Story updated 28 January 2021
The UK’s competition watchdog says it is considering investigating the children’s social care market after the recently-appointed chair of the care review wrote to it urging it to do so.
Frontline chief executive Josh MacAlister – appointed by government this month to head an independent review into children’s social care – revealed on Twitter yesterday that he had written to the Competition and Markets Authority (CMA), calling on it to carry out a study into the social care market.
His letter, to CMA chief executive Andrea Coscelli, said the CMA should consider such a review “as a matter of priority” in the light of concerns reported to him since his appointment regarding the insufficient supply of placements for children in care, and the consequences of this.
This, he told Coscelli, included “signficant out of area placements, placement breakdowns and the use of unregulated provision”, while he also cited the “high and rising cost of placements” and the role of the private sector provision.
The CMA conducts market studies to investigate concerns about the impact of markets on consumers and whether there is sufficient competition.
Market ‘not working as well as it should’
In a statement responding to MacAlister’s call, a CMA spokesperson said: “While we need to consider carefully which market studies to undertake, there are clear indications that the children’s social care market is not working as well as it should. We are therefore actively considering the case for future work in this area.”
MacAlister’s is the latest call for a CMA study into the markets for fostering or residential care, something he referenced in the letter, citing similar requests from the Children’s Commissioner for England last year and from Parliament’s housing, communities and local government committee in 2019.
Commissioner Anne Longfield, in a November 2020 report on private provision of social care, called on the CMA to conduct a market study of children’s social care to improve understanding of how competition limited prices for services paid by councils and, where it did not, what the alternatives were.
The select committee, in a 2019 report on funding of local authorities’ children’s services, said the CMA should investigate the market to address concerns around rising costs for placements and local authorities’ reliance on the independent sector, particularly for residential provision.
Issues for CMA to consider
Longfield’s, the select committee’s and other reports published in recent years highlighted a range of interlinking issues that a CMA market study into the residential or fostering markets may consider:
- Growth in private provision of placements for children in care: Longfield’s report said that, of the 11,000 more children in care in 2019 compared with 2011, 73% were cared for in private provision.
- Increasing concentration in the fostering market: last year, Ofsted revealed that two companies – Outcomes First Group and Nutrius UK – were responsible for one-third of independent fostering agency placements, which themselves accounted for 35% of all fostering placements in England in 2019. This is the consequence of a succession of acquisitions of smaller providers by larger ones. The regulator warned that this level of concentration could leave major gaps in supply if one of the big players collapsed.
- Above-inflationary increases in the costs of private provision: both the select committee and Longfield reported evidence of prices rising above inflation, with the commissioner citing a study by Revolution Consulting study showing independent children’s home placements had grown at a cost of 6% a year from 2012-13 to 2019-10.
- Private equity ownership of providers: the government-commissioned review of fostering, by Martin Narey and Mark Owers, that reported in 2018 raised concerns about the debt burden carried by IFAs run by large providers, as a result of their ownership by private equity firms, saying they made agencies vulnerable to increases in interest rates and led to higher prices because of the need to service debts.
- Whether providers have the power to set prices: amid a scarcity of placements for children in care, concerns have been raised about the power of providers to dictate prices to local authority commissioners, particularly when they have to spot-purchase placements. Longfield’s 2020 study said more evidence was needed but said “there is some evidence suggestive of the ability of private providers to set prices and exert market power, and enough to warrant further and more systematic investigation”.
- The growing use of unregulated or unregistered placements: 2019-20 annual report, Ofsted sounded a warning about the use of unregistered children’s homes in its, driven by a lack of placements, saying it was asking the Department for Education for additional powers to tackle them. Meanwhile, there are widespread concerns about the use and suitability of unregulated provision for looked-after children, with the government proposing to ban their use for under-16s and others arguing for tougher measures.
- Severe shortages of secure placements: this has been raised in a number of court judgments and by Ofsted, which has said that, at any one time, there are 25 children waiting for a placement in a secure children’s home.
