Understanding the drivers of spend in children’s services

The LGA has commissioned Newton Europe to deliver a diagnostic project to answer the question: what drives variations in spend on children’s services?

Join our event: Understanding spend in children's services
(London, 13 March 2018, free for LGA members) 

By 2020 there will be a funding gap in children’s services of at least £2 billion. The LGA is concerned that having responded to reducing resources and sharply increasing demand over recent years, councils have very few savings left to find that won’t have a real and lasting impact on crucial services that vulnerable children and their families rely on.

However, we also recognise that within the context of an overall national pressure on children’s services, there remains considerable variation in spend between similarly performing councils.

The LGA has therefore commissioned Newton to deliver a diagnostic project which will answer the question: what drives variations in spend on children’s services? The output will quantify the relative importance of both internal and external factors in driving the observed variations.

The factors Newton are investigating as part of the work include:

  • population size
  • geographic size
  • levels of deprivation
  • local market factors (e.g. impact of local wage levels and cost of procuring services)
  • council operational and financial management
  • the role of partner organisations
  • financial accounting

Clearly, not all of these factors can be investigated through analysis of nationally available data. We have therefore specifically shaped the project to involve on-the-ground analysis with a group of eight authorities who achieve similar outcomes but have varying levels of spend.

This on-the-ground work includes: assessing the coding of financial spend returns to ensure a like-for-like comparison; using local operational data to understand in more detail the drivers of spend, and completing reviews of cases to identify the impact of operational decisions on financial performance.

An interesting observation from the work so far is the degree of correlation between the amount an authority spends on children’s services per head of population aged 0-25 and their average levels of deprivation (as measured using the Impact of Deprivation Affecting Children Index, or ‘IDACI’, score). Further work is needed to quantify this relative to other factors impacting spend, and this will be one of the tasks the team will be completing over the coming months.

Newton graph

The research will conclude in Spring 2018. In the meantime, please download this briefing paper for more information.