Spending for the future: Can we do more with less?

The age of austerity seems to have no expiry date. When the coalition government published its cost-slashing comprehensive spending review (CSR) setting out spending allocations to government departments from 2011/12 to 2014/15, it expected that period to mark the full extent of cuts. However, the prolonged sluggish state of the economy and failure to conquer the deficit mean more spending cuts are inevitable beyond 2015. For children’s services, the challenges look set to get even tougher.

In the near term, Chancellor George Osborne’s “autumn statement” on 5 December will provide an update on government plans for the economy. Then, in about a year’s time, the government will publish plans for the next spending review period, which starts from April 2015. With the general election due in May 2015, these plans will take us into the next parliament. However, the coalition parties are likely to agree spending plans for one year only, 2015/16. As for Labour, shadow chancellor and former Children’s Secretary Ed Balls has said it would hold a year-long review of public finances if it was to regain power.
 
Meanwhile, the real impact of the current round of cuts is becoming clear. A report by the Family and Parenting Institute published a fortnight ago examined children’s services budgets in eight local authorities in England over two financial years – 2011/12 and 2012/13. It found spending on “non-social work” services – such as youth centres and early years provision in children’s centres – shouldered a large share of spending reductions and that councils were redirecting limited resources on targeted interventions.  One council officer interviewed in the study said: “We designed our new operating model based on a two-year recession, not a five- or seven-year stagnation”.

The last CSR was conducted within a short time frame. At least the government has more time, in theory, to conduct a more strategic review of public spending this time around – and within that what it spends on children, young people and families. In this special report, four experts assess the challenges ahead.


We need flexibility and funding stability to tackle rising demand and higher public expectations
By Debbie Jones?, Association of Directors of Children’s Services

The core principles of public services funding must be that spending follows need and that spending on prevention now is better than spending in a crisis later. New demands, new expectations of standards, new duties and new ways of working all require new ways of distributing resources to best meet the changing needs of our local populations. Children’s services are facing all of these changes over the next few years, and funding arrangements must take this into account.

The most striking change is the massive population growth in under-18s, particularly in the under-five age group revealed by last year’s census. We hear a lot about the country’s ageing population, but the last decade has seen a major shift as more children are born. This will not have come as a surprise to those of us struggling to ensure there are sufficient free nursery places for two- to four-year-olds from April 2013. From 2015, local authorities will take on the commissioning of health services for the under-fives. This presents an opportunity to better integrate health, education and social care services for all children.

But the funding and numbers of health visitors recruited must recognise the increase in this age group and fund the provision accordingly. We have seen this year the effect that this population growth has had on school places, but the census data tells us this is only the beginning, and not just a short-term problem. In a few years, the five-year-olds that local authorities are struggling to find reception class places for will be looking for secondary school places. A strategic and well-planned investment in school buildings now could stave off a crisis later.

Our recent research at the ADCS has shown that safeguarding activity continues to rise in many local authorities, from referral to entry to the care system. This is in part related to the population boom, but not completely. Further changes are to be expected in the make-up of local populations as the impact of welfare reform begins to be felt, particularly changes to housing benefit that may prompt significant numbers of families to move out of expensive areas, putting further pressures on the budgets of the places they move to.

The most important message is that the changes in demand and demography are different in different places. Changes in the economy, the local population and the national policy framework will all continue, so funding to meet these needs must be sufficiently flexible to allow local authorities to tackle these increases as they arise.
 
It is not just the volume of work that is increasing. Society also has rising expectations on the quality of services provided, whether it is services for those with special educational needs, in children’s homes or the family justice system. It is right that we should have the highest ambition for the quality of services, but we must also acknowledge that such improvements come at a price and take time to implement.

The special educational needs proposals are a particular cause for concern as they increase what parents expect the system can provide, without any realistic prospect of controlling the costs of such provision. The adversarial system in which parents and local authorities tussle over care packages will only worsen if expectations rise while budgets shrink.

