Government frustrated by ‘lack of options’ for outsourcing failing children’s services

Ministers are frustrated at the lack of independent organisations willing or able to take on failing children’s services from councils, according to market experts.

A poorly developed market in outsourcing options for children’s services has left the independent trust model as “the main, if not sole” vehicle for third party provision when councils fail, according to Laing Buisson’s children’s care sector market report.

The government looked to stimulate interest in third party provision in 2014 by handing councils legal powers to outsource almost all of their children’s services, including child protection.

Outsourcing powers

The move has sparked privatisation fears despite the government limiting outsourcing to non-profit providers. Campaigners argue private firms could set up non-profit subsidiaries to get contracts. Laing Buisson said in practice there were “few examples” of such structures.

So far just two councils have voluntarily used the outsourcing powers and in no case has a pre-existing provider been contracted. Kingston and Richmond delegated their children’s services to Achieving for Children, a community interest company created and owned by the council that operates similar to the trust model.

Third party provision has been forced on other councils. The government handed control of Doncaster and Slough children’s services to newly-created independent trusts after finding persistent failings in local authority performance.

Prime Minister David Cameron has warned a “zero tolerance of state failure” will see takeovers of other council-run children’s services that show similarly persistent failings.

Financial pressures could trigger demand

Philip Blackburn, a consultant at Laing Buisson and the report’s author, told Community Care the pressure on local authority finances and demands from government for improvements may drive more councils to outsourcing services voluntarily.

Local authorities would monitor the performance of Doncaster, Slough and Achieving for Children closely. If third party provision could demonstrate improved quality alongside cost savings, others might follow suit, he said.

“They [councils] have to do something and one area they can explore is outsourcing to generate efficiencies. I know some councils have considered it. Others are going to have to look at it as an option,” he said.

It was also possible that the third party providers already in place could expand to take on other children’s services contracts rather than a flood of new organisations entering the sector, said Blackburn.

“Some of those children’s trusts at some point in the near future will be looking at contracting with other authorities outside their local area. So there’s scope for them to get bigger,” he said.

“There may be just a few of them but they may get bigger and cover a wider area. Maybe it will go that way rather than ever increasing numbers of [organisations] doing it.”

‘Scope for innovation’

Blackburn said local authority children’s services were lagging behind developments in the health service, where outsourcing was far more developed.

He said the government was likely to be “disappointed” that, beyond pilot sites, few children’s social workers had set up small local independent practices, like those seen in healthcare, and there were generally fewer outsourcing options available.

“The scope for innovation is greatest when organisations from any sector can be involved in that. Innovation can come from the public sector, the voluntary sector or the private sector,” he said.

“The frustration possibly is that they haven’t got a wide net of organisations that are allowed to innovate really.”

Asked what the prospects for third party provision were going forward, Blackburn said: “There probably has to be some kind of nudge from the government if it’s going to be a contestable market but we’ll wait and see.

“The government is looking for quality improvements, councils keep having to generate efficiencies, they keep having to find money from somewhere, and it’s possibly those financial and quality drivers are going to push the sector in that direction where we can see more innovative models.

“We have the [Department for Education’s] innovation programme, which is quite an exciting programme. We may see some models come out of there which dictate new organisations starting off.”