Sufficiency Strategy for Cared for Children 2026-2030
Financial sufficiency
Latest financial position (November 2025)
Significant budget pressures remain within external residential placements, internal children's homes and agency fostering. However, the Children Social Care Financial Recovery Plan remains on track and ahead of schedule, which has reduced the overall overspend from the start of the financial year by over £1m. As the placement mix changes to focus on the best and most affordable care packages, expenditure will vary either up or down across the types of provision used. All placement budgets will be assessed and adjusted at the end of the financial year, which should reduce the amount of budget volatility in 2026/27 which should also been improved by MTFS growth and further interventions delivered through the Children's Social Care Financial Recovery Plan. The table below sets out the forecast expenditure for 2025/26 for each placement type, showing the budget and budget variance.
| Forecast cost (£m) | November 2025 | Unit cost per week (£) | Budget | Over / (under) spend |
|---|---|---|---|---|
| External residential | 15.373 | 6,681 | 12.933 | 2.440 |
| GMBC homes | 5.020 | 5,422 | 3.725 | 1.295 |
| Agency fostering | 3.627 | 1,301 | 2.615 | 1.012 |
| Supported accommodation | 0.731 | 2,393 | 0.000 | 0.731 |
| Secure | 0.623 | 0 | 0.000 | 0.623 |
| Remand | 0.339 | 0 | 0.000 | 0.339 |
| In house fostering | 6.382 | 614 | 6.102 | 0.280 |
| Kinship care | 0.959 | 277 | 0.916 | 0.042 |
| Hospital | 0.000 | 0 | 0.000 | 0.000 |
| Placement with parents | 0.000 | 0 | 0.000 | 0.000 |
| Placed for adoption | 0.313 | 524 | 0.373 | -0.060 |
| Grand total | 33.366 | 1,974 | 26.664 | 6.702 |
Cost drivers
The most fundamental cost driver is the number of children entering and exiting care. The complexity of need and associated cost of care packages is another key driver as whilst our activity is improving, children entering care are doing so with more complex needs which is reflected in the cost of provision.
The impact of inflation, cost of living, National Insurance and associated pay awards are all also contributing to costs.
Sufficiency in terms of placement supply within Gateshead and the associated costs of out of borough placements which are usually more expensive are also a contributory factor.
Value for money
As part of placement searches, cost breakdowns are requested by providers to ensure, as far as possible, value for money is being achieved. This supports informed discussions with providers prior to the placement commencing and supports a greater understanding of provider costs in different parts of the market.
With the NE12 regional commissioning arrangements (Northeast 12 Local Authorities) now dissolved, Gateshead is currently left without an active procurement framework, creating a significant challenge from a commissioning perspective. This creates a pressing need to establish or adopt an alternative model to ensure continuity, compliance, and effective delivery of residential services.
In addition, the absence of a structured procurement framework presents a significant financial risk, as it minimises our ability to secure consistent pricing, manage economies of scale, and implement value for money placements. A structured approach provides essential financial controls and a transparent basis for budget planning and performance monitoring.
In the absence of a framework, a local cost of care model has been developed, designed to provide a consistent evidence-based method for evaluating provider uplift requests. The model ensures that financial decisions are transparent and details workforce expenditure, service delivery requirements and inflationary pressures. By applying a structured approach, the model strengthens financial governance, details fair and sustainable provider fees and enhances Gateshead's ability to demonstrate value for money
There is clear scope to explore the development of a new residential framework that can provide structured procurement, financial assurance, and a consistent approach to commissioning moving forward.
Newton complex care diagnostic - Spring 2025
Newton's work aimed to better understand the needs, costs, and placement patterns of children and young people with complex care needs, both regionally and within Gateshead. The diagnostic explored opportunities for improved collaboration, sufficiency, outcomes, and financial sustainability. It also examined the wider children in our care cohort to identify cost pressures and areas for improved outcomes.
Key findings about needs, costs and placement patterns:
- trauma and mental health needs are the most common drivers of high‑cost placements
- 1 in 3 children and young people were not in their ideal placement to best meet their needs
- placement instability is a major issue: most children and young people in high‑cost care had multiple previous placement moves (fostering - residential - bespoke)
- strong links exist between placement breakdowns and escalating costs
- providers often lack complete information at referral stage, impacting confidence, matching, and price
- price negotiation is inconsistent across placements and often not grounded in clear need‑based costing
The diagnostic reinforces the need to:
- strengthen consistent, high‑quality assessments and referrals
- improve stability in fostering and residential placements
- address placement breakdowns earlier through targeted support
- improve commissioning practice, market understanding, and negotiation capacity
- build stronger partnerships with providers, grounded in transparency and co‑production
- review the prevalence and necessity of solo placements
- develop fostering capacity for children and young people with complex behaviours
- understand long‑term trajectories and adulthood transitions for children and young people in high‑cost care