Directors urge ‘dismantling’ of children’s social care market in face of ‘immoral’ fees

North East leaders say profits from care should be eliminated or capped with shift to council-run children's homes and in-house foster provision, in submission to care review

Screen with the word 'profits' written on it along with various related symbols
Photo: Melpomene/Fotolia

The children’s care market should be “dismantled”, with profits eliminated or capped and services delivered by councils, in the face of “immoral” fees charged by providers, directors have said.

The North East branch of the Association of Directors of Children’s Services (ADCS) made the call in a submission to the children’s social care review, which has already signalled that it will make recommendations to reduce profit-making, particularly in children’s homes.

The 12 North East directors – whose views do not represent those of of ADCS nationally – said the current market “increasingly resembles a series of cartels, able to regulate the supply of provision to retain profit margins and make considerable private profit from public funding”.

Within residential care, the report said that provision within the region was geographically uneven – largely because of house prices – and was generally “standard” four- to five-bed services. This left councils with shortages of smaller specialist placements, including emergency, respite, 52-week, parent-and-child, step-down from secure and sibling-group services, as well as provision for 16- and 17-year-olds and children with learning disabilities or autism.

“It is exceptionally difficult and sometimes impossible to match a young person’s needs to available provision,” the report said. The directors also accused some providers of “cherry-picking” the young people they would take and, in some cases, terminating placements with immediate effect, “leading to very damaging consequences for children”.

‘Immoral’ fees

“We’re fighting for a very small pool of placements, which means that prices rocket. I’ve had eye-watering amounts of quotes for placements, anything from £5,000 to £12,000 a week,” Northumberland director Cath McEvoy-Carr told Community Care. “It’s immoral, if I’m honest.”

The directors called for profit-making to be eliminated or capped, and urged the government to give councils “substantial capital funding” to develop their own residential care services, for which there was a strong track record in the North East, they said. The report mooted the government resourcing councils and not-for-profit providers “to take on the provision of all residential care with a system of transfer from private providers”.

On fostering, the report said that competition between councils and independent fostering agencies (IFAs) for foster carers drove up costs and that “there [was] little or no evidence of the tangible benefits of this model”.

The care review should consider having all foster carers assigned to the local authority they live in or other ways to co-ordinate foster carer recruitment and retention.

Removing costs of competition

“This will remove the costs of competition and profit so they can be redirected to support outcomes for children and young people,” it added.

McEvoy-Carr said that, while IFAs had their place, “the cost of those placements is quite significant, there aren’t enough placements and they do not take the children with challenging needs”. She said that, as a result, in Northumberland, the number of IFA placements had fallen from 110 to 30, with most of the remainder being long-term.

The proposals come with both the care review – and a separate study by the Competition and Markets Authority (CMA) – examining the care market including levels of profit, sufficiency and what needs to change.

Cost and quality comparisons

Latest Ofsted data shows that 82% of mainstream children’s homes (excluding secure or short-break homes) were owned by the private sector, compared with 14% for councils, as of March 2021. The number of private homes also grew more quickly (13%) than the local authority sector (11%) in the previous year.

Among all types of children’s home, 82% of council-run provision and 80% of private sector provision was good or outstanding, though 22% of council homes were in the higher category, compared with 15% in the private sector.

In 2019-2020, the average cost of a place in a private or residential children’s home was £3,862 per week, compared with £4,986 per week for the average local authority-run home, found the Personal Social Services Research Unit’s (PSSRU) annual unit costs report.

Though that does not adjust for relative levels of need, the Independent Children’s Home Association (ICHA) said the PSSRU and Ofsted data showed that “local authorities, despite their massive infrastructures, do not currently run their homes any better or more cheaply than independent providers”.

“There is nothing to suggest that returning homes to local authorities will miraculously change this,” it added.

Providers reject ‘cherry-picking’ charge

It also rejected the idea that providers were “cherry picking” children, saying that local authorities who provided homes only looked to the private sector “for those children too complex to be placed with them”.

The ICHA called, instead, for a more collaborative approach between councils and providers and a change to how homes were deployed, saying they should be used earlier in a child’s care journey and not as a last resort.

IFA membership body the National Association of Fostering Providers (NAFP) also rejected the North East directors’ proposals.

