Foster Carers: Allowances and Tax Arrangements Debate

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Department: Department for Education

Foster Carers: Allowances and Tax Arrangements

Andrew Western Excerpts
Monday 15th January 2024

(5 months ago)

Westminster Hall
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Martyn Day Portrait Martyn Day (Linlithgow and East Falkirk) (SNP)
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I beg to move,

That this House has considered e-petition 625515 relating to allowances and tax arrangements for foster carers.

This e-petition asks the UK Government to review and increase both the allowances paid to foster carers and foster carers’ tax exemption levels, so that they can reflect the true cost of caring for a child. I am delighted to see you in the Chair, Sir Graham. I appreciate that we are a little light on numbers attending, because of the seriousness of events in the main Chamber, but I hope that I can do justice to this case.

I am also delighted to be leading this most important debate on behalf of the Petitions Committee, because the work of foster carers, and the full costs of caring for a child in foster care so that they can thrive—not just survive—have for too long been given neither enough attention nor the deserved recognition. I must admit that this is the kind of profession that I personally would be terrified to even begin to enter into, and my gratitude goes out to the people who take it on.

The issues raised in the petition have several complex aspects that I will come on to, but let us start at the beginning. The petition came about because of the results of the 2022 cost of living survey carried out by FosterTalk, which is

“the Centre of Excellence UK for the Martin James Foundation”

and has for two decades been supporting those who care. The response to the survey was the largest for all surveys launched by FosterTalk to date, and its findings were stark.

The headline figures were that because of financial pressures, 43% of carers may leave fostering in the next two years; 56% of carers had not received an uplift in allowances over the previous six to 12 months; 90% of those who had felt that it did not cover the cost of caring for a child under the rising cost of living; 38% of carers had experienced mental health issues due to the cost of living crisis; and 92% of carers felt financially worse off compared with the previous year. Those are stark findings.

Of course, behind the headline figures are people—dedicated, compassionate and vulnerable people who care and are cared for—and their individual stories. The headline figures do not demonstrate the main consequential impacts, which are that more foster carers are leaving the role than joining and that the numbers are declining against a backdrop of record numbers of children who need foster carers. That is borne out by statistics published in November last year by Ofsted in relation to fostering in England, which revealed that significantly more foster carers had chosen to leave the role in 2023 compared with the number joining.

Sarah Thomas, chief executive of the Fostering Network, the leading organisation for foster care, has said that

“the Ofsted data shows the immense pressure the fostering system is under—and there simply aren’t enough foster carers to meet the rising number of children coming into care.

For the second year in a row we are seeing a net decrease in the number of foster carers available…Recruitment of foster carers is the most crucial issue facing fostering services across”

the UK. The Fostering Network is

“calling for a UK-wide strategy to address…the urgent need to”


“recruit and retain foster carers”,

because the indication is that

“these annual losses will continue unless urgent action of a much greater scale is taken.”

The Fostering Network is not alone in that opinion. The vice-chair of the Martin James Foundation, Daniel Croft, who was recently awarded an MBE for his services to fostering, has said that

“current financial pressures on our foster carers have never been greater and if we do not act, we are at risk of losing the largest dedicated workforce for children in the U.K.”

We simply cannot allow that to happen, so let us examine the hurdles that must be overcome—and how they can be overcome—to prevent a worsening of the existential crisis in fostering by effecting urgent action on a much greater scale.

As a lay person to the foster care debate, ahead of this debate I met experts from FosterTalk, the Fostering Network and CoramBAAF, the UK’s leading membership organisation for professionals working across adoption, fostering and kinship care. Those experts repeatedly highlighted similar complex aspects, and I want to raise the allowances paid to foster carers—foremost, the inconsistency of how national minimum allowances are applied.

The national minimum allowances for foster carers are set by each of the UK Governments. They vary depending on where the foster carer lives and the age of the child they care for. Notably, Scotland was late to the table and introduced national minimum allowances only in August last year—I will say more about that shortly. I can understand that the different age bands of children is relevant. Babies, for example, have different needs from teenagers. Historically, social security allowances for children recognised that and the Fostering Network continues to broadly follow that model. However, varying amounts according to where someone lives is something that I cannot understand. It is a classic example of an extremely unfair postcode lottery.

According to the most recent weekly fostering allowances report for the financial year 2023-24 that the Fostering Network published last September, children’s experiences of the application of allowances, even within the same nation and for the same age bracket, is far from consistent. For example, allowances paid in respect of children four years and under in Wales varies between local authorities by up to £43.96 per week; and in England, it varies by up to £92.34 per week, equating to an astonishing maximum difference of £4,801.68 each year.

In Scotland, the same allowance varied by up to £89.24 a week. However, as I have mentioned, I am pleased that the Scottish Government recognised this inequality and introduced, for the first time, a set rate that all local authorities must pay for foster and kinship carers. I hope that that move will reduce the future level of variance in Scotland. The new Scottish-recommended allowance was backdated to 1 April 2023 and has benefited more than 9,000 children. If local authorities in Scotland happened to be paying above the recommended allowance, the higher amount stayed in payment so that no one was worse off because of that commitment.

