Children in care costs nine times higher than government funding – report

The cost of accommodating teenagers in semi-independent housing could be over nine times higher than government funding, a new report has found.

A new report, which was produced by the County Councils Network (CCN) and London Innovation and Improvement Alliance (LiiA), revealed that young people who leave children’s homes to live in independent housing will not be able to be funded by the government. Authorities have set out there funding plans until 2026 and experts discovered costs to sufficiently support teenagers could be nine times higher.

Following this announcement, Ofsted will begin regulating semi-independent homes for 16 and 17-year-olds in care against new national standards, which will bring them in line with other types of accommodation for children in care. The regime is due to begin in October this year.

However, concerns have been cast that this new regime will be passed onto councils, placing further pressure on their children’s services budgets, while some local authorities could also find it harder to place vulnerable children because the regulations could result in a lack of local capacity.

The report found:

• In some areas of the country providers could leave the market due to the regulations and extra costs involved, such as registration and recruiting
• According to a survey of providers of semi-independent living that was conducted for the report, 19% of existing beds will not be registered due to the new regulatory system being introduced
• For those providers that intend to register their beds, over nine in ten plan on raising their prices to local authorities as a direct response to cover the additional costs of regulation. Evidence gathered from councils suggests that prices could rise between 15-30% over the next three years.
• As a result of these price increases, rising demand and indirect impacts of regulation on the market, estimates suggest the costs of the reforms could be nine times current funding allocations by 2026/27. Over the next three years government have allocated £41m per year. However, by 2026/27 councils will be spending £368m per year more than they currently do, even after accounting for government funding
• For over half of over 16s currently in semi-independent living, this is not the best type of home to suit their needs. However, a lack of availability means that there are challenges for local authorities in securing more suitable alternatives

The CCN and LiiA have warned, that with costs being passed on to councils by providers, this will push more local authorities to overspend on their children in care budgets or be forced to cut services elsewhere to make up the shortfall. Many councils’ children’s services budgets have already reached breaking point, with almost 100 local authorities overspending on children in care in 2021/22.

As a result, councils are calling on the government to urgently provide more funding to their local authorities.

Cllr Keith Glazier, Children’s Services Spokesperson for the County Councils Network, said: ‘The introduction of a central inspection regime should allay concerns that children in care were in a two-tier system where young people were regulated up to the age of 16 and those older were not. But this new regulation has come at a significant cost to providers, who are looking to pass the cost onto local authorities.

‘Councils cannot afford this and, this will push many to breaking point at a time when other reforms to the children’s social care system are being introduced. Government should therefore fully fund this new inspection regime – the shortfall cannot be made up from vital local services.

‘At the same time, the report contains evidence that as many as one in five beds could be withdrawn by providers because of these incoming regulations.

‘This will create local shortages in accommodation and could result in more children being placed in areas far from where they have grown up. We need an urgent solution to this issue, and we want to work with government and providers over the coming months to preserve as many beds as possible.’

‘The report also allows us in local government to reflect on our own performance. Whilst we always try to place children in the most appropriate setting, it is clear that in some instances young people are housed in places that do not suit their needs,’ Cllr Glazier said. ‘We want to work with government and providers to ensure there is sufficient accommodation capacity in local areas, as well as improving our own performance so there is a greater focus on prevention.’

Image: Christian Erfurt