Keeping Welsh families together

Yesterday I set out a series of facts concerning looked-after children in Wales. Welsh children are removed from their families and into local authority care at a substantially higher rate than in England. Moreover, the rate of removal has risen inexorably in Wales over the last decade. The increase was especially pronounced in the period following the Baby Peter scandal, in 2008.

Coupled with a slowing down in the rate of children leaving the care system, the overall number of looked-after children in Wales has risen by more than 1,500 in the last ten years. These extra children are not scattered at random across the country. Rather, they are drawn overwhelmingly from areas of greatest disadvantage. It is poor children, from poor families, who are caught up in this way.

Looked After Children This is the second in a two part series investigating the ever-increasing number of children taken away from their families and into the care of local authorities in Wales. Tomorrow Mark Drakeford will raise the issue in a Short Debate in the National Assembly.

This trend was not a policy accident. Rather it reflects the hegemonic grip which has been exercised over the system by those who believe that children from flawed families are best removed from them, early and decisively, in order to be offered a fresh and better start in life elsewhere. From this perspective the rising rate of looked after children is something to be welcomed. More children are getting the help they need, and for longer. Fewer children are being left in the hands of a criminal and immoral underclass, with their regular parade of awful examples. Yet while some children in such circumstances do indeed need to be removed for their own safety, and to avoid significant harm, that explanation is not sufficient to explain the strength of the trend I set out yesterday.

Indeed, these arguments are fundamentally flawed, both in terms of the futures which are created for children, and the use of scarce public funding.

The looked-after system does not buy a better future for most children. In fact, the longer it hangs on to young people, the worse their outlook becomes, in terms of both education and health. Meanwhile, the funding which local authorities provide for children’s services becomes concentrated more and more on paying for highly expensive and intensive forms of care, leaving them with little or no capacity to invest in services which help families stay together. In England, the average direct annual cost of a placement for a looked after child is £40,000. These costs range from £25,000 for a foster placement, to £250,000 or more for a specialist residential place. By way of comparison, the basic annual fee for a place at Eton is £32,067. Cumulatively the costs in England are calculated to exceed £2 billion a year.

What, then, can be done to reverse this position? In a period of such acute funding restraint, it becomes more and more difficult for local authorities to break out of the pattern which has become established over more than a decade. Instead, a new source of money has to be found, through which services can be re-engineered in the direction of supporting families. In that context, it is a source of optimism to see that the newly elected Labour councils in both Cardiff and Swansea have taken steps to implement Manifesto commitments to explore a Social Impact Bond (SIB) for exactly that purpose. In Cardiff, the first year programme of the new administration binds the authority to develop a Social Impact Bond (SIB) in one of the following areas:

• Adolescents on the edge of care
• Successful Family Interventions
• Prevention of Youth Offending

Social Impact Bonds were developed in the final years of the last Labour Government in Westminster. They are investment funds, raised from socially-motivated individuals and organisations. Through a contract with a public sector body, the Fund is used to create a new set of services designed to bring about specific and specified improved social outcomes. If those outcomes are achieved investors are repaid their original investment, plus a financial return.

The important point is to be found in a document published by the organisation Social Finance. It makes it clear that “SIBs fund preventative and early intervention programmes which tackle the underlying causes of specific social problems”. Applied to the case of children’s services, SIB investment can be used to reduce the flow of children into the most expensive, and least successful, parts of the system, creating a self-reinforcing cycle of positive spending and outcomes. Social Finance, working with three major local authorities in England, has drawn up a technical guide to the application of an SIB in this policy area. It outlines a set of services which could reduce preventable family breakdown and the number of young people entering care. As the number of young people entering the system reduces, so local authorities have greater scope to de-escalate the interventions which are applied to young people in the most expensive and distant settings, bringing them closer to home.

Financially, the SIB reduces the local authority costs by stemming the flow into care, and by reordering the care provided to existing looked-after young people. The funds released in this way are accumulated over the period of the Bond, so that its capital investment can be repaid at the end of the period, together with any return on that investment. At the conclusion of the Bond period, the local authority itself is able to use the funds released from unproductive spending into the long-term continuation of the services created through the Bond.

Of course, a large number of technical details remain to be resolved in the Welsh context. In particular, the target group for any intervention needs to be identified carefully and the measurements by which the success (or otherwise) of new interventions are to be established must be calibrated in such a way as to avoid perverse incentives. For example, my colleague, and former specialist adviser to the Welsh Government on children’s policy, Professor Ian Butler of Bath University, has suggested that an SIB experiment should focus only on those young people, aged 13 or more, who are either already in residential care, or who have already reached the care threshold. In the former case, this would allow new SIB services to be concentrated on de-escalating and normalising care. In the latter it would help ensure that SIB services were targeted at those genuinely at risk of being removed from home, with reduced risk of net-widening which ‘preventative’ services always bring in their wake.

However, the crucial need is not for further refinement of the technical and financial model. Social Finance have already created much of what is needed in this regard, and expertise already exists in Wales to allow for site-specific design to be carried out. Rather, the political will has to be summoned to take the SIB possibility from the drawing board to a practical experiment. SIBs must be implemented as soon as possible beyond Cardiff and Swansea. They may have the greatest impact in Merthyr Tydfil, Neath Port Talbot and Torfaen, where we see some of the highest rates of both deprivation and looked after children.