The Fostering Network welcomed that positive move. None the less, it has calculated that the allowance levels across all four nations still fall short of the true cost of caring for a child in foster care. The example I gave of allowances paid in respect of children who are four years and under is by no means the worst. The difference in allowances paid in respect of children between the ages of 11 and 15 in England amounts to a whopping £8,470.80 over the 2023-24 financial year. Additionally, in England, there are different minimum weekly allowances set, depending on whether someone lives in London, the south-east or the rest of England.

Notably, Northern Ireland is the only nation where all trust foster carers, including kinship carers, receive the same rate of allowances to cover the cost of caring for a child in foster care. I commend Northern Ireland for its consistent approach, which is administered by a central service, not local authorities. Unfortunately, however, Northern Ireland’s national minimum allowance is the lowest paid across all the UK nations.

On top of the inconsistency of how national minimum allowances are applied, there is also the disparity of whether additional allowances are paid to foster carers. These can be provided for things such as holidays, religious festivals, birthdays, school uniforms, an initial stock of clothing and mileage to fuel mum or dad’s taxi. We all know that those things can have an added pressure on household finances at the best of times, let alone during a cost of living crisis. Indeed, one carer who voiced concerns in FosterTalk’s cost of living survey said:

“I worry that energy, fuel and food prices will keep going up and we get more strike action, more disruption and it all impacts negatively on our foster children who already have had too much worry and negativity in their lives.”

That strikes at the heart of the problem. The inequality created by the current system for children in foster care means that some are not being given the opportunities to recover from the upheavals that they have experienced, to enable them to go on to achieve their aspirations.

A significant number of the local authorities that completed freedom of information requests that informed the Fostering Network’s most recent report on weekly fostering allowances stated that everything is included in the national minimum allowance. How can it be fair that a child can benefit from an additional allowance in one local authority when another child in exactly the same circumstances in a neighbouring local authority cannot? I have even heard anecdotal evidence of foster carers moving between local authorities so that children in their care can benefit from more generous allowances.

Additionally, different local authorities offer different discounts on rates of council tax to foster carers, ranging from zero to 100%. It is utterly unjust. On what level is it acceptable that 3% of those who responded to FosterTalk’s cost of living survey had used a food bank to support their family? Now, 3% might not seem like a lot, but that amounts to 130 families who took the survey and who have taken on the responsibilities that lie with their local authority to care for and nurture those children. Remember, too, that the 3% is from the 4,349 foster carer respondents, which does not account for the wider expanse of fostering households, of which there are 43,405 in England alone, as at the end of March 2023. A reasonable appraisal is therefore that the number of families having to use a food bank could be increased, perhaps tenfold. No wonder the number of foster carers is declining.

The Fostering Network has proposed a fairer funding framework for foster carers that is simplified as well as consistent. Taking account of Loughborough University’s minimum income standard for the UK and of Nina Oldfield’s “The Adequacy of Foster Carer Allowances”, which identifies the additional costs of caring for a child in foster care, the Fostering Network collaborated with Pro Bono Economics to calculate suggested rates of foster care allowances that

“include funds to enable foster families to save for birthdays, holidays and cultural or religious festival payments with the intention that foster carers can control and spend these additional funds as they see fit.”

That is a sensible proposal to eradicate the inequality that the system creates.

Another inequality in the system is that there is no national minimum allowance for young people aged 18 years and over to remain living in their foster family environment until they are ready to live independently. According to the most recent fostering allowances report, the difference in allowances paid to the 18-plus group across the UK nations is the most extreme, amounting to a staggering sum of £12,044 annually. That deficiency must be addressed, as young people’s needs do not stop because they turn 18.

The Fostering Network’s suggested rates of foster care allowances were underpinned by the principles of being child-centred, efficient—as well as sufficient—trusting, aspirational and, last but not least, consistent. Those seem to me to be quality principles. Will the Minister consider the Fostering Network’s recommended rates so that the full cost of caring for a child is covered? Will he look at addressing the needs of young people who turn 18 so that the best outcomes for care leavers are enabled? Will he also advise if the routine uplift to the national minimum allowances is ringfenced?

I must make one final and important point: the disparities that have been highlighted today would not have come to light without the monitoring that is carried out by the Fostering Network every year, and I thank it and FosterTalk for making today’s debate possible. I also thank both organisations for taking time away from their important work to meet me.

The Fostering Network, however, can only obtain information through freedom of information requests to local authorities because they are public bodies. Information from independent fostering agencies, which are not obliged to respond to freedom of information requests, is missing. Will the Minister therefore examine the possibility of the monitoring of all foster care providers being undertaken by a Department? Such a move could also address further disparities in the rules and regulations that exist in the foster care system, such as carers receiving payments between placements or how carers can receive support when an allegation has been made against them—statistics show that a majority of people against whom allegations have been made are completely exonerated.

