Financial allowances

Current status

The UK Government announced on 27 October 2024 and confirmed in the Autumn Budget that it will invest £44 million to support kinship and foster carers in England, including “trialling a new kinship allowance in up to 10 local authorities to test whether paying an allowance to cover certain costs – like supporting a child to settle into a new home with relatives – can help increase the number of children taken in by family members and friends”. This forms a key part of the Government’s early efforts to improve children’s social care as part of its Phase 1 reforms from now through to 2026. No further information is yet available on the kinship allowance trial, including which groups of kinship carers are eligible, which local authorities are involved, or how the allowance will be delivered.

This follows a commitment made by the previous Government in the National Kinship Care Strategy last year to deliver a 4-year financial allowances pathfinder across up to 8 local authorities from 2024-28, with £16 million funding committed to for year one (2024-5). No further information about the pathfinder had been released since first announced in the National Kinship Care Strategy. Further details were due to be published by the previous Government in Spring 2024, but a parliamentary written question tabled in May 2024 prior to the calling of a General Election revealed plans at the time to share further information “in the coming months” which suggested a delayed announcement even prior to the election. Only special guardians where the child was previously in care were due to be eligible as part of the pathfinder, and the amount offered was expected to be equivalent to the fostering allowance in that local authority. We do not yet know if the new Government’s kinship allowance trial will follow this too.

Some pioneering local authorities already deliver a consistent, non means tested financial allowance for some kinship carers, most commonly special guardians where the child was previously looked after. Existing statutory guidance on special guardianship support sets out the circumstances in which kinship carer special guardians should expect financial assessment and support, and how this should be delivered. Most local authorities continue to deliver only discretionary means tested financial support subject to annual review during a transitionary period following the making of the order.

Our verdict

We are pleased the Government has listened to our #ValueOurLove campaign manifesto and maintained the momentum following last year’s National Kinship Care Strategy in committing to delivering a trial of a kinship allowance in up to 10 local authorities, and we look forward to seeing further details soon.

Poverty and kinship care are inextricably linked. The impacts of chronic financial insecurity for kinship families are clear to see: kinship carers are more than twice as likely as all UK adults to be using food banks due to the cost of living and more than four times as likely to have had a bill they couldn’t afford to pay in the last month. Financial circumstances is one of the factors which most influences whether or not kinship carers are concerned about continuing to care for their kinship children.

Stable Homes, Built on Love committed to “explore the case for mandating” a mandatory financial allowance across all local authorities, as recommended by the Independent Review of Children’s Social Care in 2022 for special guardians and kinship carers with child arrangements orders where the child would otherwise be in care. In our 2022 annual survey, 8 in 10 kinship carers told us that this was the most important recommendation made by the Review and the one thing they wanted to see the Government implement above all else.

The Government has previously celebrated those local authorities who offer equalised financial support already. Stable Homes, Built on Love highlighted that “this often makes good financial sense for local authorities, kinship carers and, ultimately, for children and their outcomes”. It argued the provision of flexible funding for kinship arrangements makes economic sense, noting that some local authorities have seen a financial benefit – particularly where this has reduced the numbers of children in care – and encourages others to follow suit. The Strategy said “we do not want local authorities and partners to feel the need to wait for permission to act now” and that local authorities should “feel confident to pursue approaches and ways of working that we know are the right ones”, including the provision of financial support for kinship carers.

The Lords Public Services Committee in its response to the children’s social care implementation strategy has also encouraged the Government to go further and suggested that it “should ensure that sufficient financial support for those caring for their kin is provided regardless of whether the arrangement is formal or informal, and that it is consistent across England. Additional funding should be allocated to local authorities to provide this support in the immediate future.”

