Children’s services overspend risks pushing second local authority to emergency measures, report warns

A projected children’s services overspend of almost £15 million is putting another council at risk of de facto bankruptcy, according to recently published cabinet papers.

Somerset council’s July revenue budget report warns that the authority will have to make “urgent decisions” if its financial situation does not improve by October. The report then raises the option of issuing a section 114 notice, signalling financial unsustainability and shutting down all non-essential spending.

The council has proposed transferring £5 million of contingency budget across to children’s services to help mitigate departmental overspend. But, the budget report says, this will leave “the bottom line figure of overspend unaffected”.

It comes five months after Northampton – where half of the social workers recruited last year have left their posts, according to reports – became the first council in 20 years to issue one of the notices.

Somerset was one of three councils identified in research by the Bureau of Investigative Journalism, published in March, as showing “similar signs of financial stress” to Northamptonshire.

County councils, which typically serve wide areas with more dispersed populations, have been particularly hard by austerity. Somerset’s director of children’s services Julian Wooster told Community Care his department was doing “reasonably well” in the circumstances.

Placement problems

The budget report identified some key areas of concern for overspending in children’s services, including: 

• Residential and fostering placement budgets in Somerset were estimated to be overspent by almost £6.6 million because of a lack of capacity in the system.
• Fees and allowances were set to go over budget by £2.8 million, with work underway in partnership with Essex council to ensure Somerset’s special guardianship policy was proportionate to need in the county.
• Agency staffing costs – which Ofsted said at its last inspection Somerset was still over-reliant on, despite advances that saw the council move from ‘inadequate’ to ‘requires improvement’ – were projected to generate a £1.75 million overspend.

The report also said predicted savings within business support were likely to be only “achievable in part”, with further reviews still to take place.

The document said “immediate” mitigating action was necessary, with cuts expected to be made from other directorates’ staffing budgets.

‘Costs reducing’

Speaking to Community Care, Wooster said Somerset was reducing costs while improving its offer to staff, adding that the council was looking to “rebase the [departmental] budget”.

Wooster said permanent staff recruitment, described in the report as a “continuing struggle”, was improving, with reliance on agency workers having reduced by a third. Management at all levels within children’s services was now 80% permanent staff, he said.

Wooster added that difficulties around sourcing foster carers were being exacerbated by the shortage of social housing across Somerset, which meant the council was exploring options such as buying homes for families willing to accommodate sibling groups.

He said austerity meant Somerset was having to shrink its remit towards “helping people solve problems”, rather than providing universal services, but that he was “not personally concerned” about the section 114 notice warning.

“I am confident the local authority is addressing its issues,” Wooster said. “As with other councils, we are stretched and are taking appropriate action.”

An additional statement issued by Somerset council said the authority had achieved £130 million of savings in the last eight years while improving children’s services.

“It’s never been harder but all local authorities across the country face similar challenges,” the statement said. “We are prioritising the services that support vulnerable children and adults, so frontline social workers aren’t affected by restrictions on recruitment.”

A further report is due to be issued to Somerset’s cabinet members in September, taking stock of the authority’s in-year financial progress.