Finance chief admits children’s service spending is ‘not sustainable’ as he reveals £3.3m black hole

The spending of Hackney’s cash-strapped children’s service is “not sustainable”, its own finance boss has admitted.

Residential care homes charging £200k-a-head, a £2.9m hiring drive, and unexpected pandemic costs saw the council department go £3.3m over budget last year.

Children’s service finance director Naeem Ahmed told councillors that the total overspend would have exceeded £10m had beancounters not plugged the gap by burning through a £7m cash reserve.

Speaking to the Children & Young People scrutiny commission (CYPSC), he warned that vulnerable youngsters could be moved out of full-time residential placements in a desperate bid to cut costs.

He revealed that an estimated 40 children are currently in full-time placements – and complained that the council is “at the mercy” of greedy providers charging up to £200k-a-year per child.

He said: “Within corporate parenting, I guess there’s a lot of areas of high cost.

“One of the areas that has cost pressures is in residential care – on average, a residential placement costs approximately £200k per year.

“And at this point, I think there are approximately 40 children in a residential setting which obviously has a significant cost pressure to the service.

“Something that we’ve been looking at forensically is to try to understand why those children were in care, and if any steps can be taken to step them down into other settings.

“We’re reviewing a reduction in high-cost placements as part of a budget review meeting.

“The high-cost nature of of children’s placements – I guess partly that’s linked to the size of the market.

“The market’s really small so therefore you’re at the mercy of providers, so often the cost can be linked to that.”

The low number of residential care homes around the UK means Hackney is forced to send kids far outside of the borough to get them support – with CYPSC chair Cllr Sophie Conway revealing that she’s heard of children being sent to “Wales or Cheshire, or Liverpool”.

She added: “Every time I hear that figure of £200k it is so painful. Many of the issues they experience are poverty, and we could buy them a home for that price.

“We’re putting them in temporary accommodation for years and years and the impact of poverty, only to then spend £200,000 to put their children in care after the full impact of the devastation of poverty.

“It sits so badly with me.”

Children’s service director Annie Coyle agreed that it was “really important that we keep our children, close, and keep them safe and keep them protected”.

But she warned that the needs of each child sent to residential care are “highly complex” – and said the council is forced to fish in a “very small pond” when looking for residential care homes.

She said: “These are all children whose needs are high – otherwise we would have them in our fostering cohort already.”