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Funding Formula, The Buried ‘must Read, Must Know’ To Understand The Care Review

Funding formula, the buried ‘must read, must know’ to understand the Care Review

The Care Review terms of reference has not yet been challenged by its leader, Josh MacAllister. One of the opportunities for him is to join social work/care sector in a unified call for more funding or accepts the constriction of ‘no more money’.

Funding matters. It enables.

Research by Webb and Bywaters in 2018 (1) show the effects of cuts in funding for family support and early help between 2010 and 2015. Cuts were far worse in the most deprived local authorities.

We shall see if the Care Review is prepared to follow a funding formula.

Funding matters. It enables. The funding formula matters.

Technical language alert! You can skip this bit and go to the bits about pies.

The funding formula has been changed from using an absolute formula (multiplying specific amounts by needs-related factors for each local authority) to using a relative formula (where the level of need relative to other local authorities is calculated first before being multiplied by the total grant funding available thereby obscuring the real amount of need that would go unmet).

It’s a must read, must know to understand the Care Review

Calum Webb and academic at Sheffield university explains it well in his blog. (2) It’s so good that some of the words here come from that blog, something complex made clear.

The bit about pies

He imagines meal, a level of hunger, and the funding of services as a pie baked by the government.

An absolute formula makes a large enough pie that meets everyone’s hunger, whether it is a bigger piece, and medium piece or a little piece. The baker makes a pie that distributed to meet each person’s level of hunger. The baker knows how much pie is needed and how it is to be distributed.  This is what the care sector are united in calling for.

With a relative formula the only concern is slicing a pie the size of which is already decided. Regardless of hunger each diner gets an identical amount of pie even if it is clearly insufficient to satisfy their hunger. The only concern is each person’s hunger relative to the others, not the total hunger around the dinner table. The only thing that matters in a purely relative funding formula is the slicing of the pie, not the baking, and making sure everyone leaves feeling well-fed plays no part in your decision on how much is going to be cooked. This is the terms of reference of the Care Review.

It doesn’t matter how you present it this relative approach will do less not more to satisfy the hungriest of our guests. The person most in need of pie is the most disadvantaged by the relative approach. This is the same reason why the most deprived local authorities are most disproportionately affected by funding cuts.

Efforts to improve equitability of funding will never improve the position of children’s services if they remain linked to a purely relative funding formula.

As Calum Webb writes, ‘The purpose a funding formula should serve is to gauge the total need for services, calculate how much this should cost to meet, and ensure that adequate funding is in place to meet this need’.

We have seen through Covid, through the many supports for business for example, that where there is political the economic means can be found.

The larger the gap between the resources needed and the resources provided the more inequitable a relative funding formula becomes, regardless of how accurate its proportioning is.

  1. Austerity, rationing and inequity: trends in children’s and young peoples’ services expenditure in England between 2010 and 2015: Local Government Studies: Vol 44, No 3 (
  2. The biggest problem with the funding formula for Children’s Social Services isn’t that it’s too inequitable, it’s that it’s too relative. – Calum Webb