A London borough has become the latest local authority to raise alarms around the impact children’s services spending is having on its financial sustainability.
In a report published earlier this month, Lewisham council revealed it had overspent by an “unprecedented” £16.5 million during the 2017/18 financial year, following a £7 million overspend in 2016/17.
Of the total, the borough’s children’s services were responsible for £15.6 million – £12.6 million of which was spent within children’s social care. Spending on agency staff alone resulted in a £6.6 million deficit.
Lewisham’s report follows one recently issued by Somerset council, which raised the possibility of the authority having to issue a ‘section 114’ notice – the equivalent of filing for bankruptcy – if its financial situation did not improve.
As with Lewisham, Somerset’s children’s services directorate was the main area of concern, with Somerset warning of a potential £15 million overspend over the current financial year.
Earlier in 2018 Northampton became the first council in 20 years to issue a section 114 notice.
‘Of an order never seen previously’
Lewisham’s budget report described the children’s services overspend as “significant”.
“[It] is of an order never seen previously in Lewisham,” the report warned.
It added that a large increase in agency staff towards the end of the financial year had a “hugely detrimental” effect on the overall children’s services budget, which had been relatively stable until the final quarter.
Lewisham’s residential placement budget was also overspent by £3.2 million, while placements of children in semi-independent accommodation added a further £1.8 million to the total.
A ‘children’s social care roadmap’, discussed at a select committee meeting in January 2018, had forecasted an overall £7.6 million children’s services overspend, £5.7 million of which fell within children’s social care.
That earlier report predicted that the salaries and wages budget would be overspent by just £1.4 million, as opposed to the eventual £7.5 million (£6.6 million on agency staff and £0.9 million on wages). It also set out a strategy via which Lewisham was aiming to reduce its reliance on agency social workers.
The borough did not answer questions from Community Care as to the reasons for its rapidly increasing agency staff spend, or any additional steps it would be taking to mitigate the spending and stabilise its workforce.
A Lewisham council spokesperson said: “Councils across the country are facing similar financial pressures in children’s social care as they battle to manage increasing demand against severe government cuts.”
The spokesperson added that between 2010 and 2020 the government will have cut Lewisham’s overall funding by 63%, and that issues would be dealt with “as part of our overall budget planning for next year”.
Wolverhampton ‘addressing’ looked-after children overspend
In a separate development, a Wolverhampton council cabinet report warned of a projected overspend of around £2.7 million for 2018/19, largely down to costs associated with looked-after children.
A spokesperson from the council said it had “strong financial management and resilience” and pointed to it having achieved an underspend of £781,000 for 2016/17.
“While pressures have been identified during the first quarter of 2018-2019, in particular around looked-after children, work is ongoing to address this by generating efficiencies throughout the year so we don’t have to draw on general reserves,” the spokesperson added.