Competitions watchdog suggests regulation of children's placements is 'outdated'

Published by Professional Social Work magazine, 11 November, 2021

The competition’s watchdog has suggested “outdated” aspects of regulation governing care placements for children need reviewing.

It’s one of a range of early findings in an interim report into the supply of children’s social care placements in the UK published by the Competition & Markets Authority (CMA).

Though the CMA stressed its final analysis due out next year may differ, the initial findings are likely to raise alarm bells among children’s rights campaigners.

The CMA launched its investigation in March in response to concern about the high cost of placements by private providers and a lack of suitable placements.

With private firms charging thousands of pounds a week and some children being placed far from their homes, reform is widely believed to be needed.

In its interim report, the watchdog said it is concerned that “some aspects of the regulatory regime may be unwittingly creating barriers to providers”.

It added: “The overall regulatory framework has been in place for more than 20 years during which time the market has changed very significantly… It would therefore not be surprising if over this period some aspects of regulation have become outdated and inappropriate to the market as it currently exists.

“To address this, we are considering potential recommendations around the reviewing of existing regulations that apply to providers of children’s social care placements.”

The CMA said there is clearly a lack of placements across the country. This has fuelled prices and profits “above the levels we would expect in a well-functioning market”.

However, it suggests the problem is being caused by “factors that are acting to deter new provision” – one of which is the regulatory landscape.

It said: “Both local authorities and providers agreed that regulatory standards must be kept high and that the current overall level of regulation is not excessive.

“However, they also told us that aspects of the current regulatory framework and inspection processes can adversely affect the ability of providers to expand their services and their incentives to supply placements for children with complex needs, without necessarily helping to drive better outcomes. These issues were raised consistently with regards to children’s homes and to a far lesser degree in relation to foster care.

The CMA said it did not, at this stage, note any difference in the quality of provision between private providers and local authority-run placements.

Moreover, its analysis suggested that prices for placements at private children’s homes “are typically not higher than the cost of providing placements in-house”.

The watchdog did not find prices and quality of provision by shareholder-owned businesses “any worse” than other independent providers.

However, it did find the risk of such companies going bust due to high levels of debt “one that needs to be taken seriously”.

While sharing concerns over prices charged by some providers, the CMA did not believe a cap on profit was the answer.

It said this failed to address the “underlying problem of insufficient supply of appropriate placements”.

Josh MacAlister, chair of England’s Independent Review into Children’s Social Care, was among those calling for an investigation into the marketplace in care placements for children earlier this year.

The CMA is calling for feedback to its analysis by 12 November by email to children@cma.gov.uk

The full interim report can be read here