Recommendations & Conclusions
14 items
1
Conclusion
61st Report - Financial sustainability …
Acknowledged
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department) on the sustainability of children’s residential care.2 We also took evidence from the Children’s Commissioner, the Association of Directors of Children’s Services (a local government membership organisation), and …
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On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department) on the sustainability of children’s residential care.2 We also took evidence from the Children’s Commissioner, the Association of Directors of Children’s Services (a local government membership organisation), and the Children’s Homes Association (a membership organisation for providers of children’s homes).
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Government response AI summary
The government agrees with the committee's introductory statement and outlines its ongoing decisive actions to address issues in the children's social care market, including £2.4 billion for early intervention, investment in fostering, creating over 600 specialist placements, and rolling out Regional Care Co-operatives. Further information …
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HM Treasury
10
Conclusion
61st Report - Financial sustainability …
Acknowledged
In recent years, the number of children reported to Ofsted as being placed in unregistered homes at some point each year rose significantly, from 147 during 2020–21 to 982 during 2023–24.20 More recently, the Children’s Commissioner found that as at September 2024, 775 children were in unregistered accommodation—around 10% of …
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In recent years, the number of children reported to Ofsted as being placed in unregistered homes at some point each year rose significantly, from 147 during 2020–21 to 982 during 2023–24.20 More recently, the Children’s Commissioner found that as at September 2024, 775 children were in unregistered accommodation—around 10% of all children in residential care at that point on time—with the mean length of their placements longer than six months (185 days).21
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Government response AI summary
Acknowledges that placing children in illegal settings that are not inspected is unacceptable.
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HM Treasury
11
Conclusion
61st Report - Financial sustainability …
Acknowledged
Ofsted cannot routinely inspect unregistered homes and local authorities are not obliged to inform Ofsted when they place children in unregistered care, even though it is illegal for providers to operate such homes.22 In such cases there are no formal checks to ensure that children receive high quality care and …
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Ofsted cannot routinely inspect unregistered homes and local authorities are not obliged to inform Ofsted when they place children in unregistered care, even though it is illegal for providers to operate such homes.22 In such cases there are no formal checks to ensure that children receive high quality care and that they and the wider community are safe. We expressed concerns over the safety of children in unregistered places, including vulnerability to criminal gangs and to sexual exploitation and abuse, and highlighted that those in illegal homes include some children with court orders taking away their liberty. We emphasised that the current situation is completely unacceptable.23 We asked the Department to confirm its position on the number that should be placed in unregistered illegal care. It agreed that no child should be living in such a setting.24 We asked the Department how long it expects it to take to stop the use of unregistered placements. In response, it described the wider reforms to residential care, which it previously told us would take two years to take effect.25 18 Q 24 19 Qq 93-95 20 C&AG’s Report, para 1.18 21 Qq 2, 49 22 C&AG’s Report, para 1.18 23 Qq 46-49 24 Q 43 25 Qq 37, 48 10
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Government response AI summary
Acknowledges that placing children in illegal settings that are not inspected is unacceptable.
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HM Treasury
12
Conclusion
61st Report - Financial sustainability …
Acknowledged
We asked the Association of Directors of Children’s Services how it could possibly be right for any local authority to place children in homes that are not inspected. It described this as a consequence of local authorities having an absolute duty to place young people who needed a home but …
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We asked the Association of Directors of Children’s Services how it could possibly be right for any local authority to place children in homes that are not inspected. It described this as a consequence of local authorities having an absolute duty to place young people who needed a home but in some cases no regulated placement being willing to take them. This leads to unregistered placements being the “slightly less unacceptable” of two unacceptable alternatives, the other being a child not having a placement at all.26 It told us that no local authority takes the decision of using an illegal home lightly and that they engage in additional quality assurance for these placements.27
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Government response AI summary
Acknowledges that placing children in illegal settings that are not inspected is unacceptable.
