New research published by a coalition of children’s charities reveals the impact of austerity measures on looked-after children, reports Sian Norris

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Spending on early years support for children and families is half of what it was before the Coalition and Conservative Governments implemented austerity budgets, with increasing numbers of vulnerable children needing crisis interventions. 

Between 2010/11 and 2020/21, investment in early years support by local authorities fell from £3.8 billion to £1.9 billion. 

Poorest council areas were hit hardest: total spending on children and young people’s services fell by £241m in the most deprived local authorities during this period – or a 10% decrease. In contrast, the least deprived areas in the UK saw a 13% increase in spending across the decade. 

“It’s a big concern that children in deprived areas, where needs may be greatest, are often among those least likely to get help before problems spiral out of control,” said Mark Russell, Chief Executive at The Children’s Society. Children in the most deprived small neighbourhoods in the UK are over 10 times more likely to be in care or on protection plans than those living in wealthier areas. 

“If ministers are serious about Levelling Up they must better target funding to the areas that need it most,” he added. 

The data was shared in a new report by children’s charities The Children’s Society, Barnado’s, NSPCC, Action for Children, and the National Children’s Bureau. The report authors suggest that increased spending on early years support could reduce the need for later intervention in some cases, by preventing child welfare issues from reaching crisis point. 

“Councils everywhere have struggled amid government funding cuts and this is why we are calling on whoever becomes the next Prime Minister to ensure children’s services teams across the country get the extra funding they desperately need, sooner not later,” said Russell.


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The Austerity Impact

Looked-after children face a range of barriers in adult life. They are 70% more likely to die prematurely than those who are not care-experienced, and in 2020-21 only 6% of care-leavers were in higher education. They are also disproportionately more likely to be in prison. 

While spending on children’s services has risen since a low point of £9.4 billion in 2016/17, it has yet to return to its pre-2010 levels of £10.4 billion. The drop in spending coincided with the Coalition Government of 2010, led by David Cameron, and the 2015 Conservative Government, both of which pursued an austerity agenda that saw swingeing cuts to local government budgets. 

The number of vulnerable children increased by 3.3% over the decade, while the total of looked-after children rose by 24%. The squeeze of increased need and decreased budgets led to councils putting more emphasis on late intervention spending, for which funding is statutory, at the expense of early years support which can help prevent family welfare issues from developing.

Late intervention includes children’s homes, funding for fostering, and adoption services. In 2020/21, 80.5% of local authority spending on children’s services focused on those linked to late intervention – an increase from 58% a decade ago. 

In contrast, total expenditure on early intervention services has halved since 2010-11. That includes money for children’s centres, Sure Start, and youth services. At the same time, targeted interventions around substance misuse and domestic violence, which can have an impact on child welfare, have also faced cuts.

Experts suggest that reversing this trend and investing in early years support could help reduce the need for crisis services later on.

Josh MacAlister, who earlier this year published his much-anticipated review into children’s social care, emphasised the need for a “radical reset” in how government and society approach child welfare that would include a greater focus on early intervention. 

“These worrying figures support my call for a radical reset of the system to shift the focus towards intensive earlier support for families,” said MacAlister. “It’s crucial that reform comes with the investment needed to boost support for families so that more children can grow up in loving families and that the care system can provide the same foundations”.

Children’s Social Care Cannot Be Reformed Without Recognising the Impact of Poverty and Austerity

Katharine Quarmby and Sian Norris

Impact of Privatisation?

An increasing number of children’s homes are now run by private sector companies or owned by private equity firms – with the latter selling the sector to investments as having “favourable demographics”. Children’s home providers enjoyed average profit margins of 22.6% from 2016 to 2020. 

Research from the Competition and Markets Agency found that 83% of residential children’s homes are now run by the private sector. Local councils then pay for the child’s care. 

The costs of residential care have grown alongside the increase in private sector involvement, in what is a relatively supply-constrained market dominated by a few large providers. The average cost per looked-after child has increased by 11% in real terms, from £60,032 in 2012 to £66,608 in 2020, with 75% of that increase coming from residential care. 

According to the report authors, accelerating costs of late intervention “add further pressure to local authority budgets, leaving less money available for preventative measures, and feeding back into the spiral of rising costs and worse outcomes for children”. 

Imran Hussain, Director of Policy and Campaigns at Action for Children, said: “Across political divides there has been recognition of the value to communities and the public purse of investing in services that help individuals and families early, before more serious and more costly problems develop”.


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