This is particularly the case for residential child care – dominated by the independent sector which provides 70 per cent of placements – with settings concentrated in parts of the country where property is cheapest.
Sufficiency strategies are a key tool for council commissioners in their placement planning work. These documents provide key information about how local authorities manage markets, engage providers, co-ordinate provision, and steward services to meet their sufficiency duty and accommodation needs. However, research by What Works for Children's Social Care (WWCSC) last year found that 44 per cent of authorities did not have a publicly available up-to-date sufficiency strategy. Of the 81 strategies studied, most councils reported that the cohort of children and young people in care is becoming more complex and thus increasingly expensive to place within residential provision.
It was generally reported that prices and unit costs of residential care places are increasing, especially among independent (private for-profit and third sector) providers. However, unit cost information was “unreliable”, and a number of strategies cautioned against comparing costs between providers because of the many variables involved.
The research found that many authorities struggle to place children locally and to access local settings, even though this was highlighted as a priority in most sufficiency strategies. Many were also sceptical about the accuracy of their own forecasting of future needs, which calls into question how effective they can be in working with providers over long-term provision planning.
“This is a key area in need of improvement, considering that an analysis of previous and future demand constitutes the foundation of a sufficiency strategy,” say the researchers, who conclude that authorities generally do not have effective market oversight and stewardship.
Commissioning problems
The Independent Review of Children's Social Care final report characterised local authority placement finding as being at the mercy of a market they have little influence over. They lack the scale to shape market conditions and in too many cases rely on expensive spot purchasing of places at short notice instead of long-term “block” contracts with providers.
Latest analysis of the residential child care sector by Revolution Consulting shows that 97 per cent of places were spot purchased by local authorities in 2022/23 and only three per cent subject to block arrangements.
A combination of having little influence over the market, rising inflation and more children being assessed as needing more expensive residential care packages has resulted in local authorities paying more for children's home places. It has also seen more children placed in homes many miles away from their local communities as council placement finders have expanded their search to parts of the country with more capacity and better value. Latest Department for Education data shows 67 per cent of children in residential settings were placed outside of the council boundary in March 2022, compared to 58 per cent in 2021.
However, evidence gathered by Revolution Consulting suggests many of these out-of-boundary placements may be in neighbouring authorities – according to providers, two-thirds of placements are from a “host authority or near neighbour” – supporting councils’ assertion that decisions are largely driven by finding a setting in the region that best meets children's needs. Despite these factors, Revolution Consulting says the shift away from local placements “is a clear demonstration that commissioning by local authorities has not resulted in services being located where they are needed, when they are needed”.
The Competitions and Markets Authority (CMA) in its 2022 review of children's social care found that the “severe limitations on the ability of local authorities to engage effectively with the market to achieve the right outcomes” was a key factor in the shortage and rising costs of care placements. This, in some cases, was resulting in “excessive” profits being made by some of the larger independent fostering and residential care providers.
In Stable Homes, Built on Love, the government stops short of the Care Review's call to remove profit-making from the placement market – as is the intention in Wales – but backs plans to reform children's social care commissioning through the creation of regional care co-operatives (RCCs) as a way of tackling the sufficiency and cost problems.
Regional care co-operatives
The government has committed to establish RCCs in two areas next year with a view to rolling them out from 2025 after testing and evaluating the best approach.
While the government is consulting on what RCCs might look like, Stable Homes, Built on Love suggests they could be made up of regional groups of up to 20 local authorities which will help them compare how much they are each paying for foster care, residential homes, supported accommodation, and secure and therapeutic care homes. With a requirement for RCCs to publish management information about the cost of care, “commissioners will be better placed to compare both the cost and quality of services they are procuring”.
A key role of RCCs will be to work collaboratively with health, youth justice and voluntary sector agencies and care providers to ensure children can be matched to homes more effectively. There will be close links with integrated care boards which will need to appoint an executive lead to ensure services meet the needs of local children and young people. The paper states: “No matter where children are from, at the heart of this approach, it is crucial that children live close to their family, friends and school. A regional way of working should improve, not impede, this.”
Another stated benefit of commissioning care services on a regional basis is that it will deliver economies of scale, the government believes. “A regional model will have the financial force and shared risk to plan ahead and invest in homes and models of care that individual local authorities currently lack,” the document states. Better joint planning, more informed commissioning and transparency of costs will reduce excessive profit making by some providers, it adds.
The document sets out a range of other hoped for benefits from RCCs (see key features box), including that increased joint working will improve commissioning practice. The government has pledged to provide “national support with forecasting and procurement on how best to plan for sufficiency and how best to commission and procure the right homes in the right places”.
“With a smaller number of commissioning teams, but operating at greater scale, they will be better placed to share learning about how best to commission,” it adds.
Will RCCs work?
The stated aim of moving to a regional model of commissioning is to improve the sufficiency of care placements and ensure that children receive the right support packages at a financially sustainable cost to local authorities. The government believes that by working more closely among themselves and with providers local authorities will be able to stimulate the creation of more care placements of the right type in their region and that economies of scale will see the cost of delivering that provision reduce.
However, evidence from areas where regional commissioning arrangements already exist suggests it will not be straightforward. More than half of the authorities in the WWCSC study reported being part of a regional or sub-regional framework, in the expectation that this would improve their sufficiency by being able to access high quality and value for money residential services. “Authorities often reported that the effectiveness of these regional arrangements was limited as not all authorities took part, and not all providers joined the frameworks,” it states. “As a result, several authorities reported that joining these did not help them achieve local sufficiency nor reduce reliance on spot purchasing.”