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HM Treasury
13
Conclusion
61st Report - Financial sustainability …
Acknowledged
The Department described the delays in Ofsted registering providers, and how this impacted the use of illegal provision. Changes to the law requiring the registration of those providing supported accommodation for 16 and 17-year-olds, strengthening oversight, led to a significant growth in home registrations and to delays. Ofsted has set …
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The Department described the delays in Ofsted registering providers, and how this impacted the use of illegal provision. Changes to the law requiring the registration of those providing supported accommodation for 16 and 17-year-olds, strengthening oversight, led to a significant growth in home registrations and to delays. Ofsted has set a two-to-six-month target to register priority applications, including those providing emergency placements and where an urgent need has been identified, and an 18-month target for other applications.28 Meeting children’s needs
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Government response AI summary
Acknowledges that delays in Ofsted registering providers impacts the use of illegal provision.
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HM Treasury
14
Conclusion
61st Report - Financial sustainability …
Acknowledged
There are disparities in the number and types of children’s home available in different areas across the country, particularly for children with more complex needs.29 For example, there are no secure homes across all of London, while South West England has disproportionately few homes with specialist provision for children with …
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There are disparities in the number and types of children’s home available in different areas across the country, particularly for children with more complex needs.29 For example, there are no secure homes across all of London, while South West England has disproportionately few homes with specialist provision for children with mental health problems.30 These disparities can lead to children being placed in unsuitable placements with, for example, 49% of children placed in homes more than 20 miles away from their original family home.31 The Children’s Commissioner told us that inappropriate placements may lead to criminalisation, exploitation or a lack of care.32 In addition, the Association of Directors of Children’s Services told us that when children are placed far from their local authority, it makes it difficult for social workers to know and understand the support available. This negatively impacts both outcomes and costs by making it more difficult for social workers to spend time with children and build, establish and maintain relationships. When children are moved multiple times it 26 Q 5 27 Qq 6-10 28 Qq 43-44 29 Qq 39, 42 30 Q 40; C&AG’s Report, figure 9 31 C&AG’s Report, para 1.17 32 Q 3 11 is also more difficult to access support from different local authorities.33 We received written evidence highlighting that when children are placed hundreds of miles from home it can cause trauma and loss of identity, as well as significant cost.34
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Government response AI summary
Acknowledges that providers of children’s homes are not offering the places needed locally, leading to children being placed in homes that do not meet their needs.
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HM Treasury
18
Conclusion
61st Report - Financial sustainability …
Acknowledged
The Department told us that it sees reducing the need for residential care as key to addressing some of the drivers behind the increased cost. It plans to reduce the need by preventing children becoming looked after by a local authority, and then by increasing the availability of foster care, …
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The Department told us that it sees reducing the need for residential care as key to addressing some of the drivers behind the increased cost. It plans to reduce the need by preventing children becoming looked after by a local authority, and then by increasing the availability of foster care, which is eight times cheaper than residential care.47 However, over the period from March 2020 to March 2024, the number of foster care households fell by 9% when excluding fostering with friends and family, and the proportion of looked-after children in foster care decreased from 71% to 67%.48 We received written evidence from the National Association of Fostering Providers arguing that government must improve commissioning services for fostering, to introduce more variety and competition, and reduce bureaucracy.49
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Government response AI summary
Acknowledges the Department is relying on there being more foster carers, but it has yet to address the significant challenges to increase numbers.
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HM Treasury
19
Conclusion
61st Report - Financial sustainability …
Acknowledged
The Department has initiatives to increase foster carer numbers. It described, for example, launching 10 fostering recruitment hubs by 2024, covering around two thirds of local authorities.50 It explained that these hubs are boosting co-ordinated recruitment of foster carers between local authorities, and offering greater support for those becoming foster …
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The Department has initiatives to increase foster carer numbers. It described, for example, launching 10 fostering recruitment hubs by 2024, covering around two thirds of local authorities.50 It explained that these hubs are boosting co-ordinated recruitment of foster carers between local authorities, and offering greater support for those becoming foster carers.51 The Department’s early impact evaluation of the first hub did not find any significant difference between the number of foster households approved in areas supported by the hub and those not. It noted, however, that more time might be needed to see results.52 The Department told us that it is seeing numbers of new foster carers increase each month.53
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Government response AI summary
Acknowledges the Department is relying on there being more foster carers, but it has yet to address the significant challenges to increase numbers.
