishi Sunak MP, acknowledged that sometimes the costs are overestimated or underestimated but that adequately funding new burdens is a “general Whitehall principle”.74 In preparation for the Spending Review 2019, he told us that MHCLG is currently reviewing burdens across local government and that if its analysis shows that costing is inaccurate, it “will very much inform our conversation with the Treasury around the spending review, to make that we can, where possible, make a strong case for adjusting some of those things or make the case that they are not sufficient for the purposes that they were designed for”.75

37.It is unclear how the current review of new burdens ahead of the Spending Review 2019 sits with the Government’s guidance on new burdens which states that “on average no more than six new burdens from across the whole of Government will be selected for independent scrutiny per year and that there should normally be no more than one for an individual department”.76 When raised with the Government in the course of our inquiry, the Minister for Local Government said:

Not all burdens are equally burdensome. Where we focus our attention is on the ones that the LGA or indeed local authorities tell us they feel are the most financially burdensome or where there is the biggest disconnect between what they are being compensated and what the cost is.77

38.It is unrealistic to expect local authorities to successfully deliver new responsibilities without appropriate funding in the current financial climate. All new burdens must be financed adequately. The Government should evaluate its process for understanding the financial burden of new statutory duties on local authorities and consider how it could be made more accurate.

39.Long-term inaccuracies in funding are likely to have a significant impact on local authority budgets. The Government should review new burdens regularly and consider removing the cap on the number of reviews per year in order to avoid any delays in adjusting payments if necessary. We would encourage the Government to prioritise the review of those new burdens, which were identified in the written evidence we received in the course of our inquiry as being underfunded such as support to care leavers up to the age of 25 years. The Committee plans to engage further on the effect of such new burdens in its forthcoming inquiry into local government finance.

No recourse to public funds

40.Some residence permits allow people to live in the UK on the basis that they have No Recourse to Public Funds (NRPF). While NRPF status extends to precluding access to child benefit, local authority homelessness assistance and an allocation of local authority housing,78 local authorities may provide accommodation or other financial support to families with NRPF if their statutory safeguarding duties under Section 17 of the Children Act 1989 apply.79 Project 17, a charity which works to end destitution among migrant children by improving access to local authority support, describes the intervention of local authorities in this instance as “a vital safety net against destitution”.80 However, central government does not provide any funding for supporting children within NRPF families and “this activity does not form part of children’s services base budget or the funding formula which determines LA [local authority] funding” according to ADCS.81

41.We heard that the costs of supporting children in need within NRPF families placed pressure on local authority budgets.82 Data collected by the NRPF Network, hosted by Islington Council, found that the fifty local authorities which used its NRPF Connect database spent a total of £43.5 million in the 2017–18 financial year on accommodation and subsistence.83 In the 2016–17 financial year, London boroughs spent £53.7 million, an estimated annual cost of nearly £19,000 per NRPF household.84 Project 17 said that austerity and reductions in local authority funding were having a “devastating” impact on families as it had led to local authorities being “largely unwilling” to provide support to NRPF families.85 A 2016 report by The Children’s Society, Making Life Impossible, found “a reluctance or delay in making an initial assessment is an emerging practice in some local authorities… [and] a significant increase in the need to resort to litigation following a ‘child in need’ assessment to secure a clearly destitute family the support they need”.86

42.It was suggested to us during the course of the inquiry that local authority financial support was prolonged by Home Office delays in deciding immigration claims. The Children’s Commissioner for England said that “a number of councils highlighted the lengthy amount of time taken by the Home Office to make decisions regarding the immigration status of children and families”.87 The NRPF Network told us that the average family is supported for 2.5 years and that “27% of households have received support for 1000 days or longer”.88 It went on to explain that the majority of support to children within NRPF families ends when a Home Office decision is made:

67% of cases are closed when they no longer require social services’ support because the parent or adult has been granted leave to remain with recourse to public funds and can access mainstream benefits and housing services.

