The challenges faced by commissioners and providers of residential children's care were laid bare in a report by MPs in March.
The report by the House of Commons Public Accounts Committee, which looked at the Department for Education's track record on supporting children in care, was critical of the lack of progress made in improving outcomes.
Commissioning of care places by councils was also called into question, with the report revealing a system impaired by placement breakdowns and a lack of knowledge about what good-quality, cost-effective care looks like.
MPs want to see the next government do more to support local commissioning, concluding that over the past five years "too little attention has been placed on improving commissioning and the DfE has done too little to ensure the market works in the interest of children".
The creation of a set of measurement tools for residential and foster care was among a series of recommendations for government. These should offer a robust comparison of both the value and effectiveness of different settings, in particular between in-house provision and children's home places in the independent sector.
Too often, councils assume in-house residential placements are cheaper than those in the independent sector without strong evidence to back this up, MPs warned.
Another assumption many councils make is that commissioning should focus on local providers.
For Shropshire, keeping looked-after children within the county has been at the heart of residential care commissioning policy over the past year (see below – Shropshire: Reducing out-of-area placements).
But Andrew Christie, chair of the Association of Directors of Children's Services (ADCS) health, care and additional needs committee, warns that a lack of quality local care, coupled with the specialist nature of residential placements, makes "the preoccupation with local provision unhelpful".
Meeting children's needs
Instead, he would like to see commissioners place children in the best residential setting that meets their needs, irrespective of location.
"No one ever questions parents who choose to send their children to boarding school where their child may have to travel some distance. Why should it be different for children in care? If the right provision is not available locally, it would be wrong to place children locally just because it is local," he contends.
Lincolnshire County Council is among those councils to have less of a focus on location in their residential care commissioning, with the bulk of its placements bought outside of the county (see below – Lincolnshire: Flexible commissioning approach).
Lincolnshire's children's services commissioning manager, Andrew McLean, agrees with Christie that the search for quality makes local commissioning difficult.
"Our first starting point is that we try to place only in 'good' or 'outstanding' Ofsted placements," he says. "A placement that requires improvement may be £1,000 cheaper, but we will always pay more for the better provider." However, he admits that even taking away barriers of distance, there is still a "problem in the marketplace, with not that many that are good or outstanding".
There is increasing concern within the sector that the pool of independent children's care homes judged to be good or outstanding could shrink further due to new regulations and a new inspection framework for children's homes, which came into force earlier this month.
The Independent Children's Homes Association (ICHA) is leading the criticism of the changes. It says the new regulations, which include measuring homes' ability to work with schools and social workers, are too ambiguous.
Christie - who is also executive director of children's services for Kensington and Chelsea, Hammersmith & Fulham, and Westminster councils - welcomes the regulations' focus on partnership working, which he believes is the hallmark of effective commissioning in residential care.
This means partnership work between councils, with local authorities joining forces to form commissioning consortia, and councils working more closely with providers by helping them develop their provision and assess demand.
One example of strong partnership working is the support commissioning consortia gave to provider St Christopher's Fellowship in its successful bid for government funding to set up child sexual exploitation (CSE) specialist residential placements in the capital (see below – London: Specialist homes for victims of CSE).
"Where councils collaborate, it really helps as many are relatively small and find it difficult to commission on their own," says Christie. "By commissioners and providers coming together in a region, they can build up a sustained relationship over time."
Harry Wilkinson, development manager at St Christopher's, believes the creation of large commissioning consortia "has been positive" for providers. "It helps us become better able to meet their needs," he says. "Specialist services such as the CSE project are not something that just one council on its own could commission due to the low level of demand."
But ICHA chief executive Jonathan Stanley believes truly innovative commissioning, where commissioners and providers work side by side to develop local provision, is still not a reality and states "we know of no current examples".
Reflective space
According to him, the current "administrative and financial models being employed" in the commissioning of children's residential care "are not working".
At present, commissioning does not allow for "reflective space" to look at and improve practice, he says. Meanwhile, there is a lack of consensus across councils and providers on how best to measure success in improving children's outcomes.
"If all parties use the same measures, we should be able to assess young people to ensure they get the right placement first time," he says.
"We should be able to show the starting point for young people in placements and chart their progress towards a stage where they're in the optimum position to move on."
The economic theory of Common Pool Resources, developed by Nobel Prize winner Elinor Ostrom, offers one potential solution, believes Stanley.
This theory applies to markets such as residential children's care where a service is disparately owned and no one has collective responsibility, despite each purchase within it affecting the supply across the country.
Ostrom argues it is in the common interest of all those involved in such a market to co-operate together to ensure there are enough resources to go around and the sector is sustainable.
Adopting this model in children's residential care could be vital to ensuring there is a good range of placements to meet all the specialist needs of children for whom children's home provision is the best option. It would also improve the supply of local specialist provision.
Some areas are already adopting Common Pool Resources ideals to improve residential care commissioning.
The Children's Cross Regional Arrangement Group (CCRAG) was established in 2002 as a partnership between councils across the south of England to evaluate residential care provision.
Shirley Regan is head of joint children and young people's commissioning at CCRAG's host authority Hertfordshire. "By working in a collaborative way, the authorities can more effectively identify where and when vacancies occur," she concludes.
