REVEALED: Cost of Living Crisis Piles Pressure on Children’s Homes as Gas and Energy Bills Soar

REVEALED:Cost of Living Crisis Piles Pressure on Children’s Homes as Gas and Energy Bills Soar

A new investigation by Sian Norris with the Byline Intelligence Team reveals rising costs are putting budgetary pressure on council-run children’s homes already feeling the strain

Council-run children’s homes are facing significant energy bill rises, with one council reporting costs could be 390% higher than last year and another seeing its gas prices rise 400% between April and September 2022, putting pressure on budgets during the cost of living crisis.

Freedom of Information requests sent to councils in England and Wales found that more than half of those that shared their predicted energy costs for the next 12 months are expecting to pay double the amount of the previous years.

The Government has introduced a scheme to help businesses and public services over the next six months. However, some councils told Byline Times that, despite seeing energy costs double, they would not benefit from Government support as the rates they have secured from their providers fall below the price cap.

The higher bills come after local authorities have been forced to make major savings after more than a decade of austerity. Labour MP Nadia Whittome told Byline Times: “Huge increases in energy bills are now a further threat to essential services in a cost of living crisis.”

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Soaring Costs

Many councils are facing predicted energy bills for their children’s residential homes which are equal to the costs of the previous 24 months combined. One council paid £38,700 between 2020-22; its energy bills for the next 12 months alone were predicted to be £39,800. 

This was the case for eight councils, where next year’s bills were either roughly equal to, or within £10,000 of, the previous 24 months totals.

One reported how its bills for children’s homes over the previous 24 months had totalled £52,000 – its predicted energy bills for the next year is more than £62,000. Another said its bills are predicted to reach £51,547 in the coming year – a £21,000 increase.

Others are facing unprecedented rises, although they hope this will be mitigated by the Government’s plan to guarantee prices up until next April. 

Buckinghamshire Council said its energy costs for its children’s homes for the next year are 208% higher than the last financial year. Derbyshire County Council’s predicted future energy bill for its children’s homes is more than £100,000 than the previous 24 months. 

Spokespeople from both councils explained how they are always looking for ways to reduce energy consumption and will benefit from the Government’s Energy Bill Relief Scheme. However, Derbyshire Council’s spokesperson added the “exact impact” Government support “will have is unknown at the moment”.

Sheffield City Council’s energy costs for its children’s homes was more than £200,000 between 2020-2022. Its Freedom of Information response stated that “we expect bills to be around £200,000 higher than current financial year bills”. It will benefit from the Government’s scheme. 

“Central Government funding for councils must be urgently increased and, with an energy market that isn’t working for households, small businesses or our public services, we should be taking our energy system back into public hands,” said Whittome. 

The crisis has left councils asking questions about how the rising costs of running their children’s homes will be funded. One Welsh council told Byline Times that with “no additional funding currently available, the costs will have to be absorbed within existing budgets”. 

Another council facing gas bill rises of 300% warned that “significant increase in energy costs will add to the pressure on children’s services budgets, and further increase the cost of maintaining places for children in residential homes”. 

Councillor Julie Grocutt, deputy chair of the strategy and resources policy committee at Sheffield City Council, told Byline Times: “With the cost of energy and inflation soaring at such an alarming and unparalleled rate, there is little doubt that this will have an impact on everyone, including the children’s homes and social services we provide. We are working quickly and diligently to manage the effects of this as best we can.” 

A Department for Education spokesperson said that “all children’s homes will benefit from the Energy Bill Relief Scheme, reducing how much they need to spend on their energy and giving them greater certainty over their budgets over the winter months”.

The scheme provides a discount on wholesale gas and electricity prices for all non-domestic customers, including children’s homes.

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Austerity and Government Help

While the six-month Government support is welcome, soaring energy prices have followed more than a decade of austerity measures and cuts to local government funding.

“For more than a decade, the Conservatives have squeezed councils’ finances until there’s nothing left to give,” said Whittome. 

The scale of the cuts varied per council, but the National Audit Office told Parliament that “Government funding for local authorities has fallen by an estimated 49.1% in real terms from 2010/11 to 2017/18. This equates to a 28.6% real-terms reduction in ‘spending power’”.

A spokesperson for the Local Government Association told Byline Times: “The dramatic increase in inflation has undermined councils’ budgets. While recent announcements on the energy cap and national insurance rise are helpful, it is clear that the Government needs to come up with a long-term plan to manage this crisis.”

Councillor Grocutt also warned of the impact of austerity, observing that “like many local authorities, we are looking at cost saving measures across the organisation” but after years of austerity “areas to trim down are few and far between”.

“Unless the Government gives us the funding needed to offset the significant extra costs we all face, we will have to take some really difficult decisions to make sure that our vital frontline services can continue to support our most vulnerable children and families,” she added.

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Private Provision and Instability

Responses to the Byline Intelligence Team’s Freedom of Information requests were received from 60 councils, with a further 35 responding to say they do not run their own children’s homes.

Eighty per cent of children’s homes are now run by private providers and there are concerns that rising energy costs will impact the increasingly privatised sector of social care, causing instability for vulnerable children. 

Joe Hanley, a lecturer in social work at the Open University, told Byline Times: “While it is obviously a complex situation, essentially if private providers’ energy prices go up, they can charge higher fees, or pull out of an area or the sector entirely if those fees are not forthcoming.

“Chronically under-funded local authorities and children’s teams face no such recourse, and will be left to pick up the pieces whatever private providers choose to do.”

In recent years, the impact of privatising children’s social care has been in the spotlight, with former Children’s Commissioner Anne Longfield expressing concern that venture capitalist investment and high levels of debt risk causing instability to vulnerable children. 

In November 2020, Longfield wrote how “if a private provider became insolvent, there is a serious risk that every child in its care would have to be placed somewhere else” and that “our previous reports on children’s experiences of instability in the care system reveal the worry, stress, loneliness and exhaustion that children often face as a result of placement changes”.

“The private sector is increasingly influential over children’s services,” said Hanley. “Scrutiny is rightly being placed on private children’s home providers at the moment, some of whom are making huge profits out of the sector, but that is only part of a wider issue of private interests influencing all levels of children’s social care, including those in policy making circles who have allowed this situation to come about.”

A Government spokesperson told Byline Times: “We’re providing an unprecedented £259 million to maintain capacity and expand provision in secure and open children’s homes and are raising standards for children in care. This comes ahead of wide scale reform to the care system through our response to the Independent Review of Children’s Social Care.”

Additional reporting by Sascha Lavin

This article was updated at 6pm on 31 October to reflect that Buckinghamshire is a unitary, not a county, council.