The newly elected Labour government won a sizeable majority promising change and national renewal. In elevating a promise to “break down barriers to opportunity” to the status of one of the five priorities of their mission-driven government, they have placed children and young people at the heart of that programme for change.

A number of positive policy commitments which have the potential to benefit children and young people have followed. These include promises to recruit new teachers, open more nurseries, and provide breakfast clubs in schools. Alongside this has been a commitment to tackle child poverty, with the publication of a child poverty strategy expected in 2025.

The King’s speech included a pledge to introduce a Children’s Wellbeing Bill, which should rework elements of the legal framework governing children’s social care. However, to date, the new government has not committed to widescale reform of the sector, nor has it pledged any increase in funding for family help services, despite this being a central recommendation of the independent review of children’s social care in England.

For many, the lack of such a commitment is a serious concern. Children’s social care services provide vital support and care to hundreds of thousands of children and families each year, but these services, and the councils that fund and provide them, are increasingly under strain.

Despite increases in central government funding in recent years, the crisis in local authority finances has continued to escalate. This is underpinned by growing cost pressures across many services, in part due to long-term demographic changes, but also due to the pandemic and subsequent cost of living crisis.

Children’s services are no exception to this, and councils in England are spending more than ever on social care services for children and families. Growth in expenditure of more than £600 million in 2022-23 represented a 5% increase from the previous year, meaning total annual expenditure now exceeds £12.2 billion, over £1 billion higher than it was in 2010-11 and more than £2 billion more than it was six years prior.

Yet it is increasingly clear that accelerating expenditure is not leading to improved outcomes for the children and families the system supports. Data continues to show that young people who grew up in care are more likely to have poor outcomes when it comes to education, employment, housing, and involvement in the criminal justice system. Meanwhile, continued growth of the number of children in the care system is an indication that there is insufficient support and services to enable children to avoid entering the system and to get them out of the system in a timely way.

Much of this growth in spending has occurred during a period of significant financial pressure for local authorities. Providing support for children in care is a core statutory duty for local authorities. Growing expenditure on the care system has meant that councils have made spending reductions elsewhere, with early intervention services often the main target for cost savings.

The result is an increasingly imbalanced system of services, with spending skewed towards high-cost late interventions such as residential care placements, and away from early interventions such as children’s centres and family hubs.

The data that lays bare this change makes for uncomfortable reading. Between 2010-11 and 2022-23, spending on late intervention services increased by 57% while expenditure on early interventions has fallen by 44%. As a consequence, early intervention spending now accounts for less than one-fifth (18%) of total spending on children’s services, down from over one-third (36%) in 2010-11.

Within this, the rapid growth in spending on residential care placements has emerged as the most pressing issue for many local authorities in recent years. Since 2010-11, expenditure on children’s residential care has risen by more than £1 billion, equivalent to an 89% increase. Much of this has been a result of increases in the number of children placed in residential care, which has more than doubled since 2011. Worryingly, this trend appears to be occurring, at least in part, due to a shortage of suitable alternative placements rather than because this type of care has been assessed as the best option for the child.

Crucially, and most alarmingly, around half of the spending growth has occurred in the last two years alone and means that for the first time, councils now spend more on residential care placements than they do on all early intervention services. The accelerating cost of residential care placements is a consequence of both growing numbers of children and increased complexity of needs, but there are also fundamental issues with where and how this care is provided, in particular the relatively weak power of councils to influence prices.

But the increase in the demand for residential care placements is in part a consequence of wider social and economic changes which have served to exacerbate many of the key factors that drive increases in children’s social care activity.

Since 2010, the number of children living in poverty in England has risen by more than one-fifth (21%). At the same time, the number in temporary accommodation has almost doubled and those living in overcrowded homes is up by 8%.

There are now more older children in the care system. As a result, the prevalence of mental health issues has risen and there is a greater presence of complex risks from issues such as gang-related activity, child sexual exploitation, and substance misuse. The growing number of unaccompanied asylum-seeking children entering the care system in recent years has also been a contributing factor to the ageing of the care population. These children often arrive in the UK after fleeing traumatic experiences such as war and famine, and once in the UK can require specialist care to help them recover from past trauma and thrive.

There is also a sense that the response to financial pressures that local authorities have faced over the past decade or so has contributed to an exacerbation of these problems. Balancing tighter budgets through the disinvestment in early intervention services has limited councils’ ability to stem the tide of rising demand. A continued withdrawal from the provision of children’s residential care has left local authorities more reliant on private sector provision, and a hollowing out of internal skills and capabilities within local government has reduced their capacity to plan, initiate, and deliver widespread transformative change aimed at solving these complex challenges.

While a response from central government to addressing the wider policy and financial climate is clearly of primary importance, there are indications that the choices and actions made by councils themselves can have some impact. Contributors to this research highlighted that good leadership, a preventative approach to social work, and collaboration between local authorities, the wider public sector, and civil society can all contribute to a better system.

Delivering better outcomes for the children and young people coming into contact with children’s services is fundamental to breaking down the barriers to opportunity. To deliver change and national renewal, government must be prepared to tackle not only the specific challenges within the market for care placements and local government finances but also address the wider social and economic issues that are putting ever more strain on an increasingly costly system.

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