Commissioning Children's Services: Policy context

Derren Hayes
Monday, May 27, 2019

In 2017/18, councils spent £8.844bn on children's services compared with £8.476bn in 2016/17 - a rise of 4.3 per cent, according to statistics from the Ministry of Housing, Communities and Local Government.

A growing number of children have complex needs. Picture: auremar/Adobe Stock
A growing number of children have complex needs. Picture: auremar/Adobe Stock

In 2017/18, councils spent £8.844bn on children's services compared with £8.476bn in 2016/17 - a rise of 4.3 per cent, according to statistics from the Ministry of Housing, Communities and Local Government.

The rise in children's social care spending over the past year means that it now accounts for 9.8 per cent of all council spending - up from 9.3 per cent in 2016/17.

While some areas of spending - notably, early help, early years and youth work - have shrunk since 2010, the amount spent on children's social care has risen by £700m over that time (see graphics).

Amid rising demand for the most intensive support and continued pressures for efficiencies and cuts across council budgets, the scrutiny of decision making over what services are provided and by whom has never been higher.

This year alone, three major reports have highlighted concerns over how services for children and young people are commissioned by local authorities, with government being called on to undertake a review of commissioning practices.

Here, experts outline latest trends in how health, social care, youth services and special educational needs and disabilities services are commissioned.


By Amanda Allard, assistant director, the Council for Disabled Children

While education, health and care (EHC) plans have influenced the type of support councils and clinical commissioning groups are commissioning, the duties to jointly commission have had a much more profound effect on the way statutory agencies are working together to design and plan services for children with special educational needs and disabilities (SEND).

Some local areas are taking a "back to basics" approach by reviewing their vision and high level outcomes for children and young people with SEND and using these co-produced outcomes to develop and focus their strategy, contracts and key performance indicators.

Hertfordshire County Council, for example, has taken this approach to develop a framework of six core outcomes which are already being used by commissioners and applied across all agencies and services for children and young people, not only those with SEND.

However, against a backdrop of rising numbers of children with SEND and unsustainable pressure on authorities' high needs budgets, joined-up thinking remains a significant weakness in many areas - a weakness that is frequently highlighted for attention in joint Ofsted/Care Quality Commission inspection reports.

The development of the designated medical/clinical officer role is at the heart of the improved joint working we're seeing between local authorities and health services; able to provide an overview of the many different aspects of health, health provision and processes and therefore critical to any plans for system improvement. It has also contributed to earlier identification of children with SEND, a key focus of the reforms arising from the Children and Families Act 2014. The success of the role has led to plans for Designated Social Care lead roles or DSCOs to spearhead the same improved engagement from social care.

While the Act focuses on more effective meeting of needs from the universal offer, local areas on the whole are seeing a rise in numbers of EHC plans which suggests that more needs are not being met at a universal and targeted level. This is placing greater pressure on therapy services and short breaks.

Moreover, we know anecdotally that schools are struggling to accommodate pupils who are currently not accessing an EHC plan.

Other trends in how councils meet the education needs of SEND children include more ad hoc purchasing of special school places, even where this environment is not the most effective or economical. This is driven in part by growing numbers of children with complex needs which local agencies are struggling to meet, as well as by parental preference. It is reflected in rising levels of school exclusions and a weaker focus on inclusion in mainstream education.

In-patient care

The Transforming Care programme's late but significant focus on children and young people will hopefully reduce in-patient placements for children and young people with learning difficulties and/or autism.

Innovative approaches such as Ealing Council's Intensive Therapeutic and Short Breaks Service are leading to reductions in residential placements as well as delivering cost savings, while other areas are exploring "crash-pad" solutions designed to provide short-term, emergency short breaks to give families and services time to plan a viable support model. This can prevent unnecessary admission to in-patient settings or residential schools.

Overall, these examples of innovation and joined up working remain more the exception than the rule. Despite years of national policy and initiatives focusing on integrations, families can still experience fragmented support and those working in local areas can feel swamped by new initiatives and complex local systems and processes.

The Council for Disabled Children (CDC) report, It takes leaders to break down silos, identifies several factors which can make or break a local area's approach, including strong leadership which promotes cross-agency working and innovation, personalisation within a clear area-wide vision for improving outcomes, systematic approaches to data sharing and alignment of key change programmes.

