Council facing overspend after surge in costs for children’s care placements

Leicestershire County Council is forecasting a budgetary overspend this year after the cost of children’s social care placements rose by a fifth in the space of just over a year.

After four months of the 2023/24 financial year, the council is projecting a net revenue overspend of £8.9m on its £512m budget, although in-year efficiencies are likely to bring this figure down by the end of the financial year next spring.

grayscale photography of child beside tree

The main driver of the projected overspend is its children and family services directorate, which is projected to overspend by a net £7.9m (7.6%), mainly due to a £5.5m projected overspend on children’s social care placements.

While the number of children in care in Leicestershire has not risen significantly, the cost of residential placements is soaring, with the average weekly cost per placement rising from £4,800 to £5,750 in the last 12-18 months.

While there has been a change in the cohort of children in care, the council said the main driver of rising costs was market pressures.

‘A lack of provider capacity and volatility in the market, as well as increasing complexity and/or different cohort of children and young people needing placements, has significantly increased the cost of new placements,’ said a report by the council’s director of corporate resources published last week.

The report said that ‘market instability and provider choice’ meant that children with a range of complex needs, including violence and aggression as a result of experiencing trauma, had to be placed in high-cost interim provision at more than £10,000 a week per child until their behaviour stabilised or another placement could be found.

Another issue facing the council is a lack of step-down options to allow children in care to leave residential placements. Ongoing work to identify suitable provision has been hindered by low recruitment of mainstream carers, which particularly affects the availability of placements for older children and those with more complex needs.

The council said it had secured grant funding to develop new residential care units that would create extra placements for children in care.

Aside from children’s care, Leicestershire council is also forecasting an £11.9m overspend on its Dedicated Schools Grant (DSG) budget, driven by a £14m predicted overspend on special needs education. The council started the financial year with a £35.5m cumulative deficit on its high needs budget, which funds special needs education. DSG overspends and deficits do not currently have to be covered by the council’s overall budget.

After more than a decade of government austerity and despite significant council tax rises, local authorities across England are facing severe financial pressures, with Birmingham recently declaring effective bankruptcy – a crisis that does not face Leicestershire at present.

Image: Katherine Chase

More on this topic:

Council budgets buckling under soaring costs for children’s social care, warn charities


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