LONDON: Specialist homes for victims of CSE
Improving support for victims of child sexual exploitation (CSE), especially those in care, is a key plank of the Department for Education's Children's Social Care Innovation Fund.
Among funds handed out this year was a £1.19m package of support to London residential care provider St Christopher's Fellowship to develop specialist homes for victims and those at risk of CSE in the capital.
This new service – called St Christopher's Safe Steps – will look after a total of nine girls across two children's homes, one in North London and one in West London when it launches in the next few months.
The support on offer at the homes will have a social pedagogy approach, with support tailored for each child to help them "develop and use the skills to keep themselves safe", says St Christopher's development manager Harry Wilkinson.
"Social pedagogy works by putting the child at the centre of the care and every part of support is bespoke to their needs, in this case the needs of very vulnerable girls," he adds.
Close partnerships with commissioners were key to the success of securing the innovation fund money.
In total, 14 councils within two London commissioning consortia - the West London Alliance and the North London Children's Efficiency Programme - have been involved in helping St Christopher's design the service and convince the DfE there was demand for this specialist support.
"We worked with councils from the beginning, which was important as we wanted to ensure we could respond to their needs," says Wilkinson.
This strong partnership ethos has also helped convince the DfE that this specialist service would be sustainable beyond the year-long pilot stage the funding covers.
"This new service is about making real change to the residential childcare sector and the DfE felt it was something that could be sustainable with our partner authorities," Wilkinson concludes.
Residential care provider St Christopher's Fellowship received £1.19m to develop specialist homes for victims and those at risk of CSE in London
SHROPSHIRE: Reducing out-of-area placements
Slashing out-of-area placements has been a driving principle in Shropshire County Council's residential care commissioning over the past year.
The principle is built into a block contract with Keys Group, which takes the majority of externally-commissioned residential placements from the council, with a stipulation that this national provider will seek to provide a local placement.
It is a tactic that has clearly been paying off, with latest figures for out-of-area placements showing just 15 per cent of all Shropshire's looked-after children were placed outside of the county by the end of March 2014 - a fall of four per cent on March 2011's figures.
"Over the past 12 months, the work we have done with Keys is very much around bringing children back into the county," says the county council's head of social care, Tina Russell. "This is now part of the contract and applies in all cases apart from the rare exceptions where it is in the best interests of the child to be placed elsewhere."
If Keys do not have a local placement ready when needed, the council will then look to commission a spot purchase from a provider with local places, such as New Reflections or Horizon Care. "We use spot purchasing for specialist provision, such as a child sexual exploitation specific placement, and we will also purchase places to keep a child local," says Russell.
In addition, Shropshire has reviewed its in-house residential care provision to give further flexibility should the independent market not have a suitable local placement available. This includes having one of its homes offering a shared-care service for those in residential care who are either preparing to go home or move into independent living.
Russell says this focus on local commissioning is possible due to the high number of independent providers in the county. This also makes Shropshire an attractive place for other councils to commission care.
Latest figures for March 2015 show Shropshire County Council has 314 of its own looked-after children, of which 8.6 per cent are in externally-commissioned residential care. But within the county, there are a further 485 children placed by other councils.
This requires close co-ordination between Shropshire council and other local authorities in areas such as education and addressing antisocial behaviour. In place is a multi-agency care provider group, chaired by Shropshire director of children's services Karen Bradshaw, which includes local police. The county council's looked-after children team also has a designated officer to work with other councils commissioning placements within the county.
LINCOLNSHIRE: Flexible commissioning approach
Lincolnshire County Council has scaled back its residential care commissioning considerably over the past eight years.
In 2007, when the council reviewed its care arrangements, there were 46 looked-after children placed with external residential homes. Now there are just 19, with no long-term contracts in place with care providers. Instead, providers are commissioned based on their particular specialism, such as supporting those affected by self-harm or child sexual exploitation, with most based outside of the county.
"Our overall commissioning strategy for all looked-after children is not to look at residential or fostering in isolation, but instead to look at which is the best placement for each child," says Andrew McLean, children's services commissioning manager.
This has seen an increase in in-house foster care provision with residential care reduced so it is only used for children who would benefit from what is often specialist provision. As well as commissioning residential care, the council also has 19 places in its own children's homes. It has also sought to prioritise early intervention services such as family support, "which further reduces the need for commissioning out of council care", says McLean.
According to latest council figures, 88 per cent of Lincolnshire's looked-after children are placed in in-house foster care, which compares with a national average of 59 per cent and an East Midlands regional average of 61 per cent.
Flexibility is the key to Lincolnshire's commissioning of residential children's care, according to Mclean. "When we go out to the independent market, we are not tied to a framework and we can go out into the wider market," he says. "This allows us to consider every option and get the best provider."
Each contract is arranged with a focus on improving outcomes for each child. "There is a strong focus on monitoring and we have monthly internal review meetings to see if we are getting development in the child," says McLean. "The types of improvement could be specific such as managing self-harm or come from the young person themselves in terms of what they expect from therapy. There are also standard outcomes around managing a healthy lifestyle or living independently."
He stresses that commissioning is not on a payment-by-results basis with the focus instead on arranging a contract that covers the cost of the "right support". This may include extra staff or ensuring specific behavioural management procedures are in place.
