Welsh Care Policy Sparks Cost Crisis
A Welsh Government policy designed to eliminate private profit from children's care has backfired dramatically, leading to doubled costs and severe budget pressures for local authorities across Wales. Councils have told a Senedd committee that the unintended consequences have created a crisis in the care sector.
Jake Berriman, leader of Powys council, delivered stark warnings about the situation, describing how remaining private providers have been able to "make hay while the sun shines" as competition dwindled. The policy, passed by the Senedd in February, aimed to ensure looked-after children would only be cared for by public sector, charitable or not-for-profit organisations in future.
Spiralling Costs and Market Collapse
The phased move to restrict profit has seen many private providers exit the sector entirely, while those remaining have dramatically increased their charges. "We have to pay because there is no choice within the market," Berriman told the local government committee during evidence on the Welsh draft budget.
Councillors revealed shocking examples of the cost increases, with Jane Gebbie, deputy leader of Bridgend council, stating: "We've got one placement for one young person across Wales at the minute, that's £20,000 per week – that is excessive."
Mary Ann Brocklesby, the Labour leader of Monmouthshire council, added that such costs are becoming standard rather than exceptional. "I don't think there is a local authority across Wales that is not facing that kind of singular cost pressure," she warned.
Budget Shortfalls and Service Cuts
The financial implications are severe, with the Welsh Local Government Association warning of a £436 million funding gap based on a 2% budget increase. Even with the proposed 2.5% increase in the draft budget, the shortfall would be approximately £400 million.
Berriman expressed "great deal of nervousness" about the potential budget situation, noting that even a 2.5% increase would create a significant shortfall due to in-year pressures. He highlighted £560 million of pressures that "clearly won't be covered" by the proposed settlement.
The crisis has forced councils to consider drastic measures. Cllr Brocklesby revealed that councils must consider "various cost savings across the board, including looking at our workforce." She warned this would lead to redundancies in some councils and reduced services in others.
Council tax now makes up nearly 40% of Monmouthshire council's revenue, but authorities cannot keep increasing it, especially during a cost-of-living crisis when residents are already facing financial pressure.
Berriman painted a "painful picture" of the situation, explaining that every 1% less in settlement from central government results in a 3% council tax increase in Powys. He stressed that frontline services are suffering and will continue to suffer as a result of these unexpected costs.
When asked how councils would bridge the estimated £400 million gap, Cllr Gebbie bluntly stated: "I think the Welsh Government needs to tell us what they don't want us to do."
