Source · Select Committees · Education Committee
Recommendation 58
58
Acknowledged
Paragraph: 136
For far too long, some private providers have extracted significant profits from the public purse,...
Recommendation
For far too long, some private providers have extracted significant profits from the public purse, operating under a monopoly market. At the same time, they have not demonstrated equivalent value for taxpayer money in terms of improved outcomes for the vulnerable children they care for. The Government must consider whether The independent review of children’s social care’s recommendation to levy a 20% windfall tax on the 15 largest private children’s homes and independent fostering providers would be effective. The Government must also take a wider look at the market, and consider whether it would be more appropriate for children’s homes to be run by organisations such as not-for-profit community interest companies, and for negotiations on pricing to be undertaken nationally rather than locally.
Government Response Summary
The government shares concerns that some providers are making excessive profits and are investing £259 million of capital funding to increase the number of places in open and secure children’s homes run by local authorities. The government will present the implementation strategy which will outline the detailed response to recommendations from both the care review and CMA report shortly.
Paragraph Reference:
136
Government Response
Acknowledged
HM Government
Acknowledged
137. The care review and the CMA study into the children’s social care market have both highlighted that some private providers of children’s homes and fostering agencies have high levels of profit. 138. The CMA report gives a comprehensive overview of how the children’s residential care market functions, and areas for improvement. It includes recommendations around commissioning, reducing barriers to capacity, and improving resilience. 139. The department believes that provision of children’s social care placements can best be provided by a range of organisations in the public, voluntary and private sectors. However, both reports highlighted that some providers have high levels of profit. We share concerns that some providers are making excessive profits and are investing £259 million of capital funding across this Spending Review period to increase the number of places in open and secure children’s homes run by local authorities. 140. Neither the care review nor the CMA report however has recommended banning for- profit provision or capping profits, recognizing that local authorities in England are currently heavily reliant on private providers. Banning or capping profits would reduce private providers’ incentives to invest in new capacity and make the current placement shortages much worse. 141. The CMA report also states that regulators found no clear difference in the quality of private provision compared to LA run provision. Ofsted continue to judge the majority of children’s homes as ‘good’ or ‘outstanding’. As of 31 March 2022, 77% of all children’s homes were judged good or outstanding. 142. The CMA also recommended that central government mandates the appropriate level of collaboration in terms of market shaping and procurement and ensures there is a set of bodies to carry out these activities. Similarly, the care review recommended the introduction of Regional Care Cooperatives to plan, run and commission all care placements. 143. In the government’s initial response to the care review and CMA report in May, we announced that we would engage with the sector to develop proposals to improve oversight of the children’s social care market. We will shortly present the government’s implementation strategy which will outline the detailed response to recommendations from both these reviews.