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”.
“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
“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.”