The CDC believes that joining up the dots makes services more efficient as well as more effective. That's why, among many recommendations, we're asking the Department for Education and National Institute for Health Research to commission a cost effectiveness study of joint strategic planning and joint commissioning arrangements in order to further strengthen the case for change (see practice example).


By Andrew Rome, Revolution Consulting

The housing, communities and local government (HCLG) committee report, published in April, is the latest in an accumulating set of investigations into the funding of local authority children's services. In January, the National Audit Office (NAO) report Pressures on Children's Social Care criticised the Department for Education, and was followed in March by the Commons public accounts committee concluding that the sector is not financially sustainable and the DfE needs to improve the quality and cost-effectiveness of children's social care in measurable ways.

The HCLG publication builds on those conclusions, and although the call for increased funding dominates the headlines, there are other recommendations in the report that catch the eye. In particular government is directed to:

  • Consider the barriers to creating more residential care placements to increase supply.
  • Consider greater regulation of the children's care market to ensure that costs do not rise disproportionally and that there is appropriate competition.
  • Review the commissioning and procurement system by December 2019. Government and local authorities are to introduce greater oversight of how different care placements affect outcomes for children and their value for money.

The three recent reports amplify a body of evidence that has been building for a number of years. Sir Martin Narey has reviewed the operation of both residential care services for children and fostering for the DfE. Both reports highlight the weakness of commissioning structures and practices in these markets.

The shortage of appropriate children's homes places is acutely evident in the Independent Children's Homes Association 2019 State of the Sector report published last month.

The CMA has already investigated both the residential care market - Caretech merger with Cambian - and the fostering market - National Fostering Agency merger with Acorn, and Core Assets merger with Partnerships in Children's Services. No large-scale interventions have been indicated by the CMA. It is, therefore, the committee's final recommendation to introduce greater oversight that identifies one of the root causes of the current situation.

Over the last 20-30 years, the private sector has come into the supply-side of services to fill the gap left by both state and charitable providers. As the sole purchaser of services, the state has struggled with the complex task of commissioning services on a planned basis and this is part of the reason we see the picture described in the reports.

Provider perspective

In various studies - including information provided for the Narey reviews - the performance of provider sectors has been tracked. The results over several years are surprisingly volatile and vary between services. They offer a very mixed picture of commercial success and failure and far from a uniformly stable environment.

Provider organisations identify the commissioning and purchasing interface with councils among their greatest sources of anxiety. There is clear indication that providers would warmly welcome renewed partnerships on a stable long-term footing with local authorities. Such partnerships would have the potential to realise efficiencies for all parties from shared risk, but more importantly would offer more mature and stable relationships between providers and commissioners.

A substantial task

Moving away from procurement that relies heavily on spot purchasing and from the "command and control" mindset of the public sector, and moving towards greater levels of needs assessment and demand forecasting and new models of sharing risk, all require investment, strategic and commercial intelligence and longer-term mindsets from commissioners - alongside the need to aggregate demand across sub-regions, regions and nationally - for the most cases.

Whether the answer is phasing out private sector interests or improving the current state of the commissioned sector, there is complexity that needs a new mindset and maturity of relationships. It is not a task that will be satisfied by a small number of projects within the Children's Social Care Innovation Programme - it requires national oversight and leadership.

Additional funding is needed, but not just to keep doing more of what clearly does not work (see practice example).


By Leigh Middleton, chief executive, National Youth Agency

We await the government review of the statutory guidance for local authorities' duty to provide a sufficient local youth offer. The duty comes with the caveat in the current guidance that it only applies "so far as reasonably practicable". Austerity has run a coach and horses through that opening.

Without strong guidance there has been minimal defence of swingeing funding cuts to local youth services. In-house teams have been lost or dissipated, with targeted youth work often embedded in other services such as Troubled Families and social care. Other teams have been "spun out" of the local authority for commissioned services, which have also been eroded as spending cuts have continued. In many cases the voluntary sector has stepped in on reduced contracts or project funding, and a part of the youth sector depends on volunteers.

There have been two notable consequences. First, a reduction in funding "universal" or open-access youth services, with a preference for short-term targeted interventions often contracted rather than grant-funded. Second, where universal services are commissioned, these are increasingly contracted to a single provider who is expected to provide both universal and targeted services, meaning numerous prior contracts are often amalgamated into a far smaller number.

