Rise in children's home costs shows 'limited impact of commissioning'

Fiona Simpson
Thursday, February 20, 2020

The weekly cost of placements at independent children’s homes has increased by 40 per cent in the past six years, indicating "limited impact of local authority commissioning", experts have said.

Jonathan Stanley, NERCC manager, said the rise suggests a lack of placements for children with complex needs
Jonathan Stanley, NERCC manager, said the rise suggests a lack of placements for children with complex needs

The latest of three reports charting the price trends and costs of children’s homes, published by the National Centre for Excellence in Residential Childcare (NERCC) and Revolution Consulting, states the weekly cost of placements at private and voluntary sector settings is, on average, £3,970.

This is 21 per cent higher than reported costs in 2016 (£3,273 a week) and 40 per cent more than in 2013 (£2,841 a week). On average the cost has increased by seven per cent per year.

Local authorities had paid more than £7,000 a week for placements on about 230 occasions in the year leading up to March 2019, the report states.

This suggests commissioning of independent providers by local authority children’s services may have “limited impact” on reducing the cost of care, NERCC manager Jonathan Stanley and co-author Andrew Rome, director of Revolution Consulting, said.

However, the report also highlights that the weekly cost of local authority-run children’s homes, with 85 per cent occupancy, exceeds that of independent and voluntary-run children’s homes by more than £750 per week.

However, placements cost on average £3,110 a week for a home with a full occupancy, the report states.

Some 56 of 152 local authorities responded to a Freedom of Information request by the NERCC to say they were running in-house children’s homes. This amounts to 103 children’s homes across England.

Latest government statistics puts the number of local authorities with at least one children’s home at 105 out of 152 councils. This amounts to 418 homes.

The report adds that the increasing cost of placements may also indicate an increase in the number of looked-after children with complex needs compared with the number of suitable placements.

“There may be several drivers for this including increased complexity of needs, increased spot placement activity outside of price-controlling commissioned frameworks, and reported imbalances in demand and supply with places for the more complex children and young people being in severely short supply,” the report states.

For the first time, the NERCC asked local authorities to supply data on the added cost of education by providers.

This averaged £476 a week, making overall costs £4,446 a week – 12 per cent higher than those without education provided.

The NERCC has called on the government to address the increasing cost of children’s home placements in an upcoming review of children’s social care promised in the Conservative party manifesto.

Stanley and Rome said: “The finding that local authority homes are more expensive is a vital piece of information in the discussion of the future funding of children’s homes. Increasing independent sector prices confirm the view of various preceding studies that local authority commissioning and procurement practices have had a limited impact.

“Those involved in strategies for the care of children must engage with the complexity of the situation; simplification of the issues will not suffice.”

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