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Spending on children's services has risen sharply in the last year, mainly due to the rise in the number of children in care. What are the alternatives to successive overspend crises, asks Natalie Valios?

Motorists will know that you can get more miles out a car than you think after the fuel gauge has started flashing, before having to fill up with petrol. The fuel gauge for children's social services hit empty months ago, but, much the same as cars, they're still chugging along on borrowed time - and money.

A budget survey by the Association of Directors of Social Services, council treasurers and the Local Government Association at the beginning of the year revealed that of the projected social services overspend of £200 million for 2000-1, 64 per cent was attributable to children's services.

According to the Department of Health, gross expenditure by local authorities in England on personal social services was just over £12 billion in 1999-2000, an increase of 11 per cent on the previous year. Services for children and older people accounted for nearly three-quarters of the total spend.¹

Why are children's services in the fast spending lane? A critical explanation is the rise in the number of children in care. Government figures show that at the end of March 2000 this stood at 58,100 in England - 5 per cent higher than the previous year and 18 per cent higher than in 1994.²

There are several factors accounting for this rise: professionals are more aware of signs of abuse; family breakdowns are occurring more often; the birth rate has gone up; disabled children live longer. This paints a picture of greater pressure on children's services.

When you then add to this the cost of residential care, highly expensive specialist care for children with complex needs, secure accommodation, children coming into care younger and staying longer, the increase in court orders which are costly to administer, and the increasing costs of foster care as more local authorities are forced to use independent agencies because of a lack of in-house carers, it's not surprising that children's services have overtaken, and in some cases lapped, other social services budgets.

That's not forgetting the extra pressure of children in need and child protection responsibilities, says Brian Parrott, chairperson of the ADSS resources committee. The DoH children in need survey last year showed this group had increased by 10 per cent from 1997 to 400,000 children.

Putting these factors to one side, there are also workforce costs to contend with, mainly due to the number of vacancies in children's services. High cost agency staff and enhancements to entice hard-to-recruit social workers add to the staffing costs of children's services budgets as well, says Parrott.

Meanwhile, independent fostering agencies have jumped into the driving seat, and this is causing one of the greatest headaches for local authorities. While they tempt foster carers away with promises of better financial reward and support, local authorities are left paying more for effectively the same service.

The fostering budget is the main pressure on Newcastle Council's children's social services. In 1998-9, it spent £3.4 million on fostering and adoption placements. For 2000-1, this jumped by £1.9 million. Meanwhile, the number of fostered children rose by less than 15. It all points to rising unit costs, says Paul Woods, head of finance at Newcastle Council.

Like most, Newcastle Council is struggling to retain sufficient in-house foster carers and is reviewing the foster care allowance to try to keep them. But it is finding that a rising number of children are being placed with the independent sector.

"We have to pay them two to three times what we pay our in-house carers. Some of that care is specialist, but some of it is standard made necessary by the lack of in-house foster carers," says Woods.

Mike Leadbetter, senior vice president of the ADSS, first raised the issue of foster carers going over to the independent sector four years ago. Several foster carers in Essex, where he is the social services director, had left the council in favour of a private fostering company paying them four times as much and promising 24-hour support.

"We had to choose to disrupt the placements or continue to pay. It was three times as much to use the same foster carers. We learned that if foster carers went across we couldn't guarantee that we wouldn't move the child otherwise the budget would be totally out of control," says Leadbetter.

"Only last week managers were telling me about their concerns - not so much about those foster carers we can pay enhancements to because they have done training accreditation, but about those we haven't had the finance available to put through training. Managers are worried that they might be tempted."

In response to this fear, Essex has used the child and adolescent mental health grant and part of the revenue released from closing a children's home to set up a clinical support team with a 24-hour helpline for foster carers. Early indications are that it has improved the situation.

"Local authorities are having to swallow hard and pay up because they need a placement," says Clive Sellick, senior lecturer in social work at the University of East Anglia.

"I still think the independent sector is offering a distinctively better service than many local authorities. For example, every agency in our survey offered training, respite care and round the clock support to foster carers."

Sellick and a colleague were commissioned to conduct a survey of independent fostering agencies in England, Wales and Scotland by the Joint Forum of Independent Fostering Agencies, due to be published in the autumn. The survey received replies from 55, about half the estimated total.

Contrary to local authority opinion, results suggest that independent agencies are not tempting away their foster carers. According to the survey, only one third of independent foster carers came directly from local authorities.

They "rear rather than poach" foster carers by paying realistic fees and offering high quality support services which attract, and then retain them, says Sellick.

So, can local authorities do anything to offset the costs of children's services? While they continue to spend significantly more on children's services than allowed for in the government's standard spending assessment (SSA), the temptation is to siphon money from other areas where spending is more in line with the SSA. This is typically from budgets for older people or disabled adults, with the knock-on effect of insufficient money to support people coming out of hospital.

John Ransford, head of social affairs, health and housing at the Local Government Association, says: "The children's SSA is completely wrong and out of date and everyone spends massively over it.

"It's the problem of quantity and quality. If you pay for quality and the quantity rises, then by definition you pay more."

The LGA and ADSS are telling government it has to look at the special features of social services generally and children's services in particular.

"It has pumped additional money into health services and education services. It will argue that it has increased SSA, but nothing like in other areas," reasons Ransford. "Most of the additional money we have got has been in specific grants for particular purposes, like Quality Protects. We are talking about general core issues that social services has to deal with."

Children's services have always been running to stand still, says Leadbetter. "We have never had the money to seriously invest, from the inception of the Children Act 1989," he adds.

Last month's news of a £7 billion underspend on public finance, of which £700 million relates to the DoH, may add grist to their mill. As the paymaster of social services departments, the government could be using that money to relieve pressure on social services departments, and ultimately on their service users.

As it is, local authorities are facing more difficulties in 2001-2, says Parrott. A more substantial ADSS budget survey currently being analysed is expected to confirm the particular spending pressures in children's services.

As Ransford rightly argues: "You can't refuse to protect children from abuse because of budgetary problems. There are enormous cost pressures that have to be dealt with somehow."

The government ignores the flashing warning light for children's services budgets at its peril. As they pull in for a four-star fill up, it's time the government got out its credit card - there will be no other breakdown recovery organisation passing.

¹ Department of Health, Personal Social Services Current Expenditure in England: 1999-2000, DoH, 2000

² Department of Health, Statistics on Children's Social Services in England: Year Ending 31 March 2000, DoH, 2000