The shadow of Ofsted has long hung over the children's services sector, but, under new leadership, there are now hopes of a more positive relationship.

Currently, about 25 councils find themselves graded inadequate and a further 75 require improvement. These 100 strugglers include large as well as small councils, rural, as well as urban.

It's tempting that amid such a harsh judgement on the sector's performance to hit back at Ofsted, which is viewed by some as a ‘smiling tiger'. But senior sector figures are wary about running with the argument that the inspectorate is failing to accurately reflect the state of children's social care.

President of the Association of Directors of Children's Services (ADCS), Alison Michalska, says: ‘I don't think there are any local authorities that have had an inadequate rating where that is the wrong judgement. The issue has been with the capacity of Ofsted to return.'

This has left some councils languishing in categories they feel are undeserved, as well as some calls for Ofsted to relook at the requires improvement category.

Chair of the ADCS' resource and sustainability policy committee, Ian Thomas, says: ‘The problem that we had before is that people saw adequate as being alright when inadequate is not alright for vulnerable children. If we were to replace requires improvement with adequate or fair the unintended consequence is that people rest on their laurels. I'm not sure if we were to change the language that you would get the response that is necessary for our most vulnerable children.'

What Ofsted is trying to do is work closely with local authorities to ensure their experience of inspection is manageable and that it helps improve the quality of children's social work services.

Sector insiders continue to lobby Ofsted to put greater focus on helping councils before they fall over.

The ADCS together with the Local Government Association is currently working on a proposal for the creation of regional improvement alliances aimed at spotting the first inklings of service decline and taking preventative action before they reach crisis point.

Children's minister Robert Goodwill has said he believes the Department for Education should be doing more to identify struggling councils earlier, but no decision has yet been made.

Ms Michalska continues: ‘It costs a fortune to get out of intervention. We need regulation to lead to improvement.'

Mr Thomas adds: ‘Failing authorities have to spend much more to remedy the failures. The evidence tells us that intervention is costly for local authorities and the Government.

‘I pick up more of a sense that Ofsted wants to work with the sector rather than impose and that's been a shift. I feel there's much to be learnt from the regulator. When they pick up on things it should help on the journey of improvement.'

Ofsted's view does appear to be changing, with the inspectorate now more engaged with sector-led improvement and making helpful suggestions.

Gail Hopper, a North West regional representative for ADCS, says: ‘Ofsted previously criticised us, saying why would we want to take advice from you when the North West is a bit of a basket case – and they really did use the words "basket case" to one of our councils. There's now more of a positive and honest conversation happening with them.

Chief inspector Amanda Spielman recently said she wanted to ‘strengthen the relationship' between her organisation and ADCS after several difficult years when Ofsted was led by the divisive Sir Michael Wilshaw.

‘I think our relationship with Ofsted has never been better,' Ms Michalska says. ‘[Ms Spielman] has said many of the things we've been saying as a sector for a long time. She's been very engaged with us as a sector.'

There has also been praise for the way Ofsted's national director for social care, Eleanor Schooling, has made a difference.

Chair of ADCS' standards, performance and inspection policy committee, Steve Crocker, adds: ‘Eleanor Schooling has been really good news in terms of the way she's led Ofsted towards a much greater degree of collaboration with the sector. Ofsted is still the regulator but they are more willing to look at new ways of working and different models of inspection. There's a change of emphasis in terms of their engagement, though we don't yet know if the shark has lost its teeth.

‘The international research shows children in England and Wales are safer than most other countries. Local authorities have been delivering that for some time. I think more authorities are moving in the right direction and that needs to be referenced in the [new] framework.'

Ofsted has consulted with local authorities on its new inspection framework, which it is currently piloting. From January, the new programme will prioritise inspection where improvement is needed most. As part of this, Ofsted intends to meet with local authorities more frequently between inspections to ‘understand their services and the challenges they face'.

However, there is no getting away from the fact that councils overspent on children's services budgets by £605m last year and are facing a £2bn funding gap by 2020.

‘The single thing that most concerns me for the next few years is the money and our capacity as a sector to deliver good quality services when the finances are becoming more and more constrained,' says Mr Crocker. ‘As a sector, we've got to raise public awareness about the financial problems we're facing – perhaps being a bit louder.'

Ms Michalska adds that the financial picture means that more shared service models are likely to emerge. She cites the now-collapsed tri-borough and Achieving for Children, a social enterprise company created by Kingston upon Thames and Richmond upon Thames RLBCs to provide their children's services.

Other senior sector figures are more sceptical that this is the way forward and have warned of ‘real dangers' with the Achieving for Children model in particular.

What everyone agrees on is the need for answers as the funding gap grows, demand for acute specialist intervention rises and councils continue to operate in a risk-averse environment worried about the next national tragedy happening on their doorstep.

Some have suggested removing statutory obligations from home-to-school transport would be a start. ‘We need to think very carefully about access to school,' says Mr Thomas. ‘The unintended consequence could be some children not getting to school at all, but it should be explored.

‘What we need to do is invest in earlier intervention. Local authorities have cut their preventative services. I'd like to see a focus and some investment in evidence-based approaches to manage demand.

‘Devolution should be focused on tomorrow's parents today. You can't look at social care in isolation – it has to be a system-wide response. As a director of children's services (DCS) we don't control all these agendas, but we have a role to influence partners.

‘Irrespective of your model if you've got good leadership and management you will succeed. I worry about strength in depth and the quality coming through is certainly an issue, but if you get leadership right, lots of other things fall into place. If we get the investment in leadership right, I think it will bear fruit.'

Ms Michalska adds: ‘Leadership and management isn't just about the DCS and their team – it's the chief executive, leader, portfolio holder and executive members too. Often the first casualty after an inadequate Ofsted report is the DCS and their team, but getting rid of the leadership team is not always the right response.'

There are cases though when it can bring about transformation of troubled children's services departments. One such example is Leeds City Council, which was condemned for the quality of its care for vulnerable youngsters in 2009 but is now the home of the Child Friendly Leeds initiative.

‘It's something that I think is worthy of much more research and focused attention because it's working there,' says Mr Thomas. ‘It's infectious when you go to the city. I think it's a very powerful concept that I see huge dividends from if adapted to a macro-economic level. If we have a supply of well-qualified, confident young people ready for the world of work we will have a better chance post-Brexit of securing our economic future.'

As Mr Thomas makes clear, it may sometimes be forgotten but ensuring the sustainability of children's services is important for the whole of society.