- The uneven distribution of children’s homes in the country: there is a longstanding issue of children’s homes being more likely to be set up in the northern regions – where property is cheaper – than in London and the South.
The role of profit and markets
Underlying these concerns is a more fundamental issue with the role of profit-making and markets per se in children’s social care services, something the CMA will not be able to address given its remit. This point was raised by children’s charities membership organisation Children England in its response to Longfield’s November 2020 report, something its chief executive, Kathy Evans highlighted on Twitter yesterday.
Its statement at the time read: “While there should be no doubt that the care market is highly dysfunctional, and therefore should be of concern to the CMA on that basis, we do not think the answers to the problems the commissioner’s reports highlight will be found in more market analysis – plenty of which has been done already.
“Price distortions, risks of cartels and monopolies developing, and pressures on smaller competitors to enter mergers and acquisitions are all inherent features of a monopsony market [where there is a single purchaser, in this case, the state]. Making it more competitive won’t alter that structural problem. The problem is treating and managing care as a market at all, not how to make it a better one.”
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Hats off to Josh MacAlister he really knows how to create a diversion. So a review that will not include examining if funding of services is adequate, will be dragged into a meaningless ‘investigation’ of the “market”. Conclusion? There are a few bad apples but the market is competitive, there is no cartel for price fixing, hedge fund debt is sustainable. Meanwhile unregulated provision with poor outcomes gets quietly forgotten. Or so Josh MacAlister and Gavin Williamson hope. Wouldn’t be complacent if I were them mind.
The market in children’s social care isn’t working as well as it should be? Who else thinks that the fact there is any market in children’s social care is anathema? This is trying to ‘normalise’ what should be unacceptable. Getting us to argue about what sort of market there should be and not whether there is a better way to meet the needs of vulnerable children altogether which does not involve profit, shareholders and off shore accounts. As previously mentioned – a diversion.
The sensible way forward is not to create a more diverse market place with more intrusion by ‘Newcos’ (a DfE term for the new companies they wanted to encourage) or more ‘market insurgents’ (David Cameron’s preferred way forward). Neither will it be sensible to invite the international management consultants, such as those partnering with Frontline and already writing their blue prints for children’s social care, or market analysts (such as LaingBuisson who were commissioned by the government to prepare a report, overseen by and with advice from the DfE’s chief social worker, Alan Wood, and Julian Le Grand, recommending how the children’s social care market place could be encouraged and expanded) to plot a way forward.
What would be sensible would be to turn off the tap of considerable funding flowing out of children’s social services as profit to hedge funds, international venture capitalists, and the owners of private companies, and not to allow the shape and provision of children’s social care to be driven and determined by the goal of making money.
Instead, stop making poor children and families even more stressed and deprived through draconian benefit cuts; invest public money in public services to provide help and support for children and families in their communities; and where children are not able to stay within their families to have locally authority children’s homes and foster care services, and support for kinship carers, so that children and young people are not made more vulnerable and distressed by being placed with foster carers and in residential homes unknown and largely unseen by local authorities miles – often hundreds of miles – away from their families, friends, schools, communities and their social workers.
Trouble is this runs against the grain of what the Conservative-led governments have been doing and intending since 2010. This is why there should be concern about a review of children’s social care which is within the control of the government rather than being independent or cross-party, and with the government and DfE choosing who will undertake the review.
The phrase “corporate parent” just about sums up the objective monetary value to a council of a child lost in the care system. Children lost in residential care often lose their education, their voice, their identity and their relationship with family members, friends and their community.
Having experienced care abs now working on fostering myself I find this ludicrous. The issues facing LA are not just about money, what’s happened is society has forgotten that it should all be centred around the children and young people and how to give them the best outcomes when they have entered foster care. There are so many areas that need to be looked into so that both the local authority and IFAS can work together. So disappointing to see the same old merry go round thinking