A patchwork quilt of provision has emerged as a result. This has led to innovation in some areas, but a desert of provision in others. The staccato approach to project funding or national programmes that respond to short-term "crises" to be fixed, most recently knife crime, ignore the cumulative effects of good youth work throughout the life of the young person and beyond the transition into adulthood. There is a critical knock-on effect to the demand for later often much more expensive services.

The reduction in previously secure, relatively unrestricted funding for youth services has had a consequent reduction in the scope and reach of youth work. Yet there is now an increased appreciation of the value of youth work with the continuity of a trusted adult worker for the young person at its core.

Many local authorities have been innovating with delivery models and partnerships. Where a single provider has been commissioned, they can benefit from both economies of scale and from being able to run a service with less "red-tape" than a local authority may have been able. Smaller and medium-sized charities lose out, but it is these community-based organisations that can best connect with young people. They often spend large amounts of time and resources competing for bids or forging bid partnerships which are rushed.

Yet having a reduced number of contracts is easier for commissioners to manage. However, some funders want only to pay for "front line" provision, whittling away at core infrastructure costs which threaten the sustainability of service provision, exacerbating the short-term nature of much of the funding. Meanwhile, payment-by-results contracts are tricky and can create cash-flow problems. In turn, a large provider is often better able to generate matched-funding and other external sources of income, and therefore can potentially provide better facilities and wider services. This has led to some areas commissioning services as combined authorities and a move towards establishing local youth partnerships, a trend likely to rise with city-regions and elected mayors.

Overall what is missing is a coherent and consistent message through the commissioning and administrative processes. The new Youth Charter announced by government and the opportunity from strengthened statutory guidance needs to provide a core narrative of what we want for young people and expect of youth services.

A guide on good youth service commissioning considerations, developed by the National Youth Agency and the Local Government Association, will be available in July 2019.


By Frank McGhee, former director of integrated commissioning at Derby Council and Southern Derbyshire CCG, and now runs Commissioning 4 Outcomes

The NHS Long Term Plan (2019) and its predecessor Five Year Forward View (2017) both give ample opportunity for closer working across the whole health and care system.

The emphasis on emergency care, children and young people's mental health and out of hospital care all speak to the need to reduce demand as well as looking for innovative commissioning solutions.

The continual emphasis on population health plays well to a shared priority of children and young people having a good start in life.

Great efforts have been made to work closer across public sector partners. Examples include the Sustainability and Transformation Partnerships, health and wellbeing boards and joint commissioning initiatives.

Local transformation plans for children and young people's mental health, and joint strategic needs assessments have been successful at getting partners to work together and the Better Care Funds have also enabled better use of resources.

There is no doubt that locating public health functions in local authorities has created additional opportunities including a focus on life-course and the different key age groups including 0-19. The role of the health and wellbeing boards has helped to align strategic priorities. Strategic support and planning is taking place.

Joint commissioning needs to be used to co-design innovative placement options rather than using the existing options which I do not think work well for children and young people. Placements closer to home enable the continuation of relationships with family and friends, continuation of attendance at school and continuation of support networks.

The work on personalisation in adult services also offers much in terms of seeing the individual from a "strength-based" and "whole-person" perspective. This is being tested in children's services especially in the context of children with "additional" and "special" needs. Individualised budgets have also been tried with regard to "home to school" transport, however, these are limited in their scope.

We need to acknowledge the different evolution of commissioning that local authorities and the NHS have undergone. In local authorities, commissioning is a core function which sits alongside internally provided services, whereas in the NHS there has been a more distinct splitting of provision and commissioning functions.

We need to get better at recognising these cultural differences and make sure we form a single and integrated approach to commissioning. You need staff who build bridges between organisations and help translate the different languages, processes and governance (see practice example).


By Kathy Evans, chief executive, Children England

As we digest the excellent HCLG report on local authority children's services funding, it's clear that care commissioning needs major systemic reform. Among its recommendations is a call for the Competition and Markets Authority to investigate how to make the market more competitive and control spiralling council spending. That is a laudable aim, but a serious review of the care commissioning marketplace will have to unravel the common assumption that more competitive markets create more competitors. In fact the opposite is true.

