Financial allowances

Current action

The National Kinship Care Strategy committed to delivering 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). Only special guardians where the child was previously in care will be eligible, and the amount offered will be equivalent to the fostering allowance in that local authority. This will explore how a financial allowance can deliver improved outcomes for families and cost savings for local authorities.

The previous Government said it planned to “explore expanding eligibility to broader cohorts of kinship carers and all local authorities in the future, subject to the findings of our evaluation”, and committed to sharing further information on the pathfinder in Spring 2024. Participating local authorities are not yet known and we await further information on the pathfinder following the election of a new UK Government. A parliamentary written question submitted in May 2024 prior to the calling of a General Election revealed plans to share further information “in the coming months” which suggested a delayed announcement even prior to the election.

Some pioneering local authorities already deliver a consistent, non means tested financial allowance for groups of 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.

Government has previously celebrated those local authorities who offer equivalent financial support already. Stable Homes, Built on Love highlights that “this often makes good financial sense for local authorities, kinship carers and, ultimately, for children and their outcomes”. It argues 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.

Our verdict

We’re disappointed that the Government hasn’t made a commitment to introduce financial allowances nationally for a wider group of kinship carers and end the unfairness which denies financial support and plunges many families unnecessarily into poverty. As a result, too many kinship carers will continue to worry about how their financial circumstances will impact on their ability 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 Lords Public Services Committee in its response to the children’s social care implementation strategy had 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.”

The Government should listen to the evidence included within the implementation strategy on the elevated exposure of kinship families to poverty and financial insecurity, including that from our recent surveys. Elsewhere in its strategy, the Government recognised the value of strong financial support for carers raising vulnerable children, including within plans to test Family Network Support Packages and to raise the National Minimum Allowance for foster carers by 12.43%. In the 2023 Spring Budget, the Government too announced an increase in the threshold at which foster carers (including kinship foster carers) eligible for Qualifying Care Relief begin to pay tax. The success of other reforms such as these depend on closing the significant gaps in support which exist for kinship families moving towards permanence.

Despite this, a multi-year pilot is an important step forward. For the first time, concrete actions are being taken by Government to extend financial allowances to more kinship carers. Committing to funding for a four-year pilot to test out the delivery of allowances also reflects how seriously the Government is taking kinship care; it is rare for new commitments to be made beyond the current Spending Review period which ends in 2025, and so this marks the financial allowances pathfinder out amongst the Government’s other children’s social care reform commitments.

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 which confers parental responsibility to the kinship carer.

The eligibility restriction to those who are special guardians where the child was previously in care is disappointing but signals 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). We know there is a strong economic argument for well-supported kinship care which involves supporting children to be cared for outside of the local authority care system. However, there was an opportunity at the very least to deliver a more substantual pilot with a broader scope, exploring the outcomes for a wider group of kinship families when consistent financial support is offered, which has been missed.

We welcome those local authorities who have recognised that investing in kinship care makes sense and continue to 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.

What needs to happen next

Given the evidence outlined in the National Kinship Care Strategy about the significance a consistent financial allowance has for families, their outcomes, and recent insight into the motivations and barriers around progressing to special guardianship or a child arrangements order, we believe there is already a strong case for the new Government to introduce a mandatory financial allowance for all kinship carers across all local authorities. Our #ValueOurLove campaign will continue to push for this.

It is vital that the pathfinder does not paralyse progress towards a wider rollout and the new Government should continue this at pace and quickly outline participating local authorities. At a minimum the pathfinder must come with clear scale points which respond to emerging evidence. It is welcome that existing plans include exploration of expanding eligibility to broader cohorts and all local authorities in the future, but further work can be done in the interim to ensure a final evaluation due in 2028 at the very earliest isn’t the only determining factor in whether this happens or not.

Local authorities should continue to move towards leading practice on the provision of financial support for kinship carers which includes the provision of non means tested allowances. Given recognition of how financial allowances can improve outcomes for families and for local authority budgets, the next Government should continue to encourage local authorities not participating in the pathfinder to improve their policies and support offers. This should include a commitment to updating and strengthening special guardianship guidance alongside the new kinship care statutory guidance to clarify what good practice and expectations are around the calculation and delivery of financial allowances.

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 expansion of free childcare hours announced in the 2023 Spring Budget could help more kinship families access childcare, but using the same eligibility criteria as the current scheme for 3 and 4 year olds will continue to miss many of those families who need this the most, although making support for childcare costs in Universal Credit available up front is welcome.

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.