The reforms suggest that authorities would be required to be part of a RCC but experts question whether providers would be willing to increase provision if rates were to reduce (see Big Debate). Meanwhile, research from Revolution Consulting shows that more residential care providers chose to leave a commissioned framework arrangement in 2022/23 (22 per cent) than the year before (17 per cent). None reported negative consequences as a result.
The report also highlights providers’ views on tensions with commissioners over the impact of rising costs and how this can feed the negative narrative of profiteering. They called for a fairer approach to rate setting in return for greater transparency over costs and wider promotion of the beneficial impact of residential care placements.
The Association of Directors of Children's Services (ADCS) is also concerned that RCCs could result in a “mass exit” of providers and worsen sufficiency and cost pressures. They will be costly and time consuming with little guarantee of success, the ADCS says in a recent policy paper (see ADCS view, below).
Instead, the association said the government should introduce measures that encourage voluntary organisations to set up provision after that sector's share of the children's home market fell from 17 per cent in 2016 to just four per cent in 2021.
The ADCS paper adds that to increase sufficiency and reduce profit-making in the children's residential care sector, “national government should stimulate and encourage the voluntary sector back into the children's home market, for example through providing upfront capital costs and encouraging innovation in this space”.
While providers and commissioners recognise the need to improve the current placements system, there remains much scepticism that a restructure based on regional collaboration will deliver the desired improvements.
-
Revolution Consulting is running a free online seminar at 11am on Thursday 15 June outlining findings from its study on profit and debt in the children's social care sector, including what this means for local authority commissioning. More from www.revolution-consulting.org/news/
10 reasons why the government says RCCs will improve care commissioning
-
Better forecasting – Working at a regional level will help to better forecast children's care needs and predict what homes will be needed and where.
-
Economies of scale – A regional model will have the financial force to plan ahead and invest in homes and models of care that individual local authorities currently lack.
-
Fostering support – RCCs will be expected to achieve better recruitment and retention of foster carers and expand the pool of potential placements for children.
-
Better collaboration – RCCs will be expected to work closely with health and youth justice agencies to better meet the needs of children in care.
-
Complex needs – RCCs will be better equipped to provide more residential care homes for those children with the most complex needs.
-
Financial transparency – Working in groups of up to 20, commissioners will be better placed to compare the cost and quality of services and publish regular data on this.
-
Shared learning – Fewer commissioning teams operating on a larger scale will also help share knowledge on how to commission the right placements.
-
Excessive profit – A combination of better commissioning, more transparency on costs and reducing spot purchasing will reduce excessive provider profits.
-
Regulation and inspection – The government and Ofsted will develop a framework for inspecting RCCs, ensuing they are accountable for sufficiency and quality of places.
-
Children's outcomes – RCCs will prioritise matching with local homes and achieving permanency for children.
-
Source: Stable Homes, Built on Love, DfE, March 2023
ADCS VIEW
We need an alternative vision to ensure the best for children
By John Pearce, president 2023/24, Association of Directors of Children's Services
Finding homes that meet the needs of children in care is a priority for us all. Ideally, we want children to stay close to the people and places they know, where it is in their best interests to do so, but this is not always possible because of a lack of available local placements. We have long called for national action on the undersupply of appropriate homes, increasing costs of placements and profiteering from the care of children.
Stable Homes, Built on Love, seeks to address some of these issues via the creation of regional care co-operatives (RCCs). While collaborative commissioning may be part of the solution, it is unlikely to be the only answer to this complex set of issues. The existing system is successful in commissioning places for most children, but it does not serve our most vulnerable children well.
The ADCS has concerns about the model of RCCs as described in the government's plan. We think a more nuanced approach is needed considering the different localised challenges to sufficiency in regions. The association has produced a discussion document setting out a possible alternative vision which describes how local authorities and partners could come together within a system of commissioning to better meet the needs of children and young people. It envisages activity taking place at different levels, dependent on localised challenges and pre-existing relationships. There is also far more for the government to do to create the conditions where successful commissioning can take place.
We have asks of the government which we believe are prerequisites for success. We need a wholesale review of the regulatory system and the role of the regulators, as recommended by the Competition and Markets Authority. The government should develop a clear vision for the future of care, including the purpose and function of residential care. We would like to rebalance towards a not-for-profit model with government support to encourage the voluntary sector back into the market and enabling local authorities to open new provision at the pace and scale required. We must tackle the profiteering by some of the largest private providers and address high-risk financial structures backed by private equity placing the sector at risk from those whose main aim is to minimise risk and maximise profit for shareholders.
Due to how the sector has evolved, local authorities need a mechanism to step in where there is a risk of provider failure resulting in unplanned withdrawal from the market. A disorderly exit of providers would be difficult to manage in every respect. There isn’t a mechanism for us to step in and run children's homes as there is in adult social care. We shouldn’t wait until there is a crisis and children have nowhere to go before putting in place this backstop power, particularly in light of the sufficiency challenges we face.
RCCs are not a silver bullet, the ADCS discussion paper provides an alternative way in which local authorities, their partners, providers and the government can work together to ensure children stay connected to their family, friends and community wherever possible.
FURTHER READING
-
State of the sector survey, Revolution Consulting, April 2023
-
RCC policy paper, ADCS, April 2023
-
Stable Homes, Built on Love, DfE, February 2023
-
Sufficiency strategies for children in care in England, WWCSC, March 2022
-
Children's social care market study, CMA, February 2022
