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The Scottish executive has been called on to revise its funding formula for children’s services after a finance expert found that Scotland’s councils will spend £161m more this year than the executive’s estimates.

Professor Arthur Midwinter, an adviser to the executive, said the gap would widen to £222m by 2010-11 if existing grant-aided expenditure estimates continued.

But an executive spokesperson said the report ignored millions of pounds in other funding and that grant-aided expenditure “was never intended to support 100 per cent of the costs of providing services”.

Midwinter said the biggest factors in the funding gap were the growth in the number of looked-after children (1.5 per cent a year) and the increase in the cost of providing their care (4 per cent a year). And he warned that refocusing social services
on more preventive work was “an unrealistic assumption” without extra resources.

David Crawford, president of the Association of Directors of Social Work, which commissioned the research, said: “This means that services such as fostering and residential care are only funded by moving money from other areas of local authority responsibility.”