Financial impact of making these system shifts Forecast expenditure on support for children in care in a ‘no change’ scenario
However, this cumulative figure should not be read as a net saving: it represents avoided future expenditure against a worsening baseline, not cashable savings that create residual budget that could be redirected. A critical finding from this analysis is the time ‘lag’ before expenditure might reduce to budgeted levels. Even under the full- impact scenario, county and CCN unitary member authorities are projected to continue overspending placement budgets until approximately 2033, creating a cumulative overspend of approximately £2.73bn in the intervening years before break-even is reached. This overspend, which undermines local authorities’ ability to invest in preventative services/shifts, has not been explicitly funded as part of any reforms to date.
The upfront investment required to deliver the priority changes at this scale – in workforce, services, technology, and partnership infrastructure – would need to be set against this figure to arrive at a net benefit. That investment analysis is beyond the scope of this report but is essential context for any financial
It should be noted that the children’s social care Families First Programme (FFP) funding is currently due to reduce from £853.1m in 2026/27 to £729.1m in 2028/29. The reduction is due to part of the FFP investment coming from the HMT Transformation Fund, a two- year funding allocation announced at the last Spending Review. Confirmation of funding for 2028/29 will be confirmed in the next Spending Review. Potential reductions in expenditure If successfully delivered, the system shifts identified through this programme will make a significant positive impact on the outcomes and experiences of children, young people and families across the country. In addition to this, they will also make a significant impact on the financial sustainability of local authority finances. With the previously described assumptions around delivery timeframes, analysis for this programme suggests that by 2035, county and CCN unitary member authorities could spend £3.8bn per annum on children in care placements – £0.9bn per annum less than the £4.74bn per annum that analysis suggests will be required if current trends continue without the changes identified being implemented. It should be noted that this still suggests that spend on homes for children in care will increase by £600m per annum over this timeframe. Taken cumulatively to 2035, the modelled financial benefit to county and CCN unitary member authorities of successful delivery is in the region of £4.74bn compared to the do- nothing projection – a substantial figure that reflects the long-term effect of fewer children entering and remaining in care.
In 2024/25, across England’s county and CCN unitary member authorities, there were 26,700 children in care xvi , with an associated budget for placement costs of £2.7bn. The actual outturn expenditure in 2024/25 for these authorities was £3.2bn, suggesting an approximate overspend of £550m compared to the budget allocated xvii . This gap reflects sustained demand and unit cost pressures that have consistently outpaced budget- setting assumptions across the sector, driven by factors including placement market dynamics; increasing complexity of need; and the absence of sufficient family-based care settings. Analysis conducted for this programme indicates that if trends observed over the last decade were to continue unchanged, by 2035 these numbers will grow: • Approximately 29,400 children could be in care. • The associated placement budget would need to grow to approximately £3.9bn per annum. • Outturn expenditure could reach approximately £4.74bn per annum, an increase of £1.47bn. • The cumulative overspend accrued on placement budgets between 2026 and 2035 would be £7.3bn. These projections are based on extrapolation of historic trends and carry significant uncertainty over a ten-year horizon. They are intended to illustrate the long-term financial direction of travel under a no-change scenario, not to predict specific future expenditure. Factors including national policy reform; demographic change; system partner capacity/incentives; and economic conditions could all materially alter these trajectories in either direction.
planning based on these projections. This financial impact is illustrated in Figure 27 below:
Figure 27: County authority children in care number, budget and spend forecasts (full impact) County authority children in care number, budget and spend forecasts (full impact)
£5,000
£4,500
£4,000
£3,500
£3,000
£2,500
£2,000
£1,500
£1,000
£500
£0
Actual number of children in care
Forecast number of children in care (do nothing)
Spend
Spend forecast (do nothing)
Spend forecast (with impact)
Budget forecast (do nothing)
Forecast number of children in care (with impact)
Budget
64
65
Made with FlippingBook - Online catalogs