Commissioning Care: Key policy developments
Derren Hayes
Saturday, June 1, 2024
Ofsted’s annual report highlighted ongoing issues with insufficient availability of care places despite more children’s homes and places coming on stream in the year to March 2023. For council commissioners, the key issue is being able to find a placement that meets a child’s needs within reasonable distance – rather than finding a placement per se.
“In part, this is because homes, and particularly specialist homes, are not evenly spread across the country,” Ofsted’s annual report states.
“Homes continue to open disproportionately in the regions where numbers are already the highest. The distribution of homes, including new home openings, does not reflect the distribution of need.”
Around a quarter of all homes are in the North West, which was also the region where most new homes opened, whereas London has around half that rate. This is driven by economic factors and bears little correlation to demand for care placements and results in many children from the South of England being placed in settings in other regions.
Another emerging trend raised by Ofsted is that more homes are operating below their registered capacity “because the complexity of a child’s needs means that a solo placement is commissioned, so other places are blocked”. The inspectorate is concerned about the outcomes for the increasing number of children living alone. Such placements require high staffing and, in some instances, councils are charged for all places, not just the one filled.
Whereas residential child care settings and places are rising, foster households continued to decline last year, as did the overall number of places and those available and unfilled.
“This may make it more difficult for local authorities to find suitable placements to meet a child’s needs around, for example, location, other children in the household and experience level of carers,” concluded Ofsted.
The shortage of all types of places has led to more children being placed in supported accommodation, which since last September has been regulated by Ofsted. Latest figures show there are 680 supported accommodation providers registered with Ofsted operating nearly 6,000 premises.
Commissioning for needs
A recent study by consultancy Impower alongside the County Councils Network (CCN) found a “limited correlation” between the needs of young people, the costs of their care and the type of care they receive.
Separate research by the CCN found the number of care placements costing £10,000 a week or more had risen more than 10-fold between 2018/19 and 2022/23 to 1,510. An increase in the complexity of needs of children is often cited as the reason for this rise.
However, the Impower analysis suggests a new approach to commissioning that measures needs over time could reduce spending on councils’ most expensive care placements.
Authors analysed the use of a programme called Valuing Care, which was initially adopted by four county councils – Lincolnshire County Council, Norfolk County Council, Hertfordshire County Council and Oxfordshire County Council – in 2020 and has since been taken on by a further 11 across England.
The system captures a young person’s needs and changes over time across areas such as mental health, family relationships and educational progress.
According to the councils that have developed this approach with Impower, it has helped them to improve support planning, practice and commissioning for children who are looked after.
Councillor Roger Gough, children’s services spokesperson for the CCN, says: “The report profiles data-driven approaches such as Valuing Care that have had a demonstrable impact on cutting costs and providing a better level of service for young people. Its findings come at an important time, with the government currently rolling out its reform strategy and we hope that learning in this report can help inform some of those changes, especially over a greater use of data to better commission services.”
Cost of placements
What it costs to look after a child in care is a hotly contested issue. Most recent figures from the Personal Social Services Research Unit at the University of Kent shows the average daily cost of a children’s home placement in 2021 was £721 for local authority settings and £621 for independent sector (voluntary and private) provision. Meanwhile, the average weekly cost of a foster care placement was £661.
In contrast to the widely held view that private placements are more expensive than local authority run homes, the 2022 review by the Competition and Markets Authority (CMA) found no evidence to support this. However, the CMA review did conclude large private sector providers of fostering services and children’s homes appear to be making higher profits in England and Wales than it “would expect in a well-functioning market”.
Analysis by Revolution Consulting commissioned by the Local Government Association found council spending on privately run children’s services, including residential homes and foster care, has more than doubled in the past six years.
In 2021/22, local authorities in England spent £1.5bn on independent children’s homes, a 105% increase since 2015/16. The largest 20 independent children’s social care placement providers collectively recorded 19% of their aggregate fee income of £1.63bn as profit.
Data published by the Department for Education (DfE) earlier this year showed that in 2022/23, councils spent around £400mn more on private children’s home places and £200mn more on private fostering places compared to a year earlier. Last year, half of all council spending on looked-after children was with private care providers who now account for 72% of residential care and 45% of foster care spending overall. Recognising the problem, the DfE has recently established the Market Interventions Advisory Group to investigate if some of the larger care providers are “profiteering” from the sector.
