The government has rejected a proposal to transfer the youth custody budget to councils.
The proposal was dropped from the Youth Crime Action Plan, which was published last week, but councils' involvement in tackling youth crime still features heavily.
Councils will have the lead duty on the education and training of young offenders, and will also be responsible for the full cost of court-ordered secure remand. Currently, councils are responsible for the placement and one-third of secure remand costs.
Councils will also have a formal duty to review cases where children go to jail and look at whether custody could have been avoided by earlier intervention.
Andrew Webb, Association of Directors of Children's Services lead on youth crime, told Community Care that directors had resisted the proposal to transfer the custody budget as it would have been a "simplistic solution to a complex problem".
He added that shifting responsibility for the budget would also entail "transferring commissioning powers and redesigning court disposals for young people".
Bob Ashford, head of strategy at the Youth Justice Board, said that the government's decision to drop the transfer of the £279m annual child custody budget had also been influenced by concerns about the ability of councils to take responsibility for the budget.
Campaigners expressed disappointment that the proposal had been rejected. Martin Narey, chief executive of Barnardo's and former prison service head, said councils needed incentives and resources to divert children from prison.
Jon Fayle, former head of policy at the Youth Justice Board, also said he was "astonished" that the plan failed to make sufficient reference to child protection and the looked-after children's system.
Youth Crime Action Plan proposals
● Increase take-up of parenting orders alongside Asbos.
● Expand family intervention projects.
● More funding for resettlement and aftercare for children leaving custody.
● More funding for intensive fostering pilots.
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