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HM Treasury
22
Conclusion
61st Report - Financial sustainability …
Acknowledged
In 2024–25, 84% of residential care settings registered with Ofsted, including supported accommodation and children’s homes, were owned by private providers.57 The Department told us this accounts for 74% of residential care places, because privately-owned homes tend to offer fewer places than those run by local authorities and the voluntary …
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In 2024–25, 84% of residential care settings registered with Ofsted, including supported accommodation and children’s homes, were owned by private providers.57 The Department told us this accounts for 74% of residential care places, because privately-owned homes tend to offer fewer places than those run by local authorities and the voluntary sector. It told us there are benefits to having a mix of different types of providers and that private providers have a place in the market but that it would worry about an over-dominance of a particular kind of provider.58
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Government response AI summary
Acknowledges that the Department does not fully understand the financial position of private providers.
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HM Treasury
23
Conclusion
61st Report - Financial sustainability …
Acknowledged
As local authorities manage all provider contracts, the Department does not have direct visibility of contract and financial information. It does not fully understand what constitutes a reasonable price for residential care.59 The Department acknowledged that there is room to improve transparency and price sharing to strengthen the hand of …
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As local authorities manage all provider contracts, the Department does not have direct visibility of contract and financial information. It does not fully understand what constitutes a reasonable price for residential care.59 The Department acknowledged that there is room to improve transparency and price sharing to strengthen the hand of local authorities.60 We received written evidence from Revolution Consulting Limited that there are particular issues with transparency where providers have ownership and funding structures offshore.61 Seven of the ten largest providers of children’s homes are owned by private equity. The Competition and Markets Authority has reported these types of providers as having much higher debt levels than others, which we highlighted as raising concerns about their financial 54 Q 12 55 Q 61 56 Q 73 57 C&AG’s Report, para 2.2 58 Q 80 59 C&AG’s Report, para 19 60 Q 50 61 Revolution Consulting Limited (CCH0007) 15 sustainability. 62 We asked what information the Department is collecting on the financial situation of providers and it told us that it needs legislation to enable it and local authorities to collect more data.63
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Government response AI summary
Acknowledges that the Department does not fully understand the financial position of private providers.
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HM Treasury
25
Conclusion
61st Report - Financial sustainability …
Acknowledged
The Department described the significant levels of profit for some suppliers as the reason it introduced provisions in the Children’s Wellbeing and Schools Bill for a profit cap.69 The Bill will also introduce a financial oversight scheme covering those providers deemed hardest to replace. The Department acknowledged that how it …
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The Department described the significant levels of profit for some suppliers as the reason it introduced provisions in the Children’s Wellbeing and Schools Bill for a profit cap.69 The Bill will also introduce a financial oversight scheme covering those providers deemed hardest to replace. The Department acknowledged that how it will use the scheme will be covered in further regulation.70 The Children’s Homes Association told us that the scheme would provide an early warning system that providers might fail, but that it did not consider the scheme robust enough to reduce the numbers of private-equity-owned providers.71 One existing model for such an oversight scheme is that operated in the adult social care market by the Care Quality Commission, which has a dedicated financial sustainability function which oversees around 65 of the largest and most significant care providers across England, representing around 30% of its overall care market.72 62 Qq 18, 50, 74 63 Qq 75-76 64 Qq 50, 74 65 C&AG’s Report, para 2.3 66 Qq 2, 22; C&AG’s Report, para 2.4. 67 Q 18 68 Q 50 69 Q 50 70 Q 74 71 Q 22 72 C&AG’s Report, The adult social care market in England, 25 March 2021, para 2.22 16 Co-operation between local authorities
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Government response AI summary
The Committee noted that the Department introduced provisions in the Children’s Wellbeing and Schools Bill for a profit cap and a financial oversight scheme. The government explains that the Financial Oversight Scheme will be established and will increase financial and corporate transparency among the most …
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HM Treasury
26
Conclusion
61st Report - Financial sustainability …
Acknowledged
