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Ian Thomas: Challenge and modify to improve children's services

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The funding crisis in children’s services has emerged among the most pressing concerns for leaders of upper-tier councils.

There is little sign the pressure will abate soon. The Local Government Association’s estimate of a £2bn budget shortfall by 2020 rises to £3.1bn by 2025, according to recent projections.

Even this excludes the pressures within ring-fenced dedicated schools grants for children with special educational needs and disability, amounting to some £500m currently, according to the LGA’s recent interim research findings.

This shouldn’t come as a surprise to anyone working in the sector. They called it. The financial wizards in Barnet LBC published the ‘graph of doom’ in 2012 as the realised impact of a 10-year austerity programme started to emerge.

Many of us at the time accepted the theory and underpinning analysis. We stated that given the role of local authorities to create thriving places it would be a failure to allow the projections to become reality.

Fast forward to today and local government has again proved its worth by making huge savings, in many cases cutting services. But at what cost in the longer term?

The Chartered Institute of Public Finance & Accountancy recently confirmed one in every six councils face financial stability risk, with four councils spending 90% of their net budget on social care and interest payments. Cipfa asserts that for 12 upper-tier local authorities reserves will soon be depleted entirely if the current trajectory persists. Clearly, this situation is unsustainable.

As with any problem, understanding the root cause is critical to designing a solution. The reason why there is a burgeoning budget gap for children’s services nationally is complex and multi dimensional.

First, we have seen an unprecedented increase in demand over the last decade, as confirmed in the Association of Directors of Children’s Services’ Safeguarding Pressures research.

This shows a 78% increase in initial contacts regarding the safety of a child; a 159% increase in section 47 enquiries, where children are deemed as experiencing or likely to experience ‘significant harm’; an 87% increase in children subject to a child protection plan; and a 24% increase in children looked after by the local authority.

These unprecedented augmentations are due to several factors, alongside population growth. They include the ramifications of Baby P’s tragic death in 2007, which has led to a better understanding of neglect and appropriate response (and many would say, in some cases, a reduced appetite for risk).

There is also a new Ofsted regime, which resulted in more councils rated as ‘inadequate’ or ‘requires improvement’; a reversal of upward adoption trends following significant case law; a better understanding of and response to non-familial abuse such as child sexual exploitation, county lines, modern day slavery, radicalisation and extremism; and increasing numbers of unaccompanied asylum-seeking children.

There has also been a reduction in early help offers and an increase in challenges faced by more deprived families. This noteworthy given the “strong link” found by Joseph Rowntree Foundation research between family poverty and a child’s chance of suffering abuse or neglect.

Another reason for the budget gap is the rise in unit cost due to market conditions. Basically, the market for ‘children looked after’ placements is not keeping pace with demand, which is driving up the cost of care.

A further prominent factor is workforce, with most areas having to rely on a higher proportion of agency staffing, which generally costs more than permanent workers within the child protection sphere.

So what’s the solution? More money is needed, but clearly not at any price given the pressures across the public sector.

I believe time spent in benchmarking to inform is time wasted. Local areas are at different points in improving, there is wide variation in demographics with complex heterogeneous communities, and the characteristics of each individual area range from inner city urban to coastal deprivation.

This is compounded by idiosyncratic situations such as extensive historical abuse investigations, which fuel demand for child protection. For good measure, you could add the many ways councils choose to code expenditure.

In my view, as part of this year’s spending review more time should be devoted to developing local 10-year financial strategies which focus on investing rather than spending. The former should be spent more wisely, reaping return, whereas the latter is more likely to be reactionary and wasteful.

Each strategy could appropriately reflect local context, identify early intervention and edge of care approaches to create return on investment, and be supported by multi-agency commissioning strategies to ensure cost-effective sufficiency of placements relative to need, complemented by a compelling workforce development offer.

When aggregated at a macro level the figures could be unpalatable for most. But if we redirect considerable effort and the cost of benchmarking into challenge, validation and modification we could get there. Over a decade my bet is that this would be appreciably cheaper than the current ‘strategy’.

Ian Thomas, chief executive, Kingston upon Thames RBC, and former chair of the resources and sustainability policy committee, Association of Directors of Children’s Services

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