Andrew Western Portrait Andrew Western (Stretford and Urmston) (Lab)
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Does the hon. Gentleman agree that the situation that he has set out with the handling of complaints is a symptom of the fact that, because they are not employees, foster carers cannot be members of trade unions and, as a result, cannot seek support by a route that would be available to most typical employees?

Martyn Day Portrait Martyn Day
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The hon. Member makes a very good point. Foster carers are all self-employed and have to deal with all the complexities of that, including tax returns, as well as with the vital role of caring.

At the very least, a review of how allowances are applied to foster carers is urgently needed. Foster carers must receive a payment that takes account of the full cost of caring for a child, now and into future years. Foster carers need to be recognised for the work they do, and children deserve better.

Andrew Western Portrait Andrew Western (Stretford and Urmston) (Lab)
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It is a pleasure to serve under your chairmanship, Sir Graham. I congratulate the hon. Member for Linlithgow and East Falkirk (Martyn Day) on securing this debate, and I pay tribute to everybody who took the time to sign the petition, including 48 residents in my constituency of Stretford and Urmston. Like those people, I care passionately about ensuring that foster carers are recognised and supported.

In preparing for the debate, I was fortunate that a member of my office staff, Emma Hirst, had been a foster carer for over 20 years, up until very recently. In that time, Emma provided a loving and supportive home to countless children, including refugee children, many of whom had been through immense hardship. I place on record my thanks to Emma, and to all the foster carers in Stretford and Urmston and more widely, for the life-changing impact that they have had on some of the most vulnerable people in my community and across the country. My comments will be shaped by Emma’s experience.

Emma told me that, during her 20-year spell as a foster carer, the role became increasingly challenging. When she started, the children who came into her care were often traumatised, but back then they were able to access mental health support, pastoral care at school and youth services, all of which were vital for their education and wellbeing. A decade of Conservative austerity has eroded those services, and the children who came into her care in later years faced increasingly lengthy waits for any kind of support.

The focus of today’s debate is financial support for foster carers, but inadequate financial support must be seen in the broader context of the decline of the public services that foster carers once relied on to make their jobs easier, which is a key reason for the recruitment and retention crisis in fostering.

Despite the pressure she was under, Emma, like foster carers across the country, was registered as self-employed and was therefore unable to access sick pay, payment for time off or any real employment rights. As I mentioned, like other foster carers, she also was not able to be represented by a trade union. Ultimately, it all became too much; Emma was burned out, and she recently took the decision to stop fostering. Like any true foster carer, however, she made time over Christmas to take a baby on an emergency basis, because foster carers are always there to look after children in desperate need.

Although Emma’s decision is understandable, it is a huge loss to fostering services in my community. Her example shows the importance of putting the right support in place for foster carers. Naturally, there is a financial element to that. The altruistic nature of fostering means that conversations about money are often shied away from, and our admiration for foster carers does not pay the bills, so it is right to discuss these allowances, tax arrangements and fees. That is not least because, as the Member for Linlithgow and East Falkirk mentioned, the fostering allowance does not cover the full cost of providing foster care to a child.

I will give credit where it is due: in December, the Government announced a 6.88% uplift to the foster care national minimum allowance. I also welcome the changes made last year that mean that most foster carers will no longer pay tax on that income. But I wish to focus the majority of my comments on those fostering allowances, because I note that the increases to the minimum allowance still fall short of the recommendations made by the Fostering Network.

I would be grateful if the Minister could set out what assessment his Department has made of the affordability of the national allowances called for by the Fostering Network. Moreover, I would be grateful if he would clarify where the funding for the 6.88% uplift will come from. I am unclear whether local authorities will have to find that money from existing budgets. Given the perilous state of local government finance, that may prove unmanageable for councils across the country. I am sure the Minister intends to fund the uplift from an alternative source, but I would be grateful for his reassurance on that point.

Another crucial point is that the fostering allowances are a postcode lottery for many people. In England, only 26% of local authorities pay the national minimum allowance at all the age bands. That results in discrepancies: for example, the maximum difference in allowance rates payable for 11 to 15-year-olds in England is as great as more than £8,000 per year. When we all agree that all children’s lives are of equal importance, that cannot be acceptable. Will the Department consider monitoring compliance with the national minimum allowance and look into reviewing fee payments so that there is more consistent compensation for the time, skills and experience of foster carers?

If we needed a reminder of the importance of getting this right, it came with Ofsted’s data on foster care for 2023, which showed a 6% fall to 35,000 over the past two years in the number of mainstream households in England who are fostering. The data also showed that the number of applications to become foster carers fell by over 3,000 between 2021 and 2023. This recruitment and retention crisis comes at a time when the care population continues to grow; it now stands at over 83,000.

The value of foster carers is in allowing children to be placed in environments that feel more like a real home, rather than in the less natural environment of a care home. It is also in the financial savings to local authorities, because many placements in care homes and other settings can be incredibly expensive. These trends are simply unsustainable; for the good of vulnerable children and the foster carers who are so dedicated to them, we must address them. I look forward to hearing more about how the Government intend to do that when the Minister responds.