Cost of caring for children creates significant pressure for local authorities

The cost of providing safe and secure care for children over the last 5 years has far exceeded the budget available.  As Westminster Grants are cut back the costs continue to rise.

It is estimated that there has been an over spend of around £3bn in the budgets of local authorities for children’s safety.  The Local Government Association (LGA) called on the Government to make use of the coming review of children’s social care as an opportunity to look at why the needs for care have increased and take the chance of addressing this problem.

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Children’s services to be contracted out to independent providers?

At a time when the recent Supreme Court decision has focused minds on the issue of legal liability for foster care, and with ever increasing demands on local authority children’s services, Laing Buisson, healthcare consultant, has published a report suggesting large-scale contracting out of children’s services is imminent.

Central government funding for local authorities has fallen by £2.4 billion since 2010, however the expectation to deliver good outcomes and provide better services remains.

The report states that there is a drive towards a ‘payment by results’ approach and because of the scale of the children’s social care market it is an attractive option for investors.

Laing Buisson refers to a successful fostering scheme in Birmingham which is one of the children’s services which has been taken over by a Government trust. The scheme is called ‘The Step Down Programme’ and is funded through a social impact bond. The provider is a social capital investment fund and they only get paid if a foster placement remains stable after 52 weeks.

The programme saved the council approximately £880,000 with 70% of the placements making it through the project and remaining stable.

The report considers moving services to outside providers and could offer ‘scale and scope’ to services which find themselves under huge budget demands, with associated improvement in quality and better value for money.

However, this is not the first time there has been a suggestion that children’s services should be moved from local authorities to independent providers. In 2014 the Government reversed a decision to allow councils to outsource children’s services to outside providers, following a privatisation row. With the introduction of the Children and Social Work Act 2017 there were concerns over how the ‘exemption clause’ could open the door to private providers. Involvement of external providers in other traditional local authority processes has not always been successful and the potential for this to be seen as a negative money making option must not be ignored. There is no straightforward answer to this conundrum but clearly with increasing demand and need it is not a problem which can be ignored.


Written by Nicola Aspinwall, solicitor at BLM