Any regulatory body has to tread a fine line between showing off its own competence, as demonstrated by improvements in what it regulates, while justifying its existence by pointing out continuing flaws. Yesterday's annual report from Ofsted, the education and children's watchdog, did precisely this. It presented a generally positive impression of developments in schools and children's services, while noting "a stubborn core of inadequate teaching" that held some schools back. It also criticised children's services in "a minority of councils".

Despite this expert balancing act, however, there must be two causes for concern. The first relates to Ofsted's findings, as set out in its report. While performance ratings, especially in childcare, showed improvement, almost 10 per cent fewer colleges of further education were assessed as outstanding or good. So there has been deterioration, too, in some key areas. In local authority children's services, the quality of serious case reviews – conducted, for instance, after the death of a child on the "at risk" register – less than one third were judged "good". It is hardly consoling to think that Ofsted may have shown more rigour in its assessments in the wake of the Baby P case, before which Haringey social services had been rated "good".

The second cause for concern relates to Ofsted itself. This is one huge regulator, covering everything from nurseries through schools to further education colleges, and taking in children's services in between. Its remit reflects the breadth of responsibilities that reside in the Department for Children, Schools and Families. And it makes sense that the department and the regulator should cover the same ground, which is why Ofsted's brief was extended.

But is it really such a good idea for either to have such broad and simultaneously disparate responsibilities? The desire for better coordination among the many different children's services is laudable, but where this really matters is at grassroots level. The creation of the DCSF, as of the new Ofsted, has spawned a labyrinthine bureaucracy and smacks of empire-building. The next government, whatever its complexion, should think seriously about breaking it up.