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Audit Commission - 12 per cent more children in council care at an overall cost of £3.4 billion

The number of children in the care of councils in England rose by 7,210 (12 per cent) over a four year period ending on 31 March 2013. 68,110 children were in care on this date, including 42,228 in care as a result of abuse or neglect. In 2012/13, councils in England spent a total of £3.4 billion caring for these vulnerable young people, who represent 0.6 per cent of all children in England under the age of 18.

Despite the 12 per cent rise in the number of children in care, councils’ costs increased by only 4 per cent nationally. Due to a number of factors that influenced spending, regional costs varied from a 15 per cent rise in the North East to a 7 per cent reduction in London.

The Audit Commission’s briefing, Councils’ Expenditure on Looked After Children: Using Data from the Value for Money Profiles Tooltakes a closer look at councils’ expenditure on foster care, which totalled £1.5 billion in 2012/13. It examines the impact that growing numbers of looked after children has had on councils’ expenditure and other factors which affect how much councils spend.

There is significant variation in the amount councils spends on each looked after child. In 2012/13, 21 councils spent less than £40,000 per child and 32 councils spent more than £60,000 per child. Councils with higher than average expenditure should explore the reasons for this and consider whether there is scope to reduce their spending. If, in 2012/13, higher spending councils had been able to reduce their spending to that of the remaining three quarters of councils in their comparator group[1], total spending would have reduced by £84 million – around 2.5 per cent of total spending in that year.

Total expenditure on services for looked after children rose by £1.4 billion in real terms between 2000/01 and 2012/13 – a 69 per cent increase. Councils have increasingly used foster care as the preferred form of care. In 2012/13, it accounted for 64 per cent of all the care provided. Between 2008/09 and 2012/13 councils’ use of foster care increased by a fifth, and over two thirds of this extra care was provided by foster care agencies from the private and voluntary sectors. The cost of agency foster care reduced by 15 per cent during this period, but the data supplied by councils shows that it remains on average a third more expensive than council provided care. At least some of this difference may be due to differences in the way councils and foster care agencies account for their costs.

Audit Commission Chairman, Jeremy Newman, says: ‘It is beyond question that councils must place children in settings that meet their individual needs and that provide cost effective, high quality care. With pressure to improve outcomes and reduce costs, all councils are faced with the challenge of getting the optimum value from the £137 on average spent per day, which equates to £50,000 a year, looking after each child in their care. To meet the complex needs of this group, spending can be more than five times[2]the financial cost of bringing up a child where there is no requirement for council support. Our briefing highlights considerable variation between councils’ spending on looked after children in their care. We encourage all councils to review their spending and in particular urge higher spending councils to understand the reasons for this and to consider whether they can secure more cost-effective placements without compromising on the quality of care.”

When the Commission conducted its analysis, inconsistencies in the way councils report similar data, which reduce the usefulness of the data, were identified. Although the standard of the data was better in 2012/13 than in previous years, there is still substantial scope for improvements. Both the Local Government Association and CIPFA are working to encourage improved data collection, recording and use. It is important that councils can make like-for-like comparisons between services, to inform the decisions they make to meet the needs of children in their care in a cost effective manner.

The Commission’s analysis shows that a range of factors affect how much councils spend, including:

  • how easy it is to recruit local foster carers;
  • the availability of suitable local placements when they are needed;
  • the balance between the council’s use of its own and agency foster care services; and
  • the nature of the foster care market operating in the local area, with councils purchasing a larger volume of foster care and being able to choose from a wider range of suppliers tending to get a better price.

Jeremy Newman concludes: “Councils should use their collective purchasing power to get maximum value for the £1.5 billion they spend on foster care. Rather than competing with each other, potentially driving up prices, councils should consider whether collaborating with neighbouring councils can secure the services they need, at a price they can better afford. Whilst councils know their population and their associated needs we believe that the VFM Profiles Tool can play a part in helping inform the decisions needed to deliver the best local outcomes.”

