Funding of local authorities’ children’s services Contents

Conclusions and recommendations

Funding pressures

1.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. (Paragraph 12)

2.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. (Paragraph 21)

3.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. (Paragraph 22)

4.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. (Paragraph 23)

5.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. (Paragraph 27)

Other pressures

6.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. (Paragraph 34)

7.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. (Paragraph 38)

8.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. (Paragraph 39)

9.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. (Paragraph 45)

10.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. (Paragraph 46)

11.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. (Paragraph 51)

Sustainability of current system

12.The Committee heard many factors were at play in accounting for the record numbers of children in care and the significant increases in other child protection activity. Without a better understanding of demand it is impossible for local authorities and the Government to anticipate care needs and budget effectively–the key to long-term sustainability. (Paragraph 73)

13.While we welcome the Government’s efforts to understand demand by conducting research we are concerned that it has only recently started seriously looking into this issue. We are particularly concerned that the numbers of newborns taken into care has more than doubled in the last ten years. Understanding the reasons behind the record numbers of children in care is of utmost importance if the Government wants to bring these numbers down. (Paragraph 74)

14.The Government should share its research data anonymously with local authorities in order that they can use it to inform their budget projections. By December 2019, the Government should report to the Committee whether there is scope to reduce demand nationally, and, if so, the Government should have assessed the merits of various methods to reduce demand by then as well. Where there isn’t scope to reduce demand, for example if increased need necessitates it, local government must be appropriately and flexibly resourced. (Paragraph 75)

15.Limited variation in spend on children’s social care and differences in the numbers of children taken into care may be expected but the high level of divergence is concerning and suggests the practice of local authorities is very different, although the reasons why are unclear. While we acknowledge that an over simplistic comparison of spend per child is unhelpful, there must be lessons to be learnt for the sector as a whole from understanding such variation further. We welcome the Government’s efforts to better understand what is happening in individual local authorities but it could be doing more. (Paragraph 87)

16.We therefore urge the Government to implement the first recommendation of the Public Accounts Committee’s 88th Report of Session 2017–19, which calls for the Department for Education to publish information concerning variation by December 2019. The National Audit Office should also independently continue to look into the reasons behind variation in spending and activity. While reducing spend per child must not be a goal in itself, we believe best practice that emerges from this analysis should be disseminated nationally. The Government should also consider standardising financial reporting to make comparisons easier and provide greater transparency on cases of children being taken into care. (Paragraph 88)

17.Local authorities are highly reliant on the independent sector, particularly for children’s residential care. Both local authorities and independent providers recognise that costs for care placements in the independent sector are increasing but there is some disagreement on why this is the case. More must be done by local government and central government to facilitate an increase in the supply of such placements. (Paragraph 112)

18.The Government should consider the barriers to creating more residential care placements from the perspectives of both local authorities and private providers, and of people applying to become foster carers. In doing so, it should consider the role of greater central government investment in this sector. There may also be a role for greater regulation of the market to ensure that costs do not rise disproportionally and that there is appropriate competition. The Competition and Markets Authority should investigate this market. We encourage the NAO to analyse and compare the cost and value for money of private and in-house children’s residential care provision when it next revisits this topic. (Paragraph 113)

19.Given local authorities’ high reliance on the independent sector, particularly for residential care, it is imperative that commissioning and procurement are improved to ensure no child is placed in unsuitable care settings. There should be more monitoring of the impact of different placements and the quality of care on children’s outcomes. A variety of improvements were suggested to us including the introduction of a national care bank, central government investment, and a local government procurement strategy. (Paragraph 114)

20.Local authorities and the independent sector must work pragmatically together to ensure the needs of children are met; independent care providers constitute a significant proportion of the market. By December 2019, the Government should take the lead in conducting a review of the whole commissioning and procurement system and assess the merits of the various improvements that have been suggested to us in the course of our inquiry. We urge the Government and local authorities to introduce greater oversight of how different care placements affect outcomes for children to ensure that every child receives the support they require. Local authorities should also better monitor the value for money of placements; as supply increases and commissioning improves, understanding the value for money will become more and more important. (Paragraph 115)

21.High turnover and low retention of the children’s social care workforce point to a system that isn’t working well. Children pay the price as professional relationships break down. It has a cost for local authorities who resort to filling vacancies with agency staff and may, if financially viable, have to spend money on attracting staff. Social workers are suffering from a range of pressures such as increased workload and administrative burdens. (Paragraph 130)

22.While some workforce reforms have been introduced, it is clear that more needs to be done nationally to retain good professionals and build long-term professional relationships in the sector; there is no point recruiting more staff if they will not stay. The Government should increase core funding in order to enable local authorities to ease the pressure facing social workers. We suggest that the implementation of the recommendations of the British Association of Social Workers and the Children’s Commissioner for England, detailed in their 80–20 Campaign report such as increasing the number of support staff and upgrading IT equipment, would be a good place to start. (Paragraph 131)

23.The Government must also conduct a consultation with social workers, local authorities and representative professional organisations across the country to gain a better understanding of the pressures facing social workers and why social workers are leaving their roles, whether to go to another local authority, take another job at the same council or to leave the profession altogether. Based on the consultation, the Government should assess the merits of options (e.g. limiting caseloads, reducing the administrative burdens, and nurturing supportive cultures) to lessen the burden on children’s social workers as a matter of urgency. We expect the Government to report back to the Committee by December 2019. (Paragraph 132)

24.We believe that the Government should fund the creation and implementation of a national recruitment strategy to encourage people into the sector. As part of this work, the Government should consider whether additional recruitment incentives or support are required, particularly to attract staff to local authorities with poor Ofsted ratings. We consider that this work could be conducted by Social Work England. (Paragraph 133)

25.Some of the challenges facing social workers are reflected in the wider children’s social care workforce, where retention of staff is also proving problematic. Nevertheless, the wider workforce also has challenges of its own, particularly regarding remuneration, which we were told is on a par with working in a supermarket, and the level of training. It is highly questionable that some of the most vulnerable children are being cared for by a workforce that may not always be as well qualified as might be expected. The Government should invest in the workforce to ensure that it is appropriately remunerated, skilled and supported to deliver the best outcomes for children. There is value in considering what lessons from UNISON’s ethical care charter may also apply to children’s care; we reiterate a recommendation by our predecessor committee which called for the Government, in partnership with the LGA to publish a care workers’ charter, drawing upon UNISON’s Ethical Care Charter, which sets out what care workers can expect from their employer. (Paragraph 139)

26.More should be done to understand the wider children’s care workforce. The Government should collect data about the profile of this workforce to better understand who is supporting some of the most vulnerable children in society. We believe that professional registration, as recommended by the Independent Inquiry into Child Sexual Abuse, may be a vehicle for greater transparency. (Paragraph 140)


27.Notwithstanding concerns raised about the administration of the Innovation Programme in Chapter 1, innovation which not only improves outcomes for children but also enhances financial sustainability is to be embraced. We welcome the Government’s commitment to supporting the expansion of successful initiatives to 20 local authorities. However, we believe that these initiatives should be seen as pilots with successful programmes systematically rolled out to all local authorities with the appropriate long-term support and resources which that would entail. (Paragraph 146)

28.Moreover, we believe that these initiatives should enrich and complement the delivery of good core services: innovation should not be prioritised over getting the basics right. Innovation cannot solely be responsible for delivering sustainable children’s services and must be accompanied by an increase in core funding and the other reforms we propose in this report. (Paragraph 147)

Improving children’s services

29.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. (Paragraph 155)

30.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. (Paragraph 156)

31.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. (Paragraph 159)

Published: 1 May 2019