‘Overwhelmingly positive’ IFA performance

NAFP chief executive Harvey Gallagher cited Ofsted figures showing 93% of IFAs, who account for 34% of fostering households, were rated ‘good’ (74%) or ‘outstanding’ (19%).

“It’s overwhelmingly really positive,” he said. “They are also excellent value for money for the public purse. The costs are really similar for IFAS and local authorities. IFAs spend more on their services because their children are older and have more needs, their social workers have lower caseloads and they provide more support to their foster carers.”

He added: “Why would you want to remove something that was really good for children and for the public purse? IFAs have raised the bar for everyone and local authorities have had to up their game.”


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11 Responses to Directors urge ‘dismantling’ of children’s social care market in face of ‘immoral’ fees

  1. Tom J July 30, 2021 at 1:02 pm #

    Warning- Local pay caps for agency social workers have not worked and will unlikely work for care provision. This is because when local authorities are desperate and Ofsted are breathing down their neck they understandably break and say ‘lets do what’s needed’.

    The only solution will be to bring in house or for there to be a national cap.

  2. Geoff July 30, 2021 at 2:02 pm #

    I have no experience of Northeast directors but I do not recall Directors down the years making waves about the market in Child Care.It was clear from some time in the 90’s that we would end up in this sort of situation after all it’s “The Market”. People and companies go into the market to make as much money as possible. This is not a surprise. Directors should have been screaming that the interests of children were being subsumed by market forces 10 if not 20 years ago. I don’t suggest that some individual directors may not have had misgivings but as far as I can recall directors have not come out collectively to say loudly and clearly to the public and politicians that this was a mistake. Probably still won’t.

  3. J Pate July 30, 2021 at 3:11 pm #

    Let’s not forget that list local authority run children’s homes were closed due to the horrendous abuse and cost cutting exercises that took place.

    I’m all up for capping profits but let’s not pretend this is for children as it isn’t. If it was councils would have built outstanding residential placements a long time ago.

    As well as legislating a cap – let’s legislate that local authorities will be unable to cut any funding for the children’s homes and that their budget increases every year with the rate of inflation.

  4. Billy Tell July 30, 2021 at 3:41 pm #

    Be careful what you wish for….it might have teeth. It seems to me that officers of all these Social Care Directorates are the very people that created this “market” by the neglect of, and wholesale closures of in house Children’s Homes and other resources for Children-In-Care, and yes central government contributes to this crisis by cutting budgets, BUT there is an inbuilt bias from social workers against residential care, and foster parents have found out the hard way that some of these children are so damaged they tax and exhaust all personal attempts to parent them. If you look at and compare the claims for resources and training needed to manage and work purposefully with these children and young people from Residential Workers some 30 years ago you will find similarity in the demands for resources that Foster Carers make now. Shift the problem but no long term solutions. And another dreadful failing of Social Services is that they ship out their most damaged and vulnerable children into ready made Care Ghetto’s many miles away from their communities.

    There are still no solutions despite the good intentions of the great and the good, and the self appointed, Children in Care…Children of the State are everybody’s children and therefore we should all feel great shame this scandal continues apace.

  5. Elle July 30, 2021 at 4:44 pm #

    And yet they’ve never considered this in LD or geriatric care?

  6. Steven Langston July 30, 2021 at 6:12 pm #

    When councils openly say they avoid smaller ‘cottage garden’ providers (see for example Walsall’s ‘I’m From Walsall’ document) and prefer corporate providers. This is what you will get. Support smaller providers!

  7. Beth July 30, 2021 at 7:43 pm #

    I recall visiting a children’s placement that was costing thousands a week and I mean that in plural. They were not meeting the young persons needs, more managers than I have ever seen, so called therapist/psychologist with no boundaries and they had the cheek to tell me the staff got £2000 bonus if named staff of the week/month whatever it was.
    Interesting to note my car was the oldest banger in the drive on visiting as a social worker.
    Yes skills can cost but to be fair some of these placements are profit orientated. If you costed them hourly and scrutinised what value/hours you were paying for it would be interesting.
    The difference in rates charged to children’s services and adults is an issue. Providers know children’s will pay.
    People are now randomly trying to get into care providing as it is big profit. It needs to stop there are too many unregulated placements that leave young people open to advise.
    There is room for both LA and private but I strongly feel that every LA should run some core services. Stronger scrutiny as part of commissioning and monitoring should also be in place.