[1] Councils are divided into two comparator groups for this analysis – London (where three quarters of councils spent £71,313 or less per child) and the rest of England (where three quarters of councils spent £53,918 or less per child).

[2] The Child Poverty Action Group’s latest research calculated the cost in 2013 to be aminimum of £148,000 in total to bring a child up until they reach the age of 18. This works out at an average of £8,706 per year. http://www.cpag.org.uk/content/cost-child-2013

Notes to Editors

1) This briefing, Councils’ Expenditure on Looked After Children: Using Data from the Value for Money Profiles Tool, takes a closer look at councils’ expenditure on foster care which totalled £1.5 billion in 2012/13. In the briefing we explore the impact that growing numbers of looked after children has had on councils’ expenditure and other factors which affect how much councils spend. It does not seek to analyse the quality of services for looked after children or their impact on children’s lives and future prospects. Children’s social care services are subject to a high degree of public, political and regulatory scrutiny and councils are under pressure to improve.

2) The VFM Profiles are available on the the Audit Commissions VFM Profiles webpage. The data in the VFM Profiles can be used to examine for individual councils: the level of spending; changes in spending over time; and how spending and changes compare to other councils of the same type; to councils that serve areas that are similar in terms of population and economic factors; or to councils within geographic areas.

Details for accessing additional data from the Audit Commissions VFM Profiles webpage
a). Select a council.
b). Choose a comparison group – you will be taken to the ‘Overview’ page.
c). From the Overview page select the tab at the top labelled ‘Children & young people’.
d). The refreshed page will now have green tabs towards the top of the page, select ‘Looked after children’.
e). Here you can see a range of indicators, such as the:‘Total spend on children looked after (£s)’, the ‘Number of looked after children per 10,000 children aged 0 to 17’, the ‘Total spend on adoption services per child placed for adoption’, the ‘Number of looked after children placed for adoption/foster care and the Costs of children in foster care per day.

3) VFM briefings published by the Audit Commission include: -
Managing Council Property Assets: Using Data from the Value for Money Profiles Tool(PDF document) (June 2014)
Local authority waste management: Using Data from the Value for Money Profiles Tool(March 2014)
Councils’ Centrally Managed Spending: Using Data from the Value for Money Profiles Tool (February 2014)
Council’s expenditure on benefits administration: Using Data from the Value for Money Profiles Tool (January 2014)
Business Rates: Using Data from the Value for Money Profiles Tool (PDF document)(October 2013)
Income From Charging: Using Data from the Value for Money Profiles Tool (September 2013)
Social Care for Older People: Using Data from the Value for Money Profiles Tool (July 2013)
Council Tax Collection: Using Data from the Value for Money Profiles Tool (June 2013)

4) Some additional background facts about the potential effect of being a ‘looked after’ child: – About 23 per cent of the adult prison population have been in care. – Around a quarter of those living on the street have a care background. – Care leavers are four or five times more likely to commit suicide in adulthood. – A quarter of care leavers were pregnant or young parents within a year of leaving care. – 36 per cent of 19 year olds who were looked after at the age of 16 were not in employment, education or training. (Source: Still Our Children: Case for reforming the leaving care system in England Briefing for House of Commons Report Stage of the Children and Families Bill, Barnardo’s, May 2013)

5). The Audit Commission’s role is to protect the public purse. We do this by appointing auditors to a range of local public bodies in England. We set the standards we expect auditors to meet and oversee their work. Our aim is to secure high-quality audits at the best price possible. We use information from auditors and published data to provide authoritative, evidence-based analysis. This helps local public services to learn from one another and manage the financial challenges they face. We also compare data across the public sector to identify where services could be open to abuse and help organisations fight fraud.

For further information please contact: 
Nick Rigg, Senior communications specialist
Audit Commission
Direct line: 0303 444 8284
Press office: 0303 444 8282
Email: n-rigg@audit-commission.gsi.gov.uk

Channel website: https://www.icaew.com

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