Funding of local authorities’ children’s services Contents

5Improving children’s services

148.The final chapter of our report examines two universal mechanisms for securing short- and long-term financial sustainability: future funding and systemic changes. Addressing these two mechanisms successfully will benefit the totality of children’s social care, from the frontline of care to local authority budget lines.

Increasing funding

149.The challenges facing local authorities’ children’s services are diverse. Time and time again we have been told, and indeed concluded in previous sections of this report, that the solution to those challenges is increased Government funding. A selection of the wide-ranging calls for increased funding from stakeholders across the sector that we heard during the course of the inquiry are provided below:

In Chapter 1, we agreed with local authorities that the current funding levels are unsustainable, echoing the Government’s comments that local authorities are in a “challenging financial environment”.334

150.The LGA calculated how much more funding was needed to deliver the current level of service in the future: £2 billion by 2020 and £3.1 billion by 2025.335 The LGA acknowledged that would not allow for any enhancements to services.336 The LGA’s estimation of the funding gap was often referenced by local authorities and other stakeholders who participated in our inquiry, suggesting that there is support of this analysis.337 The Parliamentary Under Secretary for Children and Families said “in terms of future funding and the spending review, the LGA has done really excellent work, and I want to commend them for that work. We are working between now and the spending review to get a much sharper and more granular picture of children’s social care cost pressures. That is where we are today”.338

151.If additional funding is forthcoming, we heard mixed views on the desirability of ring-fencing it. Kathy Evans, Children England, told us “we have to move away from some of the pre-targeting, the ring-fencing and the control mechanisms, because what you need is free-flow reinvestment”.339 Stuart Gallimore of ADCS explained that “local authorities are in the best place to understand their local context”.340 Ruth Allen of BASW agreed that councils should be able to “tailor [funding] to their local populations” but suggested that doing so within a framework would be preferable. Gallimore identified “a really good model” which has been used previously, “where Government set some outcomes they wanted local authorities to achieve, and then left those local authorities to get on and achieve them. They annually looked back at how that money had been spent and whether it had been spent on the things they had wanted to achieve”.341 The Government has been clear that local government is best placed to decide its spending priorities and that it has no intention of reversing its policy of ending ring-fenced grants as far as is possible.342

152.As well as additional money to plug the funding gap, the LGA called for the cuts to early intervention services to be reversed.343 On the provision of early help services, Barnardo’s suggested that ring-fenced funding had a place, calling for the Government to “provide ring-fenced central funding for prevention and early intervention, which cannot be subsumed into the wider children’s social care budget, and which incentivises sustainable partnership working”.344 Professor Jones agreed that there is a risk that additional funding may be used to off-set overspending rather than deliver services if it is not ring-fenced. He told us: “How you make sure that is properly accounted for and it does not just leak out into dealing with the overspends we have already is an issue that you would want to see addressed”.345 He suggested allocating money to all local authorities which can be spent as they see fit, but solely on early intervention.346

153.Concerns were also raised about how local authority budgets are linked to “the rise and fall of local economies”.347 Children England said that inequalities between councils may be exacerbated as councils are empowered to raise their own revenues.348 Professor Jones shared these concerns, stating that “without an as yet disclosed or committed compensatory mechanism this will have a further significant impact especially on local councils in areas of high deprivation where there will be little scope to raise money to replace the withdrawal of financial support from central government”.349 Children England proposed that core funding be subject to a new children’s services funding formula:

We have developed the case for a Children Act Funding Formula, which would distribute national taxation to all authorities with duties under the Children Act 1989 according to the needs of children in their area, based on three factors: Current and projected child population; Numbers of disabled children and young carers; and Multiple deprivation indices for the area. It will be essential to weight the formula appropriately across these three areas. In order to be responsive to changes in local population but also provide authorities with the predictable core income they need to plan and commission services appropriately, we propose that it informs a grant period of three to five years.350

The Alcohol and Families Alliance supported the introduction of the Children England funding formula, believing that it would reduce the financial burden on councils and allow more money to be spent on early intervention.351

154.The Minister for Local Government told the Committee that he was overseeing the introduction of a new funding formula for local government and that as part of that work the Department was working with external partners to develop a specific funding formula for children’s services. He explained that the formula would be highly detailed:

When they do their analysis to predict need when it comes to children’s services, they will be doing that not at a local authority level or even a lower layer super output area level; they will be doing it at the level of the individual child.

