‘Services threatened’ by London Councils fees cut proposal

Foster care and children’s homes providers have reacted angrily to London Councils’ request to cut their fees because of the recession.

Janet Rich, children’s services development officer for the National Care Association, said: “I think one of the main issues is how regional consortia use their purchasing power – some would say bullying power – to manipulate the marketplace.

“It’s one thing to ask providers to consider how they could operate more cost-effectively, it’s another to put them under so much pressure that services inevitably suffer. It’s a very short-sighted strategy – you just can’t professionalise a sector by doing things like this. On the one hand we have the government talking about a world-class workforce, but on the other we have this kind of pressure.”

Rich said the NCA was talking to the London consortium and considering how to respond to its request.

The proposal for a 2% cut came in a letter from London Councils to all members of a pan-London consortium for providers of foster care, residential care and residential special schools. London Councils and the Association of London Directors of Children’s Services set a benchmark each year for fee levels.

Future negotiations

Andy Pallas, partnership and contract manager at fostering and adoption charity TACT (The Adolescent and Children’s Trust), said that while it was able to absorb the reduction in fees, it wanted to talk to authorities about alternative ways of negotiating contracts.

“In the short term we can deal with the cut, but we want to talk to the authorities about other ways of getting this reduction or even reductions of far more than 2% with a cost-volume discount,” he said. “Providers can offer reduced rates if it means they’re put on an authority’s preferred providers list and get more business as a result. I really think they ought to be looking at that instead.

“Where this harms us is in authorities where we’ve got large numbers of children in placements and where we already offer discounts. In these cases, the local authorities are cutting off their nose to spite their face because we might have to reduce some of the discounts we’ve been offering them already.”

Pallas also said London Councils had originally sought a cut of 3%, but this was opposed by providers in subsequent meetings.

Clare Dorer from NASS, which represents independent schools and non-maintained special schools, said the councils’ request was unfair.

“I think the whole issue of local authorities paying for any range of services is going to be a big one for the next couple of years,” she said. “I don’t think anybody is without sympathy for the position they’re in during the recession, but what we’re seeking is continued dialogue with them because the recession is hitting us as well.”