Rising demand, complexity and independent placements cause of social care cost variation

A study released this week (January 11) by the Department for Education examining the reasons for variation in the costs of providing children’s social care services has found rising demand for children’s social care with an increase in the number and complexity of child protection plans to be major contributing factors.

The study seeks to categorise reasons for variation in the costs of providing children’s social care services and highlights reported cost pressures. It brings together a review of recent available research and evidence bases to look at recent trends in national data, as well as the findings from a survey of 13 local authorities on demand pressures and suggested efficiencies.

The level of fees being paid for externally commissioned placements and increases in these fees were identified as major issues for most local authorities and was one of the most frequently cited concerns in the cost pressures survey. Payments made to the independent sector for placements (both foster care and residential), were cited as reaching around £0.9 billion for privately run residential care and around £0.7 billion for independent fostering agencies.

One suggested solution to this growing concern was for authorities to develop their own in-house placement services, particularly in response to meeting the complex needs of their population of looked after children. The aim would be to reduce both their reliance on externally commissioned placements and placements outside of the local authority area.

Specific contemporary social work issues were also cited for cost pressures, such as child sexual exploitation, child criminal exploitation and county lines gangs. Associated with this, many local authorities also reported an increase in the number of looked after children in their adolescent years.

The study found service responses to address these issues, such as the No Wrong Door approach replacing traditional council-run young peoples' homes with hubs combining residential care with fostering, were still relatively new and untested in a wide range of local authorities.

Rising unit costs particularly for looked after children, was also found to be a “substantive issue” for children’s social care, particularly in the context of increased demand and reduced budgets, with some local authorities reporting year-on-year rises for several years.

Seeking to identify the causes of wide variation between authorities, the study identified social work salaries to be an ‘obvious factor’ but found difficulties making comparisons due to their ‘multi-faceted’ nature. It suggested that there was a pay gap between local authority and agency social work staff, though there was some evidence that this was narrowing as a consequence of the IR35 changes.

The establishment of regional and/or sub-regional groups was frequently cited as a solution to address market pressures and to facilitate more effective commissioning and procurement practices. Regional groups were also cited as leading to efficiencies in terms of quality assurance of placements and on-going placement monitoring, as well as leading to the creation of forums to share good practice in some cases.

The study also highlights the need for better data, and for mechanisms to link cost data to information about activity, needs and circumstances of children and young people, service receipt and outcomes achieved.