Analysis: Credit Crunch - Children's services face up to an uncertain future

But how will the credit crunch affect services for children and young people? CYP Now asks experts in the sector for their views.

WORKFORCE

- Doug Nicholls, general secretary, Community and Youth Workers' Union

We are calling on the government to offer greater assurances that charities and local authorities will not be affected by the collapse of Icelandic banks. They have already bailed the banks out and we are looking for some kind of guarantee.

We are also calling for assurances that budgets and financial support for youth work will not be affected. In difficult economic times, youth work is more, not less, essential. There are already one million young people not in education, employment or training (Neet) and there is a risk this will increase if funding for youth work decreases. Practically overnight we could see all the hard work already carried out by government and the youth work sector to bring the Neet figure down being wiped out.

It all depends on how the government views investment. I would argue that it is an investment in the future that youth work initiatives continue to be properly funded.

We are already seeing the effect of the credit crunch in the youth work sector. There are already reports that posts are being lost and a real fear that budgets will be cut. The bail out of the banks has reduced the government's pot considerably. It may be that to maintain funding for youth work they need to look at other ways to raise cash.

To make matters worse for the youth sector, there are already problems surrounding pay. The current pay offer is less than half of the rate of inflation. In the current financial climate it is vital that youth workers receive a fair wage and do not become victims of poverty themselves.

LOCAL AUTHORITIES - Jasmine Ali, head of the Children's Services Network, Local Government Information Unit

Local government is facing a social crisis. The current financial turmoil is having a major impact, not least for children's services.

And it's not just councils with money in Iceland that are at risk; tax revenues will fall over the year ahead and public spending will be under great scrutiny. Rising unemployment, the housing market downturn and rising food prices will affect ordinary families too, and local government will have to strive more than ever to help cushion the financial blow to its communities.

Every Child Matters aspires to offer every child the support they need to be healthy, safe, happy and successful learners ready to contribute to society. But, in reality, children's services are struggling to bridge the gaps between the richest and poorest children, young people and their families. The services required to bridge these gaps require resources. Very few of these initiatives can be run on a shoe-string.

This raises big questions about effective support for the existing 3.9 million children currently in poverty; the 200,000 children and young people not in education, employment or training; the 750,000 families living in poor housing; and the 100,000 children without permanent homes.

All child-centered services will come under great strain in the event of significant cuts in public sector jobs. You can be sure that change management whereby councils reassess structures and processes will be the order of the day. Another certainty is that in a bid to prevent unnecessary cutbacks, councils will pull together and make a united effort to protect their communities.

VOLUNTARY SECTOR

- Joe Levenson, director of policy and communications, National Council of Voluntary Child Care Organisations

It is almost a year since The Children's Plan was launched, with its aspiration to make England the best place in the world for children to grow up. However, economic conditions have changed considerably and this aim is in real danger if the government does not provide continued public spending on children's services.

While the voluntary sector does not appear to have directly lost out yet, these are worrying times for charities. As economic recession threatens to become economic depression, all income sources for children's charities are likely to fall. Public donations are likely to decline, earned income will come under threat and statutory income is likely to be cut back as tax revenues fall and spending on benefits increases. This is especially worrying as many charities were already experiencing financial difficulties before the current crisis. Earlier this year, our Under the Radar report found one in 10 small charities faced closure and many others were suffering due to short-term funding and financial uncertainty.

The implications of the economic downturn are especially concerning as the support provided by children's charities will be needed more than ever as the economy suffers. It will not take long for global financial collapse to be felt locally, particularly by the most disadvantaged and vulnerable.

It will become ever more important for the government to engage with the voluntary sector to ensure children do not lose out and for children's charities to work together to highlight where vital services are coming under threat.

HOUSING

- Adam Sampson, chief executive, Shelter

As recession looms over the country, children and young people will face a more uncertain future.

Earlier this year, the sheer scale of the housing crisis was already taking its toll. A Shelter survey carried out in March clearly showed how high housing costs were affecting families. It found one in four were spending less on food, 2.2 million had reduced the amount they spend on clothing for their children, and more than nine million had reduced the amount they spend on treats for the family. The fact that food and fuel bills are rising at a time when unemployment is at its highest level for eight years and repossessions are soaring will only make these numbers worse.

Worsening economic conditions will also magnify existing problems. There is still a chronic shortage of social housing, caused by two decades of under-investment. While house prices have fallen from their peak, they are still out of reach of many households. Combined with a downturn in house building, families may find getting a home they can afford becomes even more difficult. Ultimately, levels of homelessness or overcrowding may increase, with a devastating impact on children and young people's lives.

Children and young people would be right to face the coming years with trepidation. But tackling the housing crisis by helping families facing repossession, reforming the housing benefit system and, above all, building new affordable housing will give children and young people the security of a permanent, affordable home to live in.

PRIVATE SECTOR

- Nic Fell, product director, Capita Children's Services

Local authorities have got quite used to tightening their belts and children's services teams have already had to make efficiency savings to streamline services year after year. The difficulty will come in the wake of the current credit crunch and the likely need to find savings on top of the efficiency gains already achieved.

For the private companies that support this sector, the new economic climate will mean adapting to the heightened need for efficiency and helping councils uncover where further gains can be made. IT can help with this process. A simple example of how is illustrated by East Riding of Yorkshire Council. Like most authorities, East Riding supplies transport to and from school for pupils that need it. By reorganising their routes and using technology to help match pupils to routes and vehicles it estimated the savings for two secondary schools alone would be £160,000 a year. Multiply these savings for all schools, and you can see how a small change in the way things are managed can make a major difference in cash terms.

The private sector can also provide local authorities with tools that can help them uncover where their money is best spent. By accurately recording and analysing data, it is possible to discover if the additional resources targeted to raise literacy in deprived areas is actually having an impact on exam results, for example. Or if a youth work programme is encouraging pupils to stay on at school. This measurement will ensure that if funds are reduced in the future, money can be targeted at the projects that produce the best results.

CHILD POVERTY

- Tim Nicholls, press and parliamentary officer, Child Poverty Action Group

Families living below the poverty line are already forced to rely on a niche of the financial services sector that specialises in high-interest loans. For example, if a family in poverty needs a new cooker they have to rely on loans with interest rates of around 100 per cent or more.

The key is to ensure other families are not forced into this situation. The working poor are at the greatest risk. Around three out of five children living in poverty are from working families. We need to ensure they do not end up unemployed, reliant on benefits and in a far worse position. The sectors most affected by unemployment are in the low-paid service industries, such as hotels, distribution and catering. Other vulnerable areas are communications, construction and transport. What happens if these people become unemployed and are forced to rely on benefits?

The government has a commitment to halve child poverty by 2010. It needs to carry on supporting families at risk of poverty and ensure those who are dragged into unemployment do not become long-term unemployed. The longer a person is out of work the harder it is for them to get back into it.

We have already seen a rescue package addressing the top end of the financial crisis in the banking sector. There needs to a rescue package that has a focus on all of society, including those at the bottom, and a greater assurance from government that the rescue package is not just for banks. Banks have a moral and economic duty to use any financial support they get to help the poorest and those at risk of poverty and to ensure credit is affordable and accessible.