Derbyshire council leader calls for more Government funding to combat ‘runaway’ childcare costs

During recent county council meetings, the Leader, Cllr Barry Lewis, and the Deputy Leader, Cllr Smon Spencer, and others indicated that the Government needs to make a potential change in legislation with a cap on what the county council regards as crippling fees and costs from private providers for childcare services.

The Conservative-led council has stated that its biggest financial concern is for rising children’s services and adult education costs which it states are outside of the control of the authority.

Cllr Lewis said: “It’s no secret our council faces a significant in year financial challenge. We’ve always been a prudent council – it’s not down to any crazy schemes, or bad contracts or frivolous spending.

“It’s rising demand and inflationary pressures, and higher than expected wage increases. But there’s one area in particular that has caused us significant spiralling, runaway costs – and that’s care home placements for children.

“In a market where demand outstrips supply we’ve seen a further increase in costs while private care providers can pick and choose which children to accept and charge hyper-inflated costs.

“Private, independent care providers have always been a part of the way we look after children but in recent years this market has become distorted with some of the biggest private care providers making profits of over £300m last year – all on the backs of some of the most vulnerable children in the country and paid for solely by the taxpayer. This is immoral.

“Some companies involved are offshore, motivated purely by profit and less by concern for young people. This isn’t right, it’s exploiting the misfortune of young people who deserve better, and it’s treating the taxpayer as a cash cow.”

A council report stated that there was a continued demand for Children’s Services, Safeguarding and Education services and combined with rising costs this is resulting in a significant forecast budget overspend.

The report added that expenditure on placements for children in care or alternatives to care has continued to rise due to an increase in the average weekly cost of placements, a shortage of foster care places, and an increase in the number of children requiring support resulting in additional costs for Children’s Safeguarding Services.

It also stated that the budget forecast overspend on Children’s Services and Safeguarding and Education stands at £17.901m.

Derbyshire County Council has recently announced it has reduced a forecast £46.4m budget deficit for the 2023/24 financial year to a £33m figure but it has stated that rising demand and increasing pressures on the council’s budget mean it is still facing more tough cost-saving decisions like many councils across the country due to exceptionally high inflation rates, the impact of Covid-19 and the cost-of-living crisis.

The council has stated that since 2020 the numbers of children being cared for in Derbyshire has risen by 25per cent to just over 1,000, and the increased demand for support means the costs of looking after Derbyshire children who cannot live with their birth parents has risen by £40m – an increase of 105per cent – in the past five years.

In 2019 the council spent an average of just under £4,000 a week on children’s placements – that has risen to almost £7,000 a week, with some placements for children with complex needs costing £15,000 a week.

The Council Leader and Cllr Alex Dale, Cabinet Member for Education and Cllr Julie Patten, Cabinet Member for Children and Families, recently met with Derbyshire MPs to press Derbyshire’s case for extra cash.

Cllr Patten has stated that more children are needing support and the demands are increasing and she said she was aware one placement costing £12,000 a week and she has criticised private providers to the council who are ‘making huge profits out of young people’s misery’.

And Cllr Dale has also said that private providers are being allowed to make millions of pounds in profits and this money was not being properly reinvested back into supporting children’s services to bring costs down.

Councillor Lewis added: “We’re faced with cutting services that residents value. Perversely we’re now having to look to reduce preventative and early intervention services, which would stop young people coming into care.

“We’re faced with feeding a spiral that will only erode our budgets quicker, because there are simply now no other alternatives.

“So we’re calling upon our MPs and Government to tackle this with urgency. We need urgent additional funding now and a pledge of radical intervention in the immediate future to fix the deeply broken and uncompetitive market for residential care. It would be a move that could potentially save millions overnight.

“We’ve called on Government before to deal with this issue, to cap fees or to intervene in this market in some way that can bring these extortionate costs under control. They have not, and now this risks bringing well-run councils into bankruptcy. We’re drinking in the last chance saloon.”

In 2021/22, local authorities in England spent £1.5bn on independently-run residential care for vulnerable children – an 11per cent increase on the previous year – and up from £736.6m in 2015/16, representing a 105per cent increase overall, according to the county council.

The council also stated that the number of children in need of support from councils is now at its highest level since before the pandemic with 82,170 children being looked after in England.

Derbyshire County Council’s records also reveal it has seen an increase in agency fostering placements of 23per cent over the last three years and an increase of 46per cent in the number of children in external agency residential placements over the same time period.

The average cost of an agency residential placement has increased by 36per cent over the last three years, according to the county council, while the average cost of an agency fostering placement has increased by 16per cent.

A recent report commissioned by the Local Government Association found that the 20 largest independent children’s social care providers in England made profits of more than £300m last year.

Association of Directors of Children’s Services President John Pearce has also stated that the Government needs to act after he too recently raised concerns about private providers of childcare making large profits, according to a Local Government Chronicle report.