Children’s homes are profiteering from a “broken” market in which demand far exceeds supply, the children’s minister has warned.
This is driving huge spending on placements by local authorities, with fees of £8,000 plus a week “not unusual”, Will Quince told the House of Commons’ education select committee last week.
As a result, councils lack funds to invest in early intervention, to help children stay with their families, he said.
Sitting alongside the minister, Department for Education (DfE) director of children’s social care Fran Oram said the government would bring forward reforms to ensure the market functions much more in the interests of children.
These would be based on the recommendations of the Competition and Markets Authority (CMA) report into the children’s social care market – due this week – and that of the Independent Review of Children’s Social Care, expected around May.
Both the CMA, in its interim report, and care review lead Josh MacAlister have issued warnings about the high level of profits in the children’s home market.
Quince said that the government was already taking steps to tackle the issue by investing £259m in building children’s homes from 2022-25.
The majority of this will be spent on secure children’s homes, of which there are only 13 in England and for which there are 25 children waiting for a place at any one time, Ofsted has said previously.
The minister told the committee that the shortages meant that councils were having to send children “many many miles away” for a secure bed.
Providers question minister’s claims
However, his claims about fee levels were challenged by Independent Children’s Homes Association (ICHA) chief executive officer Peter Sandiford, who said “the quoting of outlier costs for a small number of cases does not reflect the cost for the sector generally.”
“Yes, some placements do cost in excess of £8,000, but these high costs are dictated by the extreme needs of the children that the local authorities cannot meet,” he said. “Such high-level needs and risks require significant specialized care twenty four hours a day to ensure they are kept safe and their needs are met.
“It is important to note such levels of need are often a result of previously failing to invest in the right provision at the right time. When used as an early intervention rather than as a last resort, a children’s home is a cost effective and impactful intervention.”
He added that average fees for council-run homes were higher (£4,865 per week) were higher than the average for the private sector and voluntary sectors (£4,153), according to the latest analysis of the unit costs of social care services produced by the Personal Social Services Research Unit. These figures do not account for differences in need between children.
‘Eye watering levels of borrowing and debts’
The Association of Directors of Children’s Services (ADCS), which has long raised concerns about profit levels for children’s care placements said said that “meeting children’s needs, not maximizing profits should always be the priority”.
Association president Charlotte Ramsden also warned that the ownership of children’s homes by private equity providers with “eye watering levels of borrowing and debts” created significant risks of providers failing.
While welcoming the government’s funding to build children’s homes, she said this needed to be followed by “a comprehensive placement strategy”, with investment to ensure “the right placements are available in the right locations and at the right time”.