  8. Scott July 31, 2021 at 1:24 pm #

    Immoral fees? In a capitalist “Mixed economy of care” turbo charged by New Labour? The North East more than other regions embraced Alan Milburn and his privatisation zeal so chickens roosting are not really such a surprise now is it? I was a Gateshead social worker in the 1990’s and the rubbishing of public provision was a cult. I lost count of the number of times councillors and their acolytes in social services told us how useless we were and how all would be better when our resources were privatised. Real estate was sold cheaply quickly to avoid proper public scrutiny. Long memories you see. I was one told to sign a new contract on reduced pay and benefits, transfer to a ‘new’ employer or be made redundant. The same process is happening right now to workers employed by Keir Starmers Labour Party. Until councillors are truly democratically accountable to us whoever runs these provisions will still prioritise cost and profit over meaningful and compassionate care. Those abused and demeaned in Lambeth Council children’s homes need to heard beyond IICSA before we entrust services to the same mindset.

  9. Ray Jones August 3, 2021 at 8:53 am #

    A bit of history – the drive to privatisation within children’s social services was fuelled by four factors. First, the ideology of the 1980s-1990s Conservative governments that the market was the magical (and mythical) generator of value for money and the three Es of economy, efficiency and effectiveness and this ideology was continued by New Labour in the 2000s. In reality the function of a privatised market is to generate profits. Second, the political concept that local authorities should be enablers not providers of services, and that they could shape the market through their specifying and contracting of services. In reality, they lost the in-house expertise about the services they formerly provided and the private sector dominated the shaping of the market. Third, the Conservative governments of the 1980s-90s rigged the adult care market so that local authorities were coerced to out-source adult care services, embedding the contract culture in local authority personal social services so that it became the accepted and fashionable way forward and started to be accepted in children’s services as well. Four, the 2004 Children Act which led, at least for a time, services being headed up by directors of children’s services who had been directors of education with little understanding that unlike their relationships with schools which were led by head teachers they needed to have direct knowledge and accountability for the care of children for whiom they were responsible. There has more recently been another driving force in how the market in children’s residential and foster care is being shaped – globalisation, where distant international venture capitalists are now owning and ripping out big profits from children’s! social care. The north east directors of children’s services are right. We have been led (and for some, but not all, too willingly) along a route that is now taking massive amounts of money away from the care of children, and it is more than timely to re-route and to rebuild local authority local care for children.

  10. Sam August 4, 2021 at 2:02 pm #

    Just as local authorities, and on Tyneside with much gusto, sold off and now resist building council houses, they will never embrace a full return of care back under local oversight without massive central government funding. That is highly unlikely. Keeping Council tax rises low is the main priority of Labour councilors. I know, I was one in North Tyneside. Most Labour councils are very comfortable with having offloaded public provision to private for profit providers. Sadly I do not share the optimism of Ray Jones.

  11. Allie August 6, 2021 at 10:24 am #

    As if by magic Alan Milburn popped up a few days ago warning us about the danger of “nationalisation” of outsourced private NHS services by the Conservative government. Naturally good manners prevent me listing any personal conflicts of interest he may have. Ray Jones gives a good history lesson but I regret is over generous on the role played by and the complicity of past social services bossess in driving through these ‘reforms’. The issue isn’t just about breaking up equity fund monopolies though. Nothing meaningful can progress while we have the multiple management structures in our services. When I became a social worker I had an almost direct line management link to our Director. I actually have to think very hard now to remember which tiers link with which director and service head. The buffers in place to shield chief executives from the consequences of their decisions is not an accident. When our bossess aren’t even accountable to the communities they are meant to be serving why would they take note of us? Bullying and victimisation in social work does not occur in a vacuum. Our bossess fear no accountability other than to councillors and Sam has laid bare what their priorities are. It’s not all about Labour led councils ofcourse as the scandals that eviscrated Tory Northumberland County Council show. I fear the new zeal for in-house services has more to do with the desire of some hedge funds to pull their investments. Perhaps councills and Directors see an opportunity to get services and buildings back at a ‘discount’? I know that if I was not a mere practitioner I would be paying very close attention to the sleight of hand deals in the making through the care review. Perhaps the North East Directors are merely ahead of the game to come.