We believed the previously-announced pathfinder, committed to by the previous Government in the National Kinship Care Strategy last year, was a welcome step forward. The eligibility restriction to those who are special guardians where the child was previously in care was disappointing but signaled a clear intention of the pathfinder to explore specifically whether a consistent financial allowance acts as a significant influence in decisions to move towards the permanency of special guardianship for kinship foster carers (or, put another way, if the lack of existing guaranteed financial support for special guardians acts as the crucial barrier which keeps kinship foster carers in that arrangement). Previously, the Government’s Stable Homes, Built on Love strategy had agreed with the Independent Review of Children’s Social Care’s assessment that the current system perversely incentivises kinship carers to become foster carers given this can be the only route to access financial support, and acknowledged this can be a barrier to permanence for children who would otherwise be cared for under a different legal order.

We know from our own evidence that it is true that poor financial support for kinship arrangements outside the care system is preventing some kinship carers moving from kinship foster care arrangements, despite their desire for permanence and parental responsibility. There is a strong economic argument for investing in well-supported kinship care arrangements. For every 1000 children looked after in well-supported kinship care rather than local authority care, the state saves £40 million and increases the lifetime earnings of those children by £20 million. 

We welcome those local authorities who have recognised that investing in kinship care makes sense and deliver pioneering practice in financially supporting special guardians and other kinship carers. Elsewhere, special guardianship guidance on the provision of financial support continues to be misunderstood and delivered poorly – and sometimes unlawfully – in practice, leading to highly variable experiences for kinship carers both across, and even sometimes within, local authorities. As explored in our Out of Order paper, there is a continued risk that current special guardianship guidance and interpretation leaves local authorities open to legal challenge, evident in a number of recent successful judicial challenges and Ombudsman complaint decisions.

What should happen next

We urge the Department for Education to work at pace to confirm plans for the kinship allowance trial so that kinship carers across England can understand how it might impact them.

However, we ultimately want to see a commitment made by the Government to legislate to introduce financial allowances nationally for kinship carers. The Department for Education and the Ministry of Housing, Communities and Local Government should jointly support a significant bid to HM Treasury as part of the multi-year Spending Review for additional funding to implement this, moving further and faster and building on available interim evidence from the kinship allowance trial. It’s promising that the Government has clarified that it will “set out plans for fundamental reform of the children’s social care system” as part of this phase.

The Government should outline clear scale points which respond to emerging evidence as part of the trial and must ensure it does not paralyse progress towards a more comprehensive rollout of financial allowances. In the interim, local authorities across England and Wales should emulate the leading practice of local authorities who already deliver a non-means tested allowance to kinship carers as soon as possible, and ensure financial issues do not prevent kinship carers from moving to a kinship arrangement best suited to their family situation. The Practice Guide for kinship care recommends that kinship carers should be offered a financial allowance “to increase placement permanency, reduce the likelihood of placement disruption and improve the likelihood of permanent guardianship”.

To support this, the UK Government should commit to updating special guardianship guidance to reduce current unacceptable variation and poor practice in the delivery of financial support. Guidance should also encourage equitable provision of suitable financial support to kinship carers with child arrangements orders, and local authorities should offer support to kinship carers with these arrangements who wish to move to special guardianship when in the best interests of the child.

In addition, the new Government should ensure all kinship carers can access other elements of financial support which can better support family life, such as free childcare. Currently, some kinship families can be unfairly locked out of existing childcare support schemes (e.g. 15 hours free childcare for 2 year olds) where there isn’t a legal order securing the family arrangement and when the child wasn’t previously in local authority care.

The new Government should also work with local authorities to ensure kinship carers can access the emergency financial support they need right now, particularly as the cost of living crisis continues to have a significant impact on families across the country. Our Breaking Point report found that 1 in 10 kinship households had run out of food and couldn’t afford to buy more in the last two weeks. Existing special guardianship guidance is very clear that “financial issues should not be the sole reason for a special guardianship arrangement failing to survive”. Whilst ongoing work to explore a financial allowance is crucial to deliver long-term financial security, too many families are in poverty today. As such, the new Government should consider additional targeted funding for kinship families and others supported by children’s social care services, particularly where there is an identified risk to permanence or of family breakdown.