CMA to examine children’s social care market
Fiona Simpson
Friday, March 12, 2021
The UK’s competitions regulator has launched an examination of children’s social care provision across England, Scotland and Wales.
The move comes following a call from Josh MacAlister, chair of England’s Independent Review of Children’s Social Care, for the Competitions and Markets Authority (CMA) to investigate complaints from within the sector about the “placements market”.
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The CMA has today (12 March) announced its study of children’s social care provision which aims to “establish why a lack of availability and increasing costs could be leading to the needs of children in care not being met”.
The study is set to examine the lack of availability and increasing costs in children’s social care provision, including children’s homes and fostering, the CMA said.
It will also investigate concerns around high prices paid by local authorities and inadequate supply of appropriate placements for children in their care.
A recent Local Government Association (LGA) study found that some independent providers of children’s residential and fostering placements are making profits of more than 20 per cent on their income.
“This could be putting pressure on the ability of local authorities to provide the appropriate accommodation and care which children need,” the regulator added.
Using its statutory market study powers, the CMA aims to obtain information to help build a better understanding of the children’s social care sector.
The study will look at:
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The supply of placements, including whether the current balance of local authority, private sector and third sector provision is working well for children and local authorities;
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Prices charged by providers and variation between prices paid for similar types of placement, with increasing prices potentially putting pressure on local authority budgets;
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The way commissioning of places is carried out, and whether local authorities could be more effective in securing appropriate placements for children;
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The regulation in the sector, and how it shapes providers’ incentives to enter and remain in the sector;
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The environment for investing in the system to ensure sufficient appropriate places are available for all children who need them in the future, and whether any measures should be taken to improve this.
Following its research, the body can issue guidance to businesses and the public, make recommendations to the industry or to the government or launch a full investigation into the market.
MacAlister has welcomed the study and said it will “work closely” with the Care Review due to an “overlap” in some areas of research but said his project will “take a broader look across children’s social care, using the evidence gathered by the CMA and others to make recommendations that span the whole system.”
He wrote in a blog published on the review’s website: “In practice this will mean sharing findings so that we benefit from the same evidence, but also more practically ensuring that requests for information are not duplicated unnecessarily.”
Andrea Coscelli, chief executive of the CMA, said: “We are concerned that some children are not getting access to the right placements due to a lack of availability in the system, and that rising prices are putting further pressure on stretched local authority budgets.
“The CMA is in a unique position to use its powers to look into this. But children’s care is not a market like any other - our clear and overriding priority will be about identifying ways children can get better care. This will include examining the concerns raised about the role of private sector providers, which has grown in the last few years, as well as the role of public and third sector providers.”
Steve Crocker, chair of the Association of Directors of Children’s Services’ standards, Performance & Inspection Policy Committee welcomed the move saying “multi-million-pound mergers” between providers and the use of private equity to drive “rapid changes in ownership, financial models and service delivery” has created “an unacceptable level of risk in the system”.
Judith Blake, chair of the LGA’s children and young people board, said “understanding the market” is vital for local authorities to cope with a predicted rise in the number of children needing placements as pandemic restrictions lift.
“We are particularly pleased the review will investigate high levels of profit making, which is particularly apparent in fast-growing groups backed by private equity or those on the stock market. Some of these groups also have considerable debt levels, which should also be looked at.
“This review will be a valuable contribution to the independent review of children’s social care. The two must consider how to support councils and independent providers to deliver the homes our children in care need, how the current market is impacting on children’s experiences, and how we can make sure children get the support they need to thrive,” she said.