Children's home providers warn councils to expect price hikes

The Independent Children's Homes Association (ICHA) has written to all directors of children's services (DCSs) in England saying a rise in fees is necessary to take into account rising pension costs, inflation and a 10 per cent increase in Ofsted registration fees announced last month.

Fuel price rises and the cost of responding to commissioning and other contract tenders are among other escalating pressures on providers' budgets.

The letter also says a fee increase would serve to recognise providers' long-term financial commitment in providing places for councils.

"For a number of years, at their cost, providers have been managing finances in order to support local authorities," the letter states.

"For the forthcoming year, providers are looking for the reciprocal partnership from local authorities. This coming year it is essential the sector is supported."

The letter also urges DCSs to ensure that rises are agreed to quickly.

It adds: "Providers are aware of the pressure on local authority budgets. Though the vast majority of children's homes are small businesses with one home or two homes only, the pressures on larger organisations is often undervalued."

Residential care is one of councils' major spending areas, costing them an estimated £1bn a year to provide children's home places.

In December last year the ICHA's six month survey of providers showed widespread concern around rising costs and fees, with three in 10 reporting a fall in their reserves.

Latest Ofsted figures show there are around 7,000 children in residential care placements and three quarters of homes are rated as "good" or better by the inspectorate.