Spend meets Cost

Cost is what it actually takes to get someone on track. Spend is what public services give to someone just because they do not have more. In this blog, I make the point that we know little about actual costs.

The people who run public services do not have it easy. It is difficult to guess how many patients will come through the doors of an accidents and emergency department each night, how many suspects will get arrested at the weekend, or how many children will need to be taken into care, just to name a few examples.

Worried about how taxpayers’ money gets spent, public service managers keep an eye on spend per head. For example, we know that the average local authority in England spends around £45,000 per looked after child. This is the result of dividing total spending by the number of looked after children.

Compare this with how mobile companies work.

Before putting a new mobile phone on the market, companies work out production costs. This is how much it costs to make each part, put the mobile phone together, and make it available in shops and websites. Then, they add a mark-up, or profit. Everything together is the price that people in the street pay for the mobile phone.

How much does the new iPhone 8 cost? Well, when I was writing this I checked and there seems to be someone out there selling for £42.

How much does it cost to provide care for one looked after child? Well, not necessarily £45,000 because this figure is the result of dividing the total spending that is available by the number of looked after children.

If we took into consideration how much it takes to provide the care and support that a child needs, particularly when their lives are so tough they need to be removed from their carers, we would probably arrive at a very different figure.

All public services, not just across social care, should get better at understanding their costs, so that they can compare them with their spend, and decide the best way forward.

Our estimate of spend per looked after child comes from this report: our report