This data shows that, in the majority of cases, local authorities are safeguarding children by providing support whilst families are waiting for a final outcome on their immigration claim. Any delay in achieving this results in direct costs to the local authority.89

Stuart Gallimore of ADCS seemingly agreed, telling us that “as an association, we have long argued in terms of the impact those delays have, in terms of local authorities”.90

43.While no direct funding is made available, the Minister for Local Government told us “there are a range of things in place to help manage that situation”.91 He expanded:

One of those is a database called NRPF Connect, which allows local authorities to work with the Home Office to identify these people and look at which status they fall under and whether that means they need extra funding or not, which has proven to be very helpful.

There are also Home Office immigration officials, and there is also another group of people… called local partnership managers, who are embedded inside local authorities where there is a particularly acute issue to help them manage that. There is also a quarterly steering group with officials from my Department, DfE and the Home Office as well, which works with local government to try to find out whether there are particular issues or cases that need escalating.

Lastly, the process of helping some of these families remove that condition has been sped up considerably. The processing time for that has halved over recent time, and the cases where local authorities are on the hook at the moment are being prioritised. With that said, I know the Home Office are looking at this and they are aware of the situation.92

The Parliamentary Under Secretary of State for Children and Families, Nadhim Zahawi MP, elaborated:

DfE has also grant-funded the No Recourse to Public Funds Network to develop the triple-pathway planning guidance and resources for social workers and personal advisers who are undertaking the educational element of support normally provided for looked-after children as well.93

44.Nevertheless, we heard calls for the Government to reduce the burden of supporting children in NRPF families on local authorities. The NRPF Network called on the Government to “take a more strategic approach to the resolution of local authority supported cases and review all the immigration policies that create barriers to obtaining leave to remain or that hinder the integration of families who have a long-term future in the UK”.94 In the short term, it also suggested “conducting a one-off exercise to systematically grant indefinite leave to remain to individuals or households receiving local authority support where regularisation of immigration status is outstanding”.95

45.Local authorities should not solely bear the burden of financially supporting children within no recourse to public funds families, particularly as councils are often required to provide long-term support as a result of Home Office delays in deciding immigration cases. Not only does it place extra pressure on local authority budgets but we heard it can also lead to delays in supporting these children. The Government should provide funding to councils proportionate to the number of children within NRPF families that they support. Notwithstanding our later recommendations regarding funding for unaccompanied asylum seeking children, we consider that the Government may wish to introduce a day rate payment equivalent to that available for supporting unaccompanied asylum seeking children.

46.While we acknowledge that the Government has made some efforts to reduce the time taken to process immigration claims, it is clear that more could be done. We urge the Government to review its relevant immigration policies and processes by December 2019 to consider where delays in the resolution of local authority-supported cases can be reduced. Also, the day payment, which we recommend above, should be payable by the Home Office in order to incentivise the quick conclusion of local authority-supported cases.

Unaccompanied asylum seeking children

47.According to the Parliamentary Under Secretary of State for Children and Families, unaccompanied asylum seeking children (UASC) account for a third of the increase in demand that local authorities’ children’s services have experienced since 2013.96 Indeed, DfE statistics show that there has been a large rise in the number of UASC that are looked after by local authorities since 2016.97 Increases in the numbers of UASC are reflected in how much local authorities are spending on UASC: analysis by the LGA found that councils “spent more than £152 million on unaccompanied asylum seeking children in 2017/18–an increase of 95 per cent on the £77 million spent in 2014/15”.98

48.The Government reimburses local authorities with UASC in their care a daily rate that varies from £71 to £114 depending on the age of the child and whether they entered the UK on or before 20 June 2016.99 Councils can also apply for support from the Controlled Migration Fund to develop capacity and “tackle specific service issues”.100 However, we repeatedly heard from local authorities that the day rate did not cover the costs of supporting these children. CCPCC explained:

These [the day rates] in no way meet actual costs. In Cambridgeshire, the shortfall between grant and actual costs of providing the accommodation in the current financial year is around £800,000… This shortfall does not include other costs faced by the local authority, including social workers, personal advisers and so on.101

ADCS supported this view, stating that “the grant funding provided by the Home Office covers on average, at best, 50% of the costs of caring for an unaccompanied child or young person”.102 Devon County Council added that funding does not take into account the individual needs of children:

