"Vicious cycle curbs prevention"

Posted on May 21, 2024

Children’s services is now recognised as the area of most significant pressure across local government, topping budget pressure surveys from sector groups.

Councils are facing a combination of significantly more children in care and the cost of placements skyrocketing. The impact on budgets has been stark. The Special Interest Group of Municipal Authorities (SIGOMA) analysis found that in 2022-23, 27% of core spending power was paid out on children’s services – up from 14% in 2011-12. Over the same period, spending power has fallen by about a fifth across England.

While all upper-tier authorities are under pressure from children’s services, as with many services in local government, there is a strong link between levels of deprivation and demand. A recent report by Health Equity North on behalf of the Child of the North All-Party Parliamentary Group showed there is significant variation across the country in terms of the rates of children in care.

Blackpool, the most deprived local authority in England, according to the 2019 Indices of Multiple Deprivation, had the highest rate in the country, with one in 52 children in care, compared with one in 140 across England.

Our analysis of revenue outturn data found spend on children’s services represented 45% of Blackpool’s core spending power in 2022-23 – the second highest in England.

The report found socio-economic drivers, alongside cuts to local government budgets, including in preventative services, have resulted in increasing numbers of children entering care. We know cuts in local government spending have particularly impacted the most deprived and grant- dependent authorities. Since 2010-11, the most deprived decile of upper-tier councils have seen an average real-terms cut of 26.6% compared with 7% for the least deprived decile.

Rising numbers of children in care then create a vicious cycle as more of the available funding is spent on very expensive placement costs, so less can be spent on preventative services that reduce demand in the long run.

The report found that between 2011 and 2019, total spending on preventative services for children and families fell by about 25% in real terms.

While this trend has been particularly felt in children’s services, it is a pattern that has repeated itself right across local government and the public sector over the last 14 years. A far greater proportion of NHS spend is now on hospital care, while in local government, as budgets were squeezed during austerity, cuts fell in non-statutory services, many of which had a preventative function.

Despite many claims to the contrary, austerity never really ended for town halls and the recent Spending Review implied significant real-terms cuts for ‘unprotected’ departments such as local government over coming years. These implied cuts were potentially worsened by the announcement to increase defence spending – a ‘protected’ department – to 2.5% of GDP by 2030.

We know preventative services are vital, but with the sector set for more austerity in the coming years, they will continue to be cut and demand will continue to rise.

To end this vicious cycle, we need to fund local government properly and fairly. In the short-term that means bringing in the fair funding review, resetting business rates and providing multi-year settlements to return stability to the sector. In the longer-term we need to think seriously about what we expect local government to provide and the funding required to do that. At the moment it is clear the level of expectation and funding do not match.

Read the article in full in the MJ online (and in print) here.