That database, which they now have, will enable the predictive modelling for the fair funding review to be done at a very granular level. Out of all the things in the fair funding review, that is probably the one that will have the most level of detail. Hopefully that provides you with some comfort going forward in terms of how funding is allocated. It will be done on as detailed and as granular a basis as possible.352

155.The 2019 Spending Review must reflect the increased demand and pressures on local authorities’ children’s services. The Government should bridge the existing funding gap for local authority children’s services in the 2019 Spending Review. At a minimum, core grant funding up until 2025 should increase by £3.1 billion to address short-term pressures. Funding for children’s services should not be ring-fenced except in limited instances of time-limited one-off grant funding as detailed in Chapters 1 and 4. Current funding levels are unsustainable given the multitude of pressures in the system which have been discussed in this report. Additional core funding is urgently required to ensure that local authorities can meet increasing demand, provide high quality children’s services and, ultimately, adequately safeguard children.

156.In the long-term, we welcome the creation of a specific children’s services funding formula to make the distribution of funding fairer. We urge the Government to consult local authorities and children’s charities to ensure it meets the needs of children across the country. After one year of implementation, the formula should be independently evaluated to consider whether it is accurately predicting needs. If it underestimates local authority costs, the need for further funding must be communicated by both the Department for Education and the Ministry of Housing, Communities and Local Government to HM Treasury in the strongest terms.

Systemic change

157.While, as evidenced above and in Chapter 1, increased Government funding is essential to securing the short and long-term sustainability of local authorities’ children’s services, we heard that it would not solve deeper systemic issues. The Social Justice Research Group at the University of the West of England told us:

Whilst we agree that funding is a key element to effective delivery of statutory and non-statutory children’s social care functions, our findings, gained through a thorough review of the whole of the CSC [children’s social care] system do not support an increase in funding as a panacea to deeper, systemic problems. It will not provide a solution to systemic issues which are costly in terms of budgets deficits, welfare failures and failures of social justice.353

Professor Devine from the Social Justice Research Group elaborated to the Committee:

There are only two possible solutions to that problem [funding deficit] … You either have to increase the budget on the basis that we are just going to keep doing more of the same—to keep doing the same, you need a bigger budget; we cannot really get away from that—or you have to change some of the variables and make sure you are doing something different to keep the budget down.354

158.The Government agreed that “money is definitely not a panacea”.355 The Minister for Local Government said that sharing best practice should “equally be focused on”.356 The Parliamentary Under Secretary for Children and Families agreed highlighting the “real role for system change through the Innovation Programme” and explained how successful models, where councils were unlocking savings and safely managing demand for critical services, were being scaled-up to bring system change to 20 more local authorities.357

159.We recognise increased funding will not solely improve sustainability; it goes hand in hand with systemic, strategic changes. During the course of our inquiry many recommendations for systemic change have been proposed, several of which have been considered already in this report. We call on the Government to implement our recommendations, particularly regarding the children’s care market, workforce, understanding demand and innovation, without delay. The sooner these systemic changes are made, the sooner we will have children’s social care which is fit for purpose and able to deliver both long-term financial sustainability for local authorities and also the best outcomes for children. The Government should consult on what further systemic changes are necessary. As we have noted throughout, we expect the reviews that have been recommended throughout this report to be reported back to the Committee by December 2019. We also expect the Government to indicate how it has taken our report into consideration in the 2019 Spending Review and explain how it is monitoring progress by December 2019.

330 Survey response

333 St Helens Council (ACS0057)

335 Children’s services funding - facts and figures, Local Government Association and Close the children’s services funding gap joint letter, Local Government Association and others, 15 November 2017.

336 Local Government Association (ACS0037)

337 See Kent County Council (ACS0011), The Children’s Services Development Group (ACS0023), Wigan Council (ACS0044), Royal College of Nursing (ACS0056), Royal Borough of Greenwich (ACS0059) and The Children’s Society (ACS0068).

343 Bright Future: Children’s Services, Local Government Association.

344 Barnardo’s (ACS0032)

345 Q10. See also Q18.

347 Children England (ACS0013)

348 Children England (ACS0013)

349 Professor Ray Jones (ACS0005). See also Association of Directors of Children’s Services (ACS0038), Newcastle City Council (ACS0045) and SIGOMA (ACS0051).

350 Children England (ACS0013)

351 Alcohol and Families Alliance (ACS0024)

353 The Social Justice Research Group, University of the West of England (ACS0028)

Published: 1 May 2019