Some experts, such as Kevin Gallagher of Amberleigh Care, say a factor in rising spending on private placements is the decline in the use of framework contracts – that set an agreed rate over several years – because they have failed to keep pace with rising costs for providers (see big debate). While recognising the need for a “mixed economy” of provision, the Association of Directors of Children’s Services (ADCS) says the balance has tilted too far in favour of private providers.
Potential solutions
To address the CMA’s “dysfunctional market” criticisms, the government is set to pilot regional care co-operatives (RCCs) in two areas this year. It is anticipated that through RCCs, councils will be able to work together to standardise placement terms and fees, and commission a broader range and number of places across a wider geographical area.
Regional commissioning of care places is not a new concept with several consortia operating across England with some councils reporting it improved access to places. Regional adoption agencies, established in 2017, have so far failed to deliver more adoptions, but Ofsted has been asked to analyse whether there are lessons to be applied to RCCs.
Some experts, while supporting the idea of regional commissioning, remain sceptical that it will deliver the benefits ministers envisage (see big debate). Last year, the ADCS issued a policy paper setting out its own ideas for how regional commissioning should work with the aim that “children must, wherever possible and appropriate, live locally to maintain relationships and links with their own community, friends and families”.
In a separate move, the Department for Levelling Up, Housing and Communities has asked councils to produce productivity plans to set out how they will improve service performance and reduce wasteful spend across all local authority provision. “It is likely that the focus of councils will again be drawn to the way in which they influence social care markets,” says Andrew Rome of Revolution Consulting.
Despite this, Rome says there is still potential for smart strategic commissioning to bring about substantial changes in the development of children’s social care provision. A combination of more partnership and risk-sharing commissioning, reinvestment in state-owned resources and the potential for direct ownership stakes in provider organisations should all be considered as routes to redirecting market development in children’s services.
He adds: “Such changes need robust, sustained and visionary leadership of commissioning, and the resources and commitment to bring about substantial change in partnership with the sector.”
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ADCS view: 'Councils need national rules to deliver more effective commissioning' Andy Smith is the ADCS President 2024/25 Placement sufficiency issues are probably at the top of the list of concerns for any director of children’s services currently. There are many things we must consider when finding the right home for a child in care, such as distance from the places and people they know and whether it can meet their specific needs. However, we are faced with a national placement sufficiency crisis with record amounts being spent by local authorities on these placements, particularly for our most vulnerable children and young people. I am glad to see that the government is now very much alive to this problem. While we, as leaders of children’s services, have been navigating this for years, it continues to intensify and is now taking a significant toll on local authority finances. It is therefore welcome to see the creation of the recently announced Market Interventions Advisory Group, although we await more information from the Department for Education on its role and remit. We absolutely need to tackle the shameful levels of profiteering from some of the largest private providers that are backed by private equity. Not only is it morally wrong to profit from our children in care, the high-risk financial structures in which private equity firms operate are far from stable. “Stable homes, Built on love” sought to address some of these issues via the creation of Regional Care Co-operatives, but these cannot be seen as a silver bullet – the problems we face are systemic. This is why the ADCS produced a discussion document last year setting out a possible alternative vision. The document acknowledges the need for a more nuanced approach that recognises the different localised challenges in each area so that authorities and their partners can co-operate to meet the needs of their children and young people. Ultimately, we need a national set of rules to drive a level of transparency through the system that enables authorities to develop and operate commissioning models which are rooted in the needs of children, rather than shareholders. Amid the discussion about commissioning models and funding requirements, it needs to be remembered that the children and young people who we are finding a suitable home for are among our most vulnerable, and often with the most complex needs. This is why we need to get it right for them and be able to step in immediately where there is a risk of a provider closing at short notice. We shouldn’t wait until there is a crisis and children have nowhere to go before putting in place backstop powers for local authorities. We all have a duty, both locally and nationally, to make sure children in our care can receive the best support available that allows them to thrive, while staying connected to their family, friends and community wherever possible. |
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