Nottingham City Council paying private companies £3.7m a month to look after children in care

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By Joe Locker, Local Democracy Reporter

Nottingham City Council is now having to spend more than £3.7m every month on private companies to look after children in care after costs in the sector soared, a Freedom of Information request has revealed.

Recent figures suggest around 700 Nottingham children are in the care of the authority, up from just over 600 in 2016.

They may be living with foster carers, at home with parents but under supervision of social services with shared responsibility, in a residential home or a placement or settings such as secure units.

Now a response to a Freedom of Information (FOI) request, submitted by the Local Democracy Reporting Service, shows the average annual cost of a looked-after child was £81,058 in 2022/23, up from £68,141 in 2021/22.

Over the same period private care providers were paid a total of £44,990,000, by the council, or around £3.7m every month.

This represents an annual increase of 34.4 per cent on the £33,476,000 spent the year before.

Owing to ongoing staffing problems, a total of £3,895,726 was also spent on agency staff to support children’s services, up from £3,454,479 the year before.

The figures were made public as the council faces a £23m in-year budget gap and is considering the possibility of a Section 114 notice, the closest an authority can legally get to declaring bankruptcy.

The council has faced fierce criticism for a string of poor financial decisions in recent years, including how it ran Robin Hood Energy, which collapsed in 2020 at an eventual cost of some £38m to the authority.

And in 2022 it emerged the council had been misusing its Housing Revenue Account – a fund from council tenants’ rents – by spending almost £16m from it on other services instead of improving homes.

But a significant portion of the current deficit is down to other costs, including the budget for children’s care, which is running at £13.5m over what it was predicted to reach in the current year.

Cllr David Mellen (Lab), the leader of the council, previously told the Local Democracy Reporting Service some of the placement costs for children with multiple needs “have just gone through the roof”.

The FOI response shows some of the costliest placements came in at upwards of £49,000 per year for one child.

“People are making a lot of money out of vulnerable children, which is rather distasteful in my view,” he said.

Terry Galloway, who grew up in care and today campaigns for children in care and care leavers, added: “The possibility of Nottingham City Council facing a Section 114 notice is a stark reminder of a crisis that extends far beyond our city’s borders.

“This isn’t just about balancing budgets; it’s about the lives of our children in care and those leaving care, they are suffering due to widespread inefficiency at every level of government.

“Local councils don’t have a choice, on a Friday night as everyone goes home for the weekend, the relentless pressure persists. The truth is, if children need help, then social services have to act.

“We must recognise that when we properly fix the children’s social care system, we wouldn’t only be saving lives; we’d also be freeing up vital funds for the non-statutory services that our communities hold dear.”

Generally, the number of children who are now looked after by local authorities has reached record levels, having risen by 25 per cent since 2011/12.

The increase, combined with inflated costs, is posing a significant financial challenge to many councils.

Figures published on November 20 by the Special Interest Group of Municipal Authorities (SIGOMA), an organisation representing 47 urban authorities including Nottingham, show that almost one-third of council funding is now being spent on children’s social care services, almost double the amount compared to 2011/12.

Chairman of SIGOMA, Cllr Sir Stephen Houghton, says the situation has left councils at risk of Section 114s and added: “These demand-led pressures are leaving councils financially stretched and at breaking point.”

A Government spokesperson said: “Local authorities have seen an increase in core spending power of up to £5.1bn or 9.4 per cent in cash terms on 2022/23, with almost £60bn available for local government in England.”

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