Watchdog calls for national and regional organisations to be set up to help councils tackle shortage in places in children’s homes and with foster carers

There is a shortage of appropriate places in children’s homes and with foster carers, “meaning that some children are not getting the right care from their placement”, a market study into children’s social care by the Competition and Markets Authority (CMA) has found.

The CMA report also found that some children were being placed too far away from where they previously lived or in placements that required them to be separated from their siblings.

The shortage also meant that high prices were often being paid by local authorities. The market study found that the main reason for this was “the fragmented system by which services are commissioned, which means that local authorities are not able to leverage their role as the purchasers of placements or to plan properly for the future”.

Some large private sector providers of fostering services and children homes appeared to be making higher profits in England and Wales than the CMA would expect in a well-functioning market, the report found.

To address these issues, the CMA has recommended that the UK Government, Scottish and Welsh Governments create or develop national and regional organisations that could support local authorities with their responsibilities in this sector.

“These would improve commissioning by carrying out and publishing national and regional analysis and providing local authorities and collective bodies with guidance and by supporting them to meet more placement needs in their local area,” the CMA said.

The watchdog said it was also concerned about the financial resilience of some private providers of children’s homes in England and Wales, particularly those financed through private equity. “High levels of debt among these firms could lead to them getting into financial difficulties, which could impact the care provided to children.”

To address these issues, the CMA has proposed:

• a system for assessing the financial health of the most difficult to replace providers of children’s homes and providing warnings to relevant authorities if a failure is likely;
• that options are actively explored for bringing foster care in-house;
• a review of the barriers to provision of children’s homes, as well as the recruitment and the retention of care staff and foster carers.

Andrea Coscelli, Chief Executive of the CMA, said: “The UK has sleepwalked into a dysfunctional children’s social care market. This has left local authorities hamstrung in their efforts to find suitable and affordable placements in children’s homes or foster care.

“We have also identified issues with the financial stability of children’s home providers. It is important to manage the risk of children’s homes providers going bust and local authorities having to pick up the pieces.

“Local authorities cannot be left to face these challenges alone. There are several areas where national governments should make changes to address issues in the sector, including new financial oversight of providers and the development of new bodies to support local authorities with commissioning. With children’s social care currently being reviewed across the UK we want to see our recommendations reflected in any changes to policy.”

The market study also highlights and reflects the significant differences in the policy context for children’s social care between England, Scotland and Wales. The devolved administrations in Scotland and Wales have each committed to move away from the model of for-profit provision in children’s social care, and national organisations already exist in these nations to support local authorities.

Cllr Anntoinette Bramble, Chair of the Local Government Association’s Children and Young People Board, said: “Councils have been raising concerns about the availability of suitable placements for children in care for some time, and this report underlines the urgency of the need for change.

“We support the Competition and Markets Authority view that oversight is needed of the financial health of the most difficult to replace providers of children’s homes. Some providers are carrying significant levels of debt and the risks to children of provider failure could be catastrophic.

“Support for councils to improve forecasting of need and market shaping activity would also help to build on work already taking place in this area.”

Cllr Bramble added: “We urge the Independent Review of Children’s Social Care to consider these recommendations in their final report and are keen to work with the Government to ensure that children can live in the homes that best suit their needs and where they can thrive.”