Social care - Adoption agencies fight to survive

Financial naivety among councils is denying around 1,000 young people in care the chance to be adopted, according to a report published last week by think tank Policy Exchange.

The No Place Like Home report says many councils are failing to use voluntary adoption agencies based on "misconceptions" surrounding the costs involved.

They are balking at paying a one-off average fee of £24,080 to agencies, instead leaving children in care at an annual cost of £25,000.

Agencies told researchers that some councils are even delaying adoption proceedings until the start of a new financial year, so it doesn't impact on their annual budget.

The result is a downturn in the number of adoptions, with latest figures showing that by the end of 2005, there were 3,800 adoptions, but by 2008 this had fallen to 3,200 and increased only slightly to 3,300 by March 2009.

New fee structure

Council reluctance to use the voluntary sector is also leaving agencies struggling to survive. Two-thirds of those surveyed saw a decrease in purchasing from councils and four out of 10 said their future financial viability was in doubt.

The fee structure is a major factor in agencies' financial problems.

According to latest government research the real cost to an agency is £36,905 per placement, around £12,800 more than the fee they charge councils.

Many agencies meet the shortfall through other more profitable services, such as fostering or concurrent planning, where potential adopters foster children on a temporary basis while parents resolve difficulties at home, eventually adopting the children if problems remain.

One agency that has no longer been able to offset its losses is the Manchester Adoption Agency. It had been covering losses through concurrent planning work. But even the profits from this have not proved enough, with the agency set to close this month.

Its director Rob Finney says: "For us the losses were too great. We've probably been running at a loss of around £100,000 a year."

In its report, Policy Exchange calls for the creation of a variable fee structure, with lower fees for easier cases, such as those involving younger, white children, and higher fees for more difficult cases, involving older children and those from black and minority ethnic backgrounds.

Further research is also needed to assess the long-term cost benefits of using agencies, according to the report authors.

Consortium for Voluntary Adoption Agencies chair Norman Goodwin, who is also chief executive of adoption agency Adoption Matters Northwest, argues that agencies offer a genuine long-term saving.

"If a stable placement is arranged well at an early stage it cuts the risk of health problems, helps the young person at school, get a job and gives them better outcomes," he says.

No Place Like Home also urges councils and agencies to work together as partners rather than merely as commissioner and supplier.

One council that has already altered the way it handles adoption is the London Borough of Harrow. It has formed a partnership with the charity Coram, which includes funding Coram staff, who work in the same building as the council's adoption team.

This arrangement has transformed the council's adoption rate from just three per cent in 2006/07 to 20 per cent in 2008/09.

Harrow's children services director Paul Clark says: "We had a poor record with adoption. Coram has a good solid reputation in this area so we talked to them to see how we could work together as partners.

"Yes money comes into it, but it is something we look at together and more creatively."

British Association for Adoption and Fostering policy director John Simmonds backs Harrow's approach. He says: "Adoption is often very segmented. The council decides something, and somewhere down the line an agency might be brought in. Adoption is a long-term process and it makes sense to involve the agency at the earliest opportunity.

Insult to councils

But the Local Government Association has reacted angrily to the Policy Exchange report, with a spokesman denying that councils put cost first.

He says the claim that adoption is delayed into the next financial year to balance the books is "an insult" to council adoption teams.

James Groves, researcher at Policy Exchange, says the intention of the report is not to criticise council adoption teams.

"This report is not saying they do not do a good job, but that at a strategic level more can be done to work in partnership with agencies.

"Many agencies are struggling to survive and if they disappear their skills could be lost forever."

The cost of adoption: How councils' financial decisions are affecting voluntary adoption agencies

£25,000: The annual cost of funding a child in foster care

£24,080: The fee local authorities pay to voluntary adoption agencies including a package of post-adoption support

66%: Percentage of voluntary adoption agencies that have reported a decrease in services purchased by local authorities

40%: Percentage of voluntary adoption agencies that say their future viability is in jeopardy