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Analysis: Children's Services - Councils face budget black hole

24th January 2006

Councils across the country are complaining of huge shortfalls in their children's services budgets for 2006/07 and many fear it will hit the Every Child Matters agenda. Ruth Smith looks at how the gap came about and how councils plan to tackle it.

Nothing can escape from a black hole, not even light. Likewise, children's services are realising that there's no escaping the 600m funding shortfall awaiting them in the next financial year.

The raw reality appears to be that the poor budget settlement fromcentral government for 2006/07 is going to hit the Every Child Mattersreforms hard (Children Now, 18-24 January).

"We're essentially fire fighting, instead of engaging in preventative work," says Conservative councillor Shona Johnstone, CambridgeshireCounty Council's cabinet member for children and young people'sservices. "There's a real danger we won't be able to deliver Every ChildMatters."

Cambridgeshire is facing a 1m shortfall in its children andfamilies' budget. "Just to stand still we'd need to increase council taxby at least six per cent. But the Government wants council tax risescapped at five per cent so we're already trying to deliver more on lessresources," explains Johnstone.

Setting the budget

This dilemma faces councils across the country as they struggle to settheir budgets before the next financial year. Andrew Webb, co-chair ofthe Association of Directors of Social Services' children and familiescommittee and director of children's services in Stockport, says he isaware of a "significant number" of councils facing problems. Suffolkfaces a 3.3m shortfall in its 2006/07 children and familybudget.

Essex faces similar problems, although its final budget won't be agreeduntil mid-February. "When money has got to be saved, preventativeservices have got to be cut," says Clair Pyper, service director forchildren and young people at Essex County Council.

And the problem is not just confined to the south of England as somesuggested after changes to the cash distribution formula led to chargesof the Government siphoning money to the Midlands and the North(Children Now, 23-29 November). "We're in the North and have one of thetoughest settlements," says Webb. Sheffield also reports "considerablebudget pressures".

But a spokesman for the Office of the Deputy Prime Minister, which isresponsible for local government finance, dismisses claims of a poorbudget settlement. "Local government has received above-inflation grantincreases for 10 successive years, enabling them to provide effectiveservices at an affordable cost and avoid council tax rises," hesays.

But the Local Government Association argues this is too simplistic. "Theoverall increase for authorities who provide children's services was 2.7per cent, which is roughly in line with inflation. But 70 councils got atwo per cent increase, meaning around half got a below-inflationincrease," explains a spokesman.

And the problem is compounded by a disagreement over how you measureinflation. The Government uses the Consumer Price Index, which largelyreflects things like food, restaurant and transport costs. But verydifferent pressures drive inflation in children's services. For example,the Local Government Association says the cost of providing support tolooked-after children has been increasing by around 10 per cent perannum in recent years and this is expected to continue. Unit costs inprivately run children's homes have increased by 45 per cent and localauthority provision by 28 per cent between 1999/2000 and 2003/04.

This was not caused just because driving up standards costs money. TheLocal Government Association says there are simply more children withgreater needs. The number of children in care has been increasing, oftenas a result of improved and more joined-up services identifying morechildren in need. So too has the number of children with severe andcomplex needs.

Medical advances mean these children are surviving longer. And localauthorities pay a major role in supporting young asylum seekers.

More children to pay for

Johnstone agrees and says Cambridge, like so many other authorities, hasseen a growing number of children in the care system. "We also have alarge number of unaccompanied asylum seekers. A growing number ofpremature babies survive, which is fantastic, but many have severedisabilities that require extra resources. And we're more aware of theneeds of children with autism, for example," she explains.

In Scotland there are similar pressures. "Many councils are showing anoverspend in their children and families services," says BernadetteDocherty, chair of the Association of Directors of Social Work'schildren and family care standing committee. "There are more childrenlooked after away from home than five years ago and placement costs haverisen to meet new standards."

But it is not all bad news. There has been a significant increase in theamount of money the Government sends directly to schools. "In Suffolkwe've got a settlement for schools, which is an increase of 6.7 per centper pupil. We're also pleased with the Sure Start and early yearschildcare settlements," says Rosalind Turner, director for children andyoung people at the council. And, although she fears that cuts to thecouncil's children and family budget could disproportionately affect thechildren most in need, she says there is a lot that can be done toinfluence schools, who are keen to champion Every Child Matters. "We'vegot to work creatively, to look at the money to make sure it's weightedto supporting the children who need it most," she concludes. P


- Children's services departments are facing a 600m fundingshortfall in 2006/07

- Download Beyond The Black Hole, a Time of Opportunity and Challengeand a linked fact sheet on vulnerable children

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