When finding children’s homes places, local authorities must often look outside of their own area, putting them in competition with each other. Local authorities also often rely on finding places just at the time children need to be housed, rather than buying in advance. which can further increase competition and …
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When finding children’s homes places, local authorities must often look outside of their own area, putting them in competition with each other. Local authorities also often rely on finding places just at the time children need to be housed, rather than buying in advance. which can further increase competition and therefore the prices they have to pay.73 The Association of Directors of Children’s Services recognised that local authorities often compete for available beds which increases prices.74 That has contributed to the exponential increase in the cost of residential care, which almost doubled over five years to £3.1 billion in 2023–24. Over the same period the average local authority spend per child increased to £318,400, from £239,800 in 2019–20.75 We received written evidence from the County Councils Network which stated that to balance budgets and meet increased demand, councils had been forced to reduce non-statutory services including those which may help avoid children needing care.76
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Government response AI summary
The Committee noted that local authorities often compete for available beds which increases prices. The government states it agrees with the Committee's recommendation and aims to implement the model nationally by Spring 2029, backed by over £10 million of funding to support the setup of …
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HM Treasury
27
Conclusion
61st Report - Financial sustainability …
Acknowledged
The Department accepted recommendations to introduce regional commissioning made by the Competition and Markets Authority and Josh MacAlister in 2022. The MacAlister review recommended that local authorities should group together in regional organisations, taking collective responsibility for running public-sector residential care and fostering and for all commissioning.77 The Children’s Commissioner …
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The Department accepted recommendations to introduce regional commissioning made by the Competition and Markets Authority and Josh MacAlister in 2022. The MacAlister review recommended that local authorities should group together in regional organisations, taking collective responsibility for running public-sector residential care and fostering and for all commissioning.77 The Children’s Commissioner told us that regional bodies would help to reduce volatility in individual areas, with regions more able to predict the number and types of places they will need.78
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Government response AI summary
The Committee noted the Department accepted recommendations to introduce regional commissioning. The government states it agrees with the Committee's recommendation and aims to implement the model nationally by Spring 2029, backed by over £10 million of funding to support the setup of up to six …
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HM Treasury
29
Conclusion
61st Report - Financial sustainability …
Acknowledged
The Department has not confirmed how it will test the full commissioning model, and stakeholders have highlighted the scale of change and the need for a strong evidence base.80 The Children’s Homes Association told us that it was unclear how regional care co-operatives would address barriers relating to property prices, …
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The Department has not confirmed how it will test the full commissioning model, and stakeholders have highlighted the scale of change and the need for a strong evidence base.80 The Children’s Homes Association told us that it was unclear how regional care co-operatives would address barriers relating to property prices, planning permission and the workforce.81 We received written evidence from Ofsted that it is disappointed not to have been given the power to inspect regional care cooperatives and is concerned that current proposals will leave gaps in oversight.82 The Children’s Commissioner told us that regional arrangements need to be much more ambitious rather than merely asking local authorities to “play nicely together, contribute a bit of money and share intelligence”.83 The Children’s Commissioner suggested a need for joint funding pots and shared accountability among local authorities, health, justice and education.84 Local authorities have previously raised concerns about the impact of regional commissioning on their statutory responsibilities, particularly around the risk of a local authority not finding a suitable place for a child.85 80 C&AG’s Report, para 3.12 81 Q 14 82 Ofsted (CCH0004) 83 Q 14 84 Q 14 85 C&AG’s Report, para 3.12 18
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Government response AI summary
The Committee noted concerns about testing the commissioning model and highlighted barriers related to property prices, planning permission and the workforce. The government states it agrees with the Committee's recommendation and aims to implement the model nationally by Spring 2029, backed by over £10 million …
Read full response →
HM Treasury