Decision details

Children's Residential Care Fee Increase

Decision Maker: Cabinet

Decision status: For Determination

Is Key decision?: No

Is subject to call in?: Yes

Purpose:

This report sets out changes in children's residential care home fees which result from negotiations with providers regarding the National Minimum Wage.

Decisions:

TonySmith

Councillor Tony Smith, Cabinet Member - Children and Family Services, said:

 

“Making sure our most vulnerable young are people are safe, protected and enabled to reach their full potential is our most enduring responsibility. We have important, and rapid, improvements to make to areas of our services and we are committed to achieving them.

 

We are proud of our high numbers of dedicated foster carers who do an outstanding job with some of our most vulnerable children, but we recognise that for a small number of children and young people residential care best meets their needs.  We want Wirral children to be placed in Wirral.  We will work with our partners and the residential care provider market to develop more locally-based places for children with more complex needs, including brothers and sisters who need to stay together, teenagers with challenging behaviour and children and young people who may be at risk of sexual exploitation.  By placing these children in Wirral we will be able to wrap services around them more effectively, responding to changes and so keeping them safe.  We will keep a sharp focus on these children through crisper, outcome-focused care planning, listening to children’s voices and encouraging their ambition.

 

This report helps us to maintain the quality of our residential care services and develop this more specialist provision in the borough.  This is vitally important for those young people who are in the care of the Council.”

 

 

Councillor Tony Smith introduced a report by the Interim Strategic Commissioning Manager.  It informed that the Local Authority had a duty to provide or procure placements for Children Looked After (CLA) which was explicit in the Children Act 1989.  This had since been strengthened by the introduction of Sufficiency Statutory Guidance (2010) and the Care Planning, Placement and Case Review Regulations (April 2011). 

 

There was also a duty of ‘sufficiency’ that required Local Authorities and Children’s Trust partners to ensure that, through provision or commissioning, a range of placements sufficient to meet the needs of all CLA were available locally or that there was a plan in place to move towards that position. 

 

Residential fees had remained static over recent years, due in part to the framework agreements negotiated and agreed by Placements North West (PNW), a regional consortium of 22 local authorities. However, the implementation of the National Living Wage (NLW) had seen wages rise from £6.50 in 2016-16 to £7.20 in 2016-17 with expected increases to over £9.00 by 2020.  Other factors driving fees increases included:

 

·  The EU Working Time Directive (sleeping nights)

·  Wage increases across the sector to maintain career structures and pay differentials

·  Inflation

·  Pension costs

 

The Cabinet was informed that Wirral’s use of external placements was low compared to other local authorities. 13% of Children Looked After were placed externally compared to the North West (29%) and England (34%) averages. (This measure included residential care and independent foster carers).  In addition there was a higher fostering to residential ratio in Wirral (11.1) compared to the North West (7.7), i.e. for every residential placement there were 11.1 fostering placements.  This ratio had helped keep the average cost of placements lower in Wirral, at £2,682 per week compared to the North West at £2,781 per week (source: PNW census 2015).

 

The Cabinet noted that for this exercise, however, it had been difficult to benchmark uplift requests across providers, because each had very different staffing models, capital costs and remuneration packages.

 

It was reported that a process for regional and local challenge to providers’ requests for fee uplifts had been established in autumn 2015, agreed by the Local Authority members of PNW.  Wirral had led the negotiations, on behalf of a number of Local Authorities, with a locally-based provider, who had described a range of additional cost pressures the most significant of which had been the additional cost of sleep-ins (10pm to 8am) as they were classed as “working time” under the new Working Time Directive, and had to be paid at the NLW rate of £7.20 per hour.

 

In the local negotiation officers had brokered a reduction in the weekly uplift requested by the provider, following challenge on some of their costings.  In addition, as Wirral had a number of young people on long term placement with the provider a phased introduction of the new rate for existing placements had also been agreed.  Taken together these actions had reduced the Council’s exposure to the full impact of the fee uplift for 2016/17. 

 

 

The Cabinet was made aware that this extra cost could not possibly have been foreseen at the outset of the last PNW tendering exercise.  Providers had argued that they were left with no alternative but to request uplift in fees from the local authorities. The ramifications of this had caused a ripple effect in the Residential Care sector, placing some providers at risk of financial difficulty.

 

The report set out the options:

 

·  not to pay the NLW uplift; or

·  ask providers to absorb costs of the legislative increases.

 

The report also detailed the risks associated with each option.

 

Residential Care and Independent Fostering placements were procured as part of a regional framework for the period 2014 to 2018. This was run by Placements North West (PNW) on behalf of 22 Local Authorities in the region.

 

The Cabinet was also informed that the budget for Residential Care was £5.6m.  In addition there were budget pressures of £1.9m which were being dealt with through demand management.  The fee increase was projected to cost £250,000 in 2016-17 and it was recommended that this be met from the Revenue Budget Contingency. Whilst 2016-17 was impacted by both the Working Time Directive and the National Living Wage future years would take into consideration the National Living Wage.

 

Councillor Phil Davies informed that it was very important that employees paid the National Living Wage and the cost of sleep-ins.

 

RESOLVED: That:

 

(1)  the actions taken by the Director of Children’s Services to increase residential care fees where necessary with effect from 1 April 2016 and the continuing pressure in future years resulting from the National Living Wage (NLW) and the Working Time Directive be noted; and

 

(2)  the increased cost of £250,000 be met from the funding set aside in the Revenue Budget Contingency 2016/17.

 

Councillors Bernie Mooney and Stuart Whittingham left the meeting.

Report author: Janice Monty

Publication date: 05/10/2016

Date of decision: 03/10/2016

Decided at meeting: 03/10/2016 - Cabinet

Effective from: 13/10/2016

Accompanying Documents: