Recommendation 23

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