Sector split over Care Review’s comments on residential care

In the review’s first major publication, chair Josh MacAlister raised concerns over a handful of private companies “profiteering” from children’s homes.

Some 41 per cent of children’s homes are run by private companies, the Case for Change stated, adding that “the average reported price per child for a place in an independent children’s home in England in 2018/19 was around £4,000 per week, representing an increase of 40 per cent on prices in 2012/13”.

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According to the report, across the largest twenty providers this amounts to a profit estimated at £265m.

“The review is concerned about the cost, profit, and financial health of providers and the impact of the current system on children. We want a pragmatic re-think given the urgent problems, the complexity of the issues and the fragility of the current system,” MacAlister wrote.

Following previous comments made by the review chair on the issue, the Competition and Markets Authority (CMA) is investigating the commissioning of children’s residential care and is due to publish a report in the autumn which will feed into the review.

The Independent Children’s Home Association (ICHA) has criticised the review’s comments. 

In its response to the Case for Change, it states: “The current sufficiency issues reflect, amongst other factors, the historical location of homes, changes in regulation, the changing face of children’s need and a significant decrease in social care funding. As a result, local authorities have become more focused on local placements at a decreased price. This has in turn fed into a feeding frenzy of unfounded blame regarding cost, and a subsequent polarising of public and independent services.”

It accuses the review of wanting to “increase this divide without paying heed to facts”.

“ICHA therefore calls on the Care Review to give equal weight to all parties, recognising the wealth of expertise and knowledge across the provider spectrum. We believe that this can best be done by engaging in respectful dialogue and the use of well-researched evidence,” it states.

Andrew Rome, director at Revolution Consulting, whose research is cited in the Case for Change, adds in the consultancies response that discussions around the review are entrenched in “emotive” and “divisive” language such as “‘excess profit’, ‘indefensible profit’, ‘dysfunctional market’, ‘broken system’, ‘profit-making elimination’”.

“The language is divisive, and all the more surprising as the CMA review has yet to report on its very factual-based study,” he states.

“I’m therefore calling on the review to reconsider its approach to discussions of the sector. The new children’s commissioner has helpfully described how the provider sector has some of the most excellent practice and knows how to look after society's most complex children. “Certainly any poor practice also needs to be eliminated, and our regulation and inspection regime therefore needs to be dispassionately analysed by the review, but extrapolation of the experience of a minority onto the whole risks losing the large majority of good and outstanding people, practice and services,” he adds.

However, in its response to the Case for Change, the Association of Directors of Children’s Services, says it “welcomes the review’s recognition of the challenges in the ‘market of care’ and would support a pragmatic re-think”.

“The current system is a placement monopsony whereby local authorities are the only purchaser and due to demand, providers are able to pick and choose which referrals they accept and at what price. Introduction of legislation which prevents for-profit operations or as a minimum caps the level of fees chargeable in this area, bringing fostering and residential services in line with the arrangements for adoption services and also fostering in Scotland would be welcome,” it states.

• CYP Now will publish a series of articles focusing on the key themes raised in sector responses to the Case for Change.