Why it's time to rethink risk and the way services respond to it

December's local government finance settlement was grim. Analysis by the Local Government Association has concluded that councils are set to lose a further £2.2bn of national revenue support grant funding in 2017/18. That is a 30 per cent cut on 2016/17.

It predicts that the next 12 months will be hugely challenging for all local authorities. It warns that there will inevitably be reductions in services across the board including core services such as children's centres, but also the things that contribute to child wellbeing that we often take for granted like maintenance of parks and green spaces.

And with most councils agreeing to a new four-year financial settlement, we also now know that things are not going to get better any time soon. In fact, it is estimated that local authorities now face an overall funding gap of a £5.8bn by 2020.

Although we are used to hearing large numbers talked about, it is still difficult to fully understand what these huge numbers really mean. So let's take a moment. A billion is a thousand million. And local government needs to find nearly six thousand million pounds.

Now, that's not going to be achieved by switching to second-class post or from getting a better deal on the copier paper. After years of austerity, local government is already remarkably efficient compared with other parts of the public sector.

The only real place left for us to go is risk. Our work with children, young people and families who are the most vulnerable or who have complex and challenging needs is often defined by a very high level of risk. And responding to risk can be very expensive; particularly if it reaches such a level where children come into care.

A foster care placement can cost anything up to £40,000 a year and the average spend on a residential placement is somewhere in the region of £135,000. Secure accommodation is eye-wateringly expensive, working out at up to £250,000 a year.

It all adds up - indeed, the National Audit Office reported in 2014 that the annual spend on supporting children in foster and residential care had reached a record £2.5bn.

The care system can, and does, make a positive difference to the lives of many children and young people. But with a reported 37 per cent increase in the number of children in care since 2007, do we now have any choice but to reassess how we can manage risk safely without necessarily moving so many children out of their family?

To be successful, any change of approach needs proper, long-term investment in high quality services. This means having seven-day-a-week wraparound family support that can work in partnership with families, helping them understand what is going wrong in their lives, while addressing the needs of their children.

It must mean that other services - including schools and health services - take a more active part in robust and focused family support plans.

And yes, it must also mean addressing the provider market and being prepared to disrupt it unless it changes - like the private fostering agencies, which now can cost twice as much to use as council fostering placements.

Adult services face the same set of challenges. That is why after a break of 24 years, Milton Keynes Council is going back into the specialist care home market, buying a 29-bedroom care home for older people with dementia who have very complex needs. We're forecasting that we will generate a decent annual surplus which can then return to support other services.

Managing risk can be expensive, but as those non-public providers know, it can also be rewarding if you get it right.

I've not yet met a councillor or worked with a colleague who believes that the way we respond to risk should be dependent on the budget available. There is universal agreement that vulnerable children or adults need to be protected and properly cared for, and that a professional assessment should always underpin the action we take.

But if it hasn't already, we're fast reaching a point where if costs keep rising, the system will become unsustainable. We urgently need a national debate on risk and our response to it, challenging the ever-present public blame culture that prevents us from being more creative, and the sometimes unrealistic set of expectations from inspectors.

It is not reckless to rethink risk and the way we respond to it. Hoping things will be alright, despite the rapidly deteriorating financial situation, most definitely is.

• Michael Bracey is corporate director for people at Milton Keynes Council