The Home Office funding takes no account of the exceptional needs some of these children have. Devon is currently looking after one young person received through the National Transfer Scheme at a cost of £10,300 per week. We receive just £637 per week from the Home Office.103

49.ADCS raised concerns that the costs of supporting UASC are “becoming a barrier to ongoing participation in the voluntary national transfer arrangements”.104 ADCS President, Stuart Gallimore, stated that the cost burden was unevenly distributed, telling us that “local authorities are sharing a significant financial cost on the back of doing the right thing, or geographically being close to a dispersal point or a port of entry”.105 The geographic nature of this responsibility was reflected by ADCS research which found that London was supporting the most UASC, followed by the South East, though the largest increases between 2016–17 and 2017–18 were in the North West and the South West. ADCS explained that the increase in the South West was “largely due to new ‘entry points’ emerging, such as Poole and Portsmouth, following the closure of the migrant camps in Calais and subsequent reduction in arrivals via Dover”.106

50.The Minister for Local Government told us that “a strong amount of representation” had also been made to him about the mismatch between the available funding and the costs to local authorities of supporting UASC.107 He went on to say that he had raised the issue with the Home Office several times and that it is “aware that there is a cost pressure there and they are actively in the process of reviewing it”. The Leader of the House recently confirmed that a review was being conducted and its conclusions would be published soon:

We are currently reviewing funding arrangements, and more than 50 local authorities have taken part in a consultation. We hope to reach a conclusion soon, but it is right to take time to assess the evidence thoroughly. We are committed to putting in place arrangements that work as well as possible for both unaccompanied children and local authorities.108

51.It is right that the Government is currently reviewing its reimbursement policy for local authorities which provide care to unaccompanied asylum seeking children. As part of its review, we call on the Government to increase the daily rate of payment. The review should also consider how the funding system can be designed to better disperse UASC across the country in order to reduce pressures in some areas.

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

65 Professor Ray Jones (ACS0005)

66 MHCLG and DfE (ACS0065)

67 Association of Directors of Children’s Services, Children’s Services Statutory Duties, October 2018

68 See Kent County Council (ACS0011), Association of Directors of Children’s Services (ACS0038) and Manchester City Council (ACS0040)

69 North Yorkshire County Council (ACS0021)

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

72 Ministry of Housing, Communities and Local Government, New burdens doctrine: guidance for government departments, June 2011

73 Ministry of Housing, Communities and Local Government, Q174–175; New burdens doctrine: guidance for government departments, June 2011

76 Ministry of Housing, Communities and Local Government, New burdens doctrine: guidance for government departments, June 2011

78 UK Visas and Immigration (Home Office), Guidance: Public Funds, February 2014

79 NRPF Network (ACS0009)

80 Project 17 (ACS0014)

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

82 See NRPF Network (ACS0009), Local Government Association (ACS0037) and London Councils, No Recourse to Public Funds webpage.

83 NRPF Network, Annual Report 2017–18

85 Project 17 (ACS0014)

86 The Children’s Society, Making Life Impossible, April 2016

87 Children’s Commissioner for England (ACS0058)

88 NRPF Network, Islington Council (ACS0009)

89 NRPF Network, Islington Council (ACS0009)

94 NRPF Network (ACS0009)

95 NRPF Network (ACS0009)

96 Q162.

97 Department for Education, Children looked after in England (including adoption) 2017/2018, November 2018

98 Local Government Association, Spend on asylum-seeking children doubles in four years, February 2019

99 Home Office, UASC Funding Instructions 2018/19, August 2018

100 Ministry of Housing, Communities and Local Government, Controlling Migration Fund Prospectus, August 2018

101 Cambridgeshire County and Peterborough City Councils (ACS0007). See also Devon County Council (ACS0003) and The Children’s Commissioner for England (ACS0058).

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

103 Devon County Council (ACS0003). See also ECPAT UK (ACS0027).

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

106 Association of Directors of Children’s Services, Safeguarding Pressures Phase 6, November 2018

108 Business Question, 21 February 2019

Published: 1 May 2019