Competition authority drops plans for children's social care market investigation

In a notice published this morning (Thursday), the CMA confirmed that it had received no evidence to support a market investigation under section 131 of the Enterprise Act 2002 in relation to the supply of children’s social care services in England, Scotland and Wales.

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The decision will come as a blow to campaigners who argue the current system for commissioning placements for looked-after children is broken, resulting in excessive profiteering by some private sector fostering and residential care providers.

The CMA is still undertaking a market study of the children’s social care sector, as opposed to an investigation. Emerging findings from the study will be published “in the coming weeks”, the authority said.

A market investigation requires the CMA to assess whether there is an “adverse effect on competition” arising out of an “identifiable feature or features” of the market. The CMA can make orders that are legally binding on businesses or require them to publish information which the authority believes would make the market work more effectively.

The CMA launched its study into the children’s social care market on 12 March. This followed a call from chair of the independent review of children’s social care Josh MacAlister to look into the placements market following complaints from within the children’s sector.

The study is considering “the extent to which a matter in relation to the supply of those services has or may have effects adverse to the interests of consumers, and to assess the extent to which steps can and should be taken to remedy, mitigate or prevent any such adverse effects”.

The market study notice invited any persons wishing to make representations, including on whether the CMA should make a market investigation, to do so in writing no later than 14 April 2021. The CMA said it received no representations, within the specified period, “to the effect that a reference under section 131 of the Act should be made in relation to the matters specified in the market study notice”.

It added that the decision “should not in any way be interpreted as the CMA finding no concerns in the sector, only that any potential concerns would not be best addressed through a market investigation”.

It added: “The CMA is planning to publish its emerging findings in the coming weeks, alongside its early thinking on potential measures to address any concerns it identifies. It will invite submissions on those findings.”

The CMA’s decision not to make a market investigation reference was welcomed by the Independent Children’s Homes Association (ICHA).

Liz Cooper, deputy chief executive of the ICHA, said: “We value their objective input into this issue and look forward to the report underlining the rationale for this decision and any recommendations that may come out of that report.”

Carolyne Willow, director of charity Article 39, said she had never been optimistic that the CMA study could bring about positive change for children, “given the body’s specific legal function and scope”.

“That’s why we are pressing on with our freedom of information fight to obtain correspondence between the CMA and the Department for Education and the chair of the care review, Josh MacAlister, for the period before the market study was launched. The CMA has confirmed such correspondence exists but it has refused to release it. Our complaint to the Information Commissioner was accepted for investigation last month,” she said.

“Our fear has always been that the CMA market study would be limited but it would relieve the care review from having to carefully consider the scale of profit-making in children’s social care, now and planned for the future, and the implications of this for the care and protection of very vulnerable children.”

Jonathan Stanley, chair of the National Centre for Excellence in Residential Child Care, added: “The CMA make it clear that this decision should not be interpreted as finding no concerns. Planning to understand the findings and to address them needs to be made now.”