No solution to 'broken' children's services that are crippling council budgets, MPs warned

A “market failure” in children’s services is putting enormous pressure on council budgets with no way to fill them without reform, MPs have been warned.

Yesterday Councillor Graham Chapman, the Vice Chair of the SIGOMA group of councils, said that local authorities across the country see “almost no way through” rising costs.

He told Parliament’s Levelling Up Committee that the costs of children’s services are now “enormous”.

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Cllr Chapman warned that even if councils issued a section 114 notice, an effective-declaration of bankruptcy that could lead to government intervention or a bailout, it is unlikely this will solve the issue as “the market is broken”.

Bradford Council is facing its own financial troubles relating to ballooning costs for children's services.Bradford Council is facing its own financial troubles relating to ballooning costs for children's services.
Bradford Council is facing its own financial troubles relating to ballooning costs for children's services.

“We’re reaching a tipping point,” he added.

It comes after a report by the Competition and Markets Authority found that a lack of placements for vulnerable children meant that they are being placed far from home or in inappropriate settings as well as driving higher fees which councils have no choice but to pay.

This has seen several councils pay exorbitant fees for private providers to run poor-quality children’s services, with the £6.5bn UK market needing significant overhaul.

Earlier this year control of children’s services in Bradford were transferred to the Bradford Children's Trust after the council’s performance was rated inadequate by inspectors with Ofsted finding “widespread failures in all areas”.

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However a meeting in July this year raised concerns that the council, who fund the Trust despite not running services themselves, would not be able to afford the costs required.

The council currently faces a £68 million overspend, with children’s services alone accounting for £45 million of this.

Separately Rotherham Council is facing a £9 million budget deficit for the coming financial year, having to use reserves to cover spending in 2023/24, potentially stretching into 2025/26

Finance bosses said pressures in children and adult social care were significant drivers of this.

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Pressures on spending and services are also seeing councils back out of implementing impactful policies which they support, new research suggests.

Analysis by the IPPR think tank found that while 78 per cent of urban councillors believe local authorities have a duty to tackle air pollution, most say they have neither the necessary powers (52 per cent) or funding (72 per cent).

Only 6 per cent ‘strongly agree’ that the Government is doing enough to support local authorities to tackle air pollution.

Maya Singer Hobbs, senior research fellow at IPPR, said: “Local councillors in our cities and towns generally know that air quality is bad and is leading to avoidable illnesses and deaths. But they feel they are too powerless and penniless to make a meaningful difference, and feel they’ve been abandoned by government.

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“Local people, like councillors, are best placed to design local solutions to improve air quality where they live. However, without more resources and wider support from national government, they won’t be able to take action at the pace and scale required to match the severity of the problem.”