Research by the National Children’s Bureau and Public Alchemy, commissioned by London Councils, has analysed the proposed changes to the Children and Young People's Services relative needs formula and made a series of recommendations to the Department for Education.
As part of the government's proposed approach to local authority funding reform through the Local Government Finance Settlement (LGFS) from 2026-27, a revised model for determining need and distributing funding for CYPS is under consultation.
The Department for Education (DfE) is leading on updating the CYPS relative needs formula, which creates the most significant funding shifts in the entire local government funding reform proposal. The new model calculates expected need using child level data and Lower Super Output Area (LSOA) level data. This is a unique method for predicting need, using multi-level regression analysis as opposed to a more traditional weighted factor-led approach.
Research by NCB and Public Alchemy, commissioned by London Councils, has analysed the proposed changes to the CYPS relative needs formula. This research, titled "Meeting needs or missing needs?, Assessing the proposed changes to the Children and Young People's Services relative needs formula", has focused on the potential impact of the proposed changes to the CYPS relative needs formula and identifying the ways in which the formula could be strengthened and updated to better reflect the needs of children, young people and families.
In order to ensure the new CYPS relative needs formula is robust and appropriately and equitably distributes CYPS funding to local authorities, the suggest the following recommendations are taken forwards by the Department for Education:
- Refine the CYPS relative needs formula to ensure it accurately reflects the needs of children and young people and can be examined and road-tested by the sector. This should include extensive modelling and impact assessments as part of the development of these proposed changes to understand the short, medium and long-term impact on children and families
- Replace the child health metric with a metric that measures SEND
- Update the IDACI formula to reflect 'true income after housing costs
- Replace the free school meals metric with Universal Credit claimant data to account for current undercounting and future changes planned for free school meal eligibility
- Thoroughly investigate the changes to the overcrowded housing metric between the first and second iterations of the proposed CYPS relative needs formula in order to understand the reason for these changes and to ensure overcrowded housing is accurately captured in the formula
- Replace the parental qualifications metric with data on crime rates of street level crimes
- Ensure the implementation of any changes to the CYPS relative needs formula are phased
Read the full report by NCB and Public Alchemy by clicking here