Councils are bypassing the best residential child care providers in favour of cheaper options that yield poorer outcomes, according to a study.
The report by the New Economics Foundation blamed “inappropriate” performance targets and cost-cutting for what it described as a false economy.
The study found specialist therapeutic provision – usually a more expensive option – was often “squeezed” financially.
Researchers cited the case of provider Shaftesbury Young People, which recently lost out on contracts to larger organisations because it could not compete on price despite the high quality of its care.
The report said that, when costs and benefits were aggregated across the whole of government spending and long-term economic and social effects were taken into account, investment in high-quality care yielded significant dividends (see panel).
However, it said the government’s 3% annual efficiency targets for councils and performance indicators that focused on short-term outputs rather than long-term outcomes led to authorities making the “false economy” of buying in cheaper services.
It recommended an overhaul of performance measures for looked-after children. This included requiring and funding providers to track young people after they left care in order to gauge long-term outcomes.
The report follows criticisms from the Independent Children’s Homes Association (ICHA) that councils were using efficiency savings to justify sub-inflationary or zero per cent fee increases for providers.
Peter O’Neil, of the ICHA, backed the report’s findings. He said some councils were “particularly strident in their efforts to save money rather than actively pursue positive outcomes for children”.
But Ann Baxter, chair of the Association of Directors of Children’s Services’ health, care and additional needs committee, disagreed.
She said: “Councils and their partners are always striving to ensure that public money is used to maximise quality and value. Individual decisions about appropriate placements are always informed by need and the child’s best interests.”
● For every additional £1 invested in higher-quality residential care, between £4 and £6.10 worth of additional social value is generated.
● The total value of residential care services could be up to £700m over 20 years – enough to pay the country’s entire annual care bill for children in care.