The report recounts eye-watering figures of steep rises in the "costs" of independent care, but in most cases they are actually referring to the prices, not the costs, of care. Costs are what a provider has to pay out in salaries and bills; price determines the amount they can earn in income from councils.

Many council procurement strategies attempt to cap, or fix, the maximum prices they're willing to pay providers, which can sound like an obvious way to prevent excessive profit. But different providers don't all have the same costs - smaller organisations with fewer places to sell will have higher costs per place than organisations with a higher volume of care places. Whatever their size, providers who pay better terms and conditions for staff, invest in training, qualifications and quality of living conditions, will have far higher costs than high-volume high-turnover businesses paying minimum wages in the cheapest properties and areas of the country. A uniform fixed price is less likely to be sufficient to cover the costs of smaller local organisations and higher quality more ethical employers; more likely to be sustainable for low-cost, high-churn business models.

Fee-capping can therefore be precisely what drives smaller and/or higher quality providers out of business, or forces them into mergers with the bigger companies who grow their market share; reducing rather than increasing the number of competitors. Having fewer larger providers with greater market power is what enables them to break free of council fee-caps altogether, and to charge almost any price they want from councils who are now competing with other councils in the attempt to win their bid for the same oversubscribed placement.

Thirty years of market competition is what created this problem - more competition can't be the solution. If we can all accept the need for radical change, and that it involves moving away from short-term competition towards long-term collaboration, then I do believe that all the people and organisations who have the best interests of children at heart can work out how to do the right thing, better, together.


By Ewan King, chief operating officer, the Social Care Institute for Excellence

Commissioning - the process used to plan, procure, deliver and evaluate services - can have a profound impact on the lives of children, young people and families. It determines how a large amount of money is spent on local people. So it is somewhat disconcerting that too many beneficiaries of children's services have so little involvement in commissioning.

What should increasingly happen is the co-production of commissioning decisions; that is, service users working together to design, commission, deliver and evaluate services.

Barriers and solutions

Cuts to local authority budgets don't help; hard-hit commissioners can claim they simply don't have the resources. But culture also plays its part. A fear is held by some that if we involve people in decisions it will simply raise expectations that then can't be fulfilled. Then there are the commissioners who demand to see the evidence that co-production works.

So what do we do about this? First, rather than hectoring already hard-pressed commissioners, we need to restate the powerful arguments for co-production. Co-production cannot only ensure that scarce resources are more closely targeted on what people want; in time, it can save money. In Oxfordshire, which has a long standing commitment to co-production, this happened with parental involvement in redesigning respite services for families of disabled children.

Good co-production?

Involvement can raise expectations, but not always when you enter an equal partnership with young people and explain from the start that money is tight; and that not everyone will get what they want. Good co-production can help you have those difficult conservations about priorities, without people always leaving the process feeling disappointed.

At Doncaster Children's Services Trust, young people are working on using a family centre so that care leavers can have access to washing machines; it's also been suggested that the centre is used as an advocacy "drop-in" service. Other care-experienced young people in the area now regularly visit care homes with commissioners to see what small but important things can be improved, for instance making sure that young women don't have to sign out sanitary products, which can affect their confidence.

Helping commissioners

People know their own lives better than anyone. This means that they can help commissioners develop services that are more likely to work for them. It leads to better services, such as The Cocoon, in Havering, which is co-produced by children in care - and care leavers - and which helps those young people access a whole host of support and services in a safe place. It was called "highly impressive" by Ofsted.

Children's services face unprecedented challenges, but even this is not enough of an excuse to avoid co-production. With strong leadership, commitment and patience, co-production can help services to not only survive but to prosper.

Click here to read more in the Commissioning Children's Services Special Report


Funding of Local Authorities' Children's Services Inquiry, housing, communities and local government committee, April 2019

Transforming Children's Services Inquiry, public accounts committee, March 2019

Pressures on Children's Social Care, National Audit Office, January 2019

Onside on One Side: A New Future for Children's Care Procurement and Commissioning, Independent Children's Homes Association, November 2018

A Review of Commissioning Arrangements for Looked-After Children in London: Final Report, Institute of Public Care, July 2018

How Well Are Our Services Commissioned? Early Messages From the 2018 Survey, Nationwide Association of Fostering Providers, February 2018

Foster Care in England, Department for Education, February 2018

Children's Residential Care in England, Department for Education, July 2016

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