Outsourcing children's services - is it for you?

  • The majority of children’s services can be delegated to third party providers following legislative amendments in 2014
  • With a fifth consecutive year of funding cuts, councils are under pressure to consider new ways of working to deliver critical services
  • We explore the benefits and consider whether outsourcing children’s services is right for your organisation, and how you can meet the challenges it presents

The Government has promised to “drive up social care workforce standards to improve support for vulnerable children” by pledging in its Spending Review to protect the Department for Education’s central children’s services budget at more than £300 million per year.

However, after five years of cuts to local government funding, and with a number of Ofsted inspections having deemed many children’s services to be inadequate, local authorities are under increasing pressure to look at new models of service delivery.

You have to look very carefully at what a third party is going to bring to the table.”
Vivien Gumble, Risk Consultant at Zurich Municipal

An amendment to the Children and Young Persons Act in 2014 now means that councils can outsource the majority of children’s services to not-for-profit third party providers.

A controversial amendment

Prior to the amendment, local authorities could outsource certain types of children’s services, for example the provision of children’s homes. However, key decision-making functions had to remain within local authority control.

Councils now have the freedom to delegate the majority of children’s services, including many sensitive decisions, such as alternative options for looking after children, including whether to recommend fostering or kinship care.

The initial proposals attracted significant opposition, mostly concerned with fears that introducing a profit motive to these sensitive decision-making functions would be against the best interests of vulnerable children.

This meant the Government had to revise the regulations so that the services concerned could only be delegated to not-for-profit organisations.

Potential opportunities

The Government intends these amendments to enable local authorities to explore new ways of working, drive innovation and create a better value service.

Vivien Gumble, Risk Consultant at Zurich Municipal, says: “There is a lot that can potentially be gained from partnership working and outsourcing. Involving other organisations can bring a fresh pair of eyes, and they may have innovative ideas learnt from similar operations.

“For example, in children’s services a lot of resources are absorbed by record keeping and other compliance activities. Larger organisations may have the benefit of more efficient admin processes or IT systems that could generate cost savings.”

However, opponents say there is little evidence that outsourcing public services actually drives innovation or improvement, and may actually cause progress to stagnate. It is argued that outsourced providers will focus on delivering their contractual obligation, and will not have the same ideological objectives as local government.

“You have to look very carefully at what a third party is going to bring to the table, and consider whether outsourcing is really the right option for your organisation,” adds Gumble.

Non-delegable duties

While councils now have more flexibility to outsource children’s services, responsibility still ultimately remains with the council if something goes wrong.

“In the early days of outsourcing, many local authorities were under the impression that they had outsourced everything, including their accountability,” explains Gumble. “However, the statutory responsibility for these services cannot be delegated or passed on via contract.

“Children’s services are very much in the spotlight at the moment, and a local authority will remain ultimately responsible if something goes wrong at an outsourced provider.”

Right skills for the job

While there are statutory minimums on staff numbers and time spent with children, one concern is that third party providers will progressively de-skill their workforce as a means of reducing costs.

Some critics speculate that the required number of social workers will shift to managerial-style roles, with less experienced and less qualified staff being used on the front line.

It will therefore be important for local authorities to work closely with third party providers to understand precisely how they plan to deliver a service for less money than a local authority.

Equally, other organisations may present an opportunity to address some important issues for the sector, such as high staff turnover.

“Some organisations may have resources that better nurture the workforce, through aspects such as greater training and development opportunities,” says Gumble.

Importance of the contract

Strong contract management is essential to ensure councils achieve value for money and protect themselves when outsourcing any public service.

“To meet your non-delegable statutory responsibilities, it is very important to draw up a robust contract which gives you exactly want you need. This is especially important in terms of oversight and accountability,” Gumble explains.

“Look carefully at key performance indicators, and make them flexible to account for potential demand fluctuations, include provisions on the quality of staff, and be able to review the contract when needed.

“This is something we can help with. Our Risk Engineering team does a lot of work around partnership working and local government transformation, so can help local authorities who are considering this route.”