New report warns councils in ‘doom-spiral of unsustainable spending on children’s services’

Councils in England are in a “worsening doom-spiral of unsustainable spending” when it comes to children’s social care, according to a new report.

Millions more has been spent on children’s services in recent years but much is going on costly late-stage intervention, new analysis commissioned by leading charities suggested.

This means vulnerable children are being helped mainly in emergency situations rather than having a focus on earlier preventative work, the report by Pro Bono Economics said.

Commissioned by leading children’s charities, Action for Children, Barnardo’s, The Children’s Society, National Children’s Bureau and NSPCC, the report has called for “significant investment” to help local authorities meet current needs while also moving towards early intervention services.

The Government unveiled its “Stable Homes, Built on Love: strategy and consultation” in February, describing it as a plan to make children’s social care work better.

It pledged £200 million over two years, to “transform the current care system to focus on more early support for families, reducing the need for crisis response at a later stage”.

But the analysis, published on Thursday, said there is “almost universal acceptance that the current system is failing” and argued that the scale of investment promised by Government “is unlikely to be sufficient to plug gaps in local authority budgets, even when combined with expected further increases in local government spending power”.

Combined spending on early intervention services, such as Sure Start children’s centres, family support and young people’s services, fell from just over £3.7 billion in 2010-11 to just over £2 billion in 2021-22, a fall of almost half (46%), while total expenditure on late interventions, including youth justice, child protection and children in care rose by a similar proportion, the report stated.

In 2021-22, more than £4 in every £5 of an additional £800 million went into late intervention services, the analysis said.

The report stated: “As recent history shows, councils may be left with little option other than to continue spending a growing proportion of their budgets on costly care placements.

“Successfully transforming services will ultimately mean making available investment in early interventions, which will reduce demand for high-cost late intervention services.

“In doing so, this will result in more families staying together in healthy environments, more children with stable and loving homes to grow up in, and fewer young people experiencing neglect, abuse, exploitation, and harm.”

The analysis said additional spending of over £1.5 billion in the last five years “has not resulted in a rebalancing of local government spending towards early intervention, nor has it reduced demand for cost-intensive late intervention services or delivered better outcomes for children and families”.

The report added: “Instead, it has flowed along well-worn pathways towards high-cost services for children in care while demand has continued to rise and cost pressures have created a worsening doom-spiral of unsustainable spending for councils.”

The Children’s Society chief executive Mark Russell said: “The time is now for an urgent shift in children’s services. We’re firefighting a growing crisis in children’s social care that’s not only costlier but often misses delivering the best for children and their families.

“This isn’t just about funding; it’s also about timely, effective care. Our children deserve proactive support, not just emergency responses when situations worsen.”

Paul Carberry (pictured), Action for Children chief executive, said: “This research shows once again how central government spending cuts are trapping cash-strapped councils in a ‘doom loop’, as their costs of children in care spiral and prevention services have to be slashed.

“For years now, successive governments have forced councils to run children’s services like A&E units, where only those at serious risk of harm get help. Waiting for children to be exposed to harm hurts children and families, and burns a massive hole in council finances. This is simply unsustainable.

“We need to rebalance children’s services so councils have the capacity to intervene earlier, support parents, protect children and keeps costs down.”

Louise Gittins, chair of the Local Government Association’s children and young people board, said the number of children in need of support from councils is at its highest level since before the pandemic and called for the Chancellor to announce adequate funding for children’s services in the autumn statement.

She added: “The funding announced in the Government’s children’s social care implementation strategy is helpful but falls short of addressing the £1.6 billion shortfall – estimated prior to inflation – required each year simply to maintain current service levels.

“Significant additional funding for all councils, not just for those chosen for the Department for Education’s pilot and pathfinder schemes, can be wisely invested in stabilising the current system to ensure strong foundations on which to build future reform.”

A Government spokesperson said: “This Government’s ambitious reforms to social care will focus on more early support for families, reducing the need for crisis response at a later stage. Our plans to do just that were published earlier this year, backed by £200 million to test and refine our approach.

“More widely, we’ve invested an additional £5.1 billion to councils in England this year to provide the support councils need to continue delivering first rate public services.”

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