Local authority children’s services: challenges and options for the future

Judith Barnes, Bevan Brittan

Local authority children’s services are currently very much in the spotlight following some critical Ofsted inspections and the consequent threat of government intervention. This, though, is a service area which has shown itself open to innovative ways of working. Here, we explore the current position and the models emerging as options for future arrangements.

In a report entitled ‘Turning the Tide’ published on 15 November 2017, three leading children’s charities warned that early intervention services in local authorities, designed to prevent problems escalating and children suffering a crisis, have been hardest hit by budget cuts.

The report, issued by the Children’s Society, Action for Children and the National Children’s Bureau, says council spending on early intervention services, designed to spot signs of neglect and abuse, fell by 40 per cent between 2010/2011 and 2015/2016. The £2.4 billion government funding cuts come at a time of growing demand for children’s services, with a 108 per cent increase in child protection investigations, according to the report.

The report’s conclusions build on growing concerns about the delivery of these key services at a time of continued financial constraint. The Association of Directors of Children’s Services, in a position statement made in October 2017, titled ‘A country that works for all children’, expressed the view that:

‘Local authorities are ambitious about improving children’s life chances but a series of conflicting national policy initiatives -particularly in relation to welfare reform -coupled with dramatic reductions in public sector funding, are increasingly affecting our ability to improve outcomes’ and

‘The Children Acts of 1989 and 2004 aimed to improve services for children by promoting early help and multi-agency working to bring about positive outcomes for children, young people and their families but these preventative duties have never been sufficiently funded. We are not, nor should we be, a blue light service.’

In terms of the performance of children’s services authorities, Ofsted has found that nearly three-quarters of top-tier councils do not meet basic requirements.

The government’s response to this has been to advocate (and in some cases direct) authorities to address underperformance in children’s services, but what is emerging is certainly not a one size fits all solution.

The first children’s trusts, which were imposed by the government on Doncaster Metropolitan Borough Council and Slough Borough Council three years ago, were based on the concept of a trust (a company limited by guarantee) wholly independent of the councils, to which the children’s services were transferred. The main statutory basis for this was a direction issued by the Secretary of State for Education under section 497A(4B) of the Education Act 1996.

At around the same time, the first voluntary creations of new models in children’s services were emerging, notably Achieving for Children Ltd which was set up by the London Boroughs of Richmond and Kingston as a jointly owned (Teckal compliant) community interest company limited by guarantee.

In July 2016 the government issued its strategy for the transformation of children’s services, titled ‘Putting Children First’. This focused on the three pillars of the children’s social care system:

  • people and leadership;
  • practice and systems;
  • and governance and accountability.

The third pillar is of most interest from a legal perspective. The paper stated:

‘Structural solutions and stronger accountability have an important role to play in driving change. Our reforms in this area focus on: supporting the emergence of innovative organisational models for children’s social care including Trusts and as a strategic priority within devolution deals; ensuring sharper and more focused accountability; and intervening decisively in cases of failure.’

‘Our ambition is that, by 2020, over a third of all current local authorities will either be delivering their children’s services through a new model or be actively working towards a different model.’

‘In future we expect to see more children’s services not-for-profit Trusts leading children’s social care services in a single authority, or having the responsibility for all children’s social care services in a combined authority area.’

So, is the children’s social care sector on the road to that ambitious 2020 vision?

It is certainly the case that the government has been active in engaging with underperforming councils. A children’s trust was set up in Sunderland this year and new trusts are in the course of establishment in Sandwell and Birmingham to go live in 2018. These three trusts have been set up as wholly owned council companies.

Statutory directions have been issued to nine councils in 2017, including: Torbay, Worcestershire, Reading, Barnet, Bromley, Tower Hamlets and Croydon.

However, the enthusiasm for a separate children’s trust as the preferred solution (whether owned by the council itself or an independent model) may be waning.

For example:

  • the direction to Torbay is that the council enters a contractual agreement for Plymouth to run its children’s services;
  • the solution for Tower Hamlets is to involve intervention advisors from Islington and Lincolnshire to support and assess the council’s improvement efforts;
  • and the commissioner appointed in Kirklees rejected the option for a trust there due to concerns over service deterioration and cost, and instead recommended that the council enter into a formal strategic partnership with Leeds.

The Local Government Chronicle (20 September 2017) speculated on the reason for this more diverse approach to solutions:

‘The DfE may itself have been looking for an excuse to retreat from the trust solution due to concerns over the long-term financial sustainability of the model. LGC has reported on anxiety within government over the high start-up costs it covers for new trusts, as well as ongoing VAT liabilities of the new models which totalled £6.5m in Slough and Doncaster over three years alone. Recent directions suggest the DfE under Ms Greening remains in listening mode and indicate local government has earned some trust and won some room to manoeuvre over the future of children’s services delivery – even if the costs associated with trusts may have contributed to the government taking a softer stance’.

Whatever the backdrop to the government policy position, it is clear that the pressure on children’s services to perform remains intense, and also that there is little likelihood of significant new investment.

Because of this, the need to look at alternative ways of delivering these services will be high on the agenda of all children’s services authorities, whether they are currently on the Ofsted or Department for Education radar or not.

Options which are emerging as ones which warrant detailed evaluation include:

  • A new entity: this could be completely independent of the council; wholly owned by the council (or jointly owned with other councils in a shared arrangement); a joint venture with a private sector provider or charity; or an entity involving a staff ownership/ mutual model.
  • A contractual solution: this could involve the outsourcing of children’s services to a third-party provider, including (if the supplier is not-for-profit) the ability to transfer a range of statutory functions.
  • A shared services arrangement: this could simply involve consultancy support from a high-performing council to another which requires improvement, or could involve a long-term contractual inter-authority arrangement to deliver services, such as currently in place between the Isle of Wight and Hampshire and proposed between Torbay and Plymouth.

It will be important that legal input is given both to the analysis of the optimum solution for a particular council and also, whatever model is chosen, to implementation. This will include consideration of procurement, state aid, commercial terms between the parties, staffing, pensions and any governance or corporate issues for a new entity.

It is likely that children’s services will continue to be at the forefront of exploring new models and leading the way in testing optimum solutions.