Unintended Consequences

Politics is, or should be, about achieving what is possible and making (informed) choices. Policies that appear at first glance to be non-controversial can often be anything but once fully understood.

The Children’s Act is one example. The Act was intended to increase parental influence over the assistance given to children with High Needs. This is a motherhood and apple pie policy, that no one is going to be against.

Until it becomes apparent that the consequences are to drive a significant number of councils into even more dire financial problems than they have had after nine years of austerity .

The legislation has brought more children into the system, in addition to the growing number resulting from population increasing. Given the choice of care packages, what parent would not select the one that provides most support, even if the child could manage with less.

So surprise, the cost of support has shot up nationally. Councils that have not unreasonably sought to balance care with cost have been taken to court and lost judicial reviews, meaning more cost and leaving high cost packages in place. There is some extra funding to allow the Government to make the claim it is dealing with the problem, but it is nowhere near enough.

None of this would matter if the Government had respected the principle that if central government creates extra responsibilities for local government the funding it provides should be adjusted accordingly. This was known as the New Burdens rule, and was introduced by the coalition government in 2010.

However, this only applies where there is a direct link. The element of parental choice complicates this as Government will argue that they have not caused the costs to increase, it is the parents.

All this may be of secondary importance if Councils had a way of raising sufficient revenue each year to meet the additional costs. Guess what, they don’t. The capping of increase in Council by central government nine years of budget reductions and demographic changes all make the position harder to deal with.

The law allows administrative decisions to be subject to Judicial review. Nothing unreasonable about that. So should a council not satisfy a parents wishes, the matter can go to court. Again wholly reasonable. Should the court find in the parent’s favour, the council will need to provide a higher standard of care, and cost is not a consideration. To add to the budget pressure, precedents are set and similar cases have to be treated in the same way. So costs go up further. Councils across the country therefore face increasing costs as an unintended consequence of a policy change, on a spiralling scale into the millions.

There is no way out short of government recognition that the change in legislation has resulted in the additional cost and that this needs funding. Ten years of austerity have squeezed out efficiency savings, councils cannot increase council tax – so this has to fall back to Government as they instituted the legislation that caused the financial shortfall.

Do you think this is going to happen anytime soon?

This article first appeared in the Havering Fabian Newsletter Edition 39 June 2019

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