Money is not everything. The attitudes and skills of the workforce make a massive difference to the quality of services. But this means that training budgets, salaries and other benefits should go some way to reflecting the higher skill levels that we must now expect from those working with children. Investing in a skilled and confident workforce, including not just social workers, but residential care staff, youth workers and nursery managers, requires stable and sustainable funding over a period of years to see the effects that we all want.

Children’s services have led the way in partnership working. A wider range of local services are now planned and delivered alongside other agencies. There are significant opportunities for savings in reducing duplication and making sure work is complementary, not contradictory. However, changes to policies in health and in schools are making this more difficult.

If it was difficult to negotiate a pooled budget with one primary care trust; it is almost impossible with several clinical commissioning groups, let alone across a wide range of providers. Similarly, as schools become accustomed to even more control over their own funding, including capital spending and use of the pupil premium, and as free schools pop up in places with lower levels of need than elsewhere, it is increasingly hard to pursue a strategic direction that secures value for money and financial probity across the education system and broader services for children and families. 

The most recent Comprehensive Spending Review has not lived up to its early promise of supporting local decisions for local people. While the unringfenced Early Intervention Grant signalled a recognition of the benefits of this work, to families and to the public purse, we were soon inundated with moral ringfences from ministers responding to public concern. Despite the creation of the grant, central government is still producing new funding streams for specific projects – to support improvements in adoption or in social work training.

The money is welcome, of course, but getting it in dribs and drabs does not help in making the bold, imaginative, system-wide reforms that are required to meet the challenges ahead. Turbulence elsewhere – in the funding of schools and early years provision, the search for new funding models for school improvement and youth services, and the introduction of payment-by-results in some areas of policy – threatens to undermine the most well-planned strategic decision making.

A cross-party commitment to early intervention should be the driving force behind the next spending review. The next review should recognise that local government needs three things to meet the expectations of central government and the public over the next five years: first, the flexibility to shape local services to meet local need; second, stable funding arrangements that allow for forward planning and strategic decisions; and third, the full and proper funding of new burdens, including rising expectations of the quality of services and the need to build a skilled, multi-disciplinary workforce to deliver on those expectations.

Debbie Jones is president of the Association of Directors of Children’s Services and director of children’s services at Lambeth Council


Political leaders should reallocate spending from the old to the young
By Enver Solomon, National Children’s Bureau

In all the debates about public spending cuts, the one constituency that politicians of all colours seem to be most careful not to upset is the so-called grey lobby. They fear any potential backlash from the retirees who hold so much power at the ballot box. Every political strategist knows that the older generation is key in electoral contests.

The trade-off in spending choices between old and young is played out most vividly when it comes to the big spending decision around welfare reform. The government has made a cast-iron guarantee to protect winter fuel allowances and other costly benefits for the elderly. It has not made any similar reassurances about protecting children and young people in greatest need. In fact, if anything, the opposite appears to be the case.

Disabled children, children with caring responsibilities, children of single parents and those in large families below the poverty line will all be disproportionately hit by reductions in benefits. With a further £10bn of welfare cuts to come, their plight is only likely to get worse. This will inevitably impact on the life chances of the poorest children.

Come the next spending round, there is a clear choice about whether or not to continue with such a disproportionate approach to reductions in welfare spending or to actually rebalance the equation so that the old shoulder more of the burden. This is one of the biggest spending choices the government faces, given that benefits and pensions account for such a large proportion of government expenditure and that further cuts in support for children and families will have a knock-on effect on health inequalities, poverty levels and family conflict.

Central government also has other important choices. The coalition found £450m from within current budgets to provide additional funding to local authorities to support so-called troubled families. The programme is not just about spending more money on families with multiple problems. How services are configured to support them is just as important.

But it has been the only extra money available for those who are often in greatest need – a third of the families include children who are on the child protection register. If there is not a further round of funding following the next spending review many local authorities might struggle to retain staff and keep the initiative on track.