Crackdown on profiteering from children's social care in reforms hailed as biggest in a generation
A “crackdown” on profiteering by private providers of children’s social care heads up reforms of the system hailed by the government as the “biggest overhaul in a generation”.
The announcement comes with a pledge of more investment on preventative services in the forthcoming Local Government Finance Settlement.
Other measures announced include:
- Giving families a legal right to be involved in family group decision making models such as Family Group Conferencing
- Creation of a ‘Single Unique Identifier’ post in local areas to promote data sharing across agencies
- Ensuring education settings are included in local safeguarding arrangements
- A new duty for local authorities to establish multi-agency child protection teams
- Stricter rules on home tuition
- A new framework for how children deprived of their liberty can be accommodated
- Planned new regulations to give local authorities control over agency workers
Education Bridget Phillipson said: “Our care system has suffered from years of drift and neglect. It’s bankrupting councils, letting families down, and above all, leaving too many children feeling forgotten, powerless and invisible.
“We will crack down on care providers making excessive profit, tackle unregistered and unsafe provision and ensure earlier intervention to keep families together and help children to thrive.”
Profiteering
The problem
A lack of places has resulted in massive private sector involvement in children’s social care so that it now owns 83 per cent of children’s homes in England.
Some of these are shareholder-owned with the biggest 15 private providers making on average 23 per cent in profit.
Average fees for a child placement are around £5,000 a week, though the number of placements costing £10,000 or more a week has risen by 1,150 per cent over the last five years with some councils paying £1 million a year for a single place in a children's home.
This has contributed to spending on children’s social care rising from £3.1 billion in 2009/10 to £7 billion last year.
In 2022, the Competition and Markets Authority (CMA) warned the UK had “sleepwalked into a dysfunctional children’s social care market” where a shortage of places enables private providers to charge excessive fees.
More recently, the County Councils Network warned spending on looked after children will rise to £12 billion a year and the number of children in placements will double by the end of the decade without action.
Private providers are more likely to set up homes in low cost areas to maximise their profit. A quarter of children’s homes are in the north west of England while only six per cent are in London, seven per cent in the south west and eight per cent in the east.
As a result, a third of children are placed more than 20 miles from their local area. Research shows this worsens outcomes for children, placements are more unstable and children more vulnerable with family, friendships and educational connections severed.
Lack of enough places has also fuelled a rise in unregistered places described by the government as often “wholly inappropriate for vulnerable children”.
Ofsted figures show there were 887 settings in 2023/24 that should have been registered, but the government believes there are more.
The CMA has also expressed concerns about the financial stability of some providers which, despite raking in huge revenues, can carry heavy debt.
An analysis by PSW earlier this year found the three biggest providers, which own more than a tenth of children’s homes in England, made combined losses of £183.9 million last year.
The three companies – CareTech, Keys Group and Aspris Holdco – paid their directors combined salaries of nearly £5 million.
The solution
A raft of measures are being proposed, backed by a warning that a cap on profit will be introduced if these do not “rebalance the market”.
The government proposes to “fast-track” non-profit providers by setting up new funding mechanisms to support them to enter the sector. A requirement for providers to be owned and residing in the UK will also be considered to stop big businesses syphoning public money off-shore.
Greater government oversight of the market – something recommended by the CMA to mitigate the risk of firms suddenly going bust – will be introduced.
This will operate similar to mechanisms introduced by the Care Quality Commission after care home Southern Cross went into bankruptcy in 2011.
Ofsted will have new powers to hold private providers to account. They will be able to demand improvement plans to resolve weaknesses in provision.
The watchdog will also be able to fine those that fail to improve, or fail to register and restrict their growth.
The government, however, does not plan to ban private firms from the sector in England, as has been done in Wales, something called for by campaigners.
Mandating FGDM
The problem
Research by the Foundations - What Works Centre for Children and Families finds children referred to family group decision making programmes are 13 per cent less likely to be subject to care proceedings. They are also nine per cent less likely to be in care a year later.
Not all local authorities, however, routinely offer this, the most well-known of which is Family Group Conferencing. As a result, opportunities to explore the strengths of family and wider community networks can be lost, says the government.
The solution
The government plans to introduce legislation to ensure every local authority must offer FGDM. It acknowledges doing so will require additional investment, including recruitment and training of staff.
Single Unique Identifier
The problem
Poor information sharing is identified in serious case reviews time and time again. It also leads to families having to repeat the same information to different professionals.
Confusion exists around the law for when to share information, particularly in cases of lesser child protection concerns.
The solution
The government proposes creating a Single Unique Identifier post in every area to link information in a bid to reduce the time professionals spend having to chase this. It aims to ensure all agencies involved have “the full picture”.
A new duty to provide “absolute clarity” is also proposed to create “culture change around information sharing”.
Multi agency working
The problem
Lack of multi-agency working has been a regular observation in serious child protection cases.
A review into the deaths of Arthur Labinjo-Hughes, aged six, and Star Hobson, aged 16 months, both of whom were known to services, underlined this in 2022.
It said multi-agency arrangements for protecting children “are more fractured and fragmented” than they should be.
It called for multi-agency child protection units to be set up staffed by professionals including social workers with the “highest levels of knowledge and skills in child protection work”.
The solution
The government plans to create a new legal duty to establish multi-agency child protection teams in every area.
They will be based on the Families First for Children Pathfinders currently being piloted in ten areas.
The government also plans to change legislation to ensure schools, colleges and other education settings where children spend much of their time are a statutory safeguarding partner.
Home education
The problem
The court case of ten-year-old Sara Sharif who was withdrawn from school to be homeschooled shortly before she was found dead in her house has shocked the nation.
Home schooling has risen in recent years, particularly in the wake of Covid. Parents in England do not currently need consent to home educate.
The solution
The government is proposing to make this mandatory when a child is subject to a section 47 investigation or on a child protection plan.
Local authorities have already been told to create a ‘Child not in School’ register.
Extending corporate parenting
The problem
Only local authorities have corporate parenting responsibilities in England, but there are other agencies that have a key role in the wellbeing of children.
The solution
The government is proposing to extend corporate parenting responsibilities to other government departments and public bodies to bring about a “culture change” in supporting children in care and care leavers. This is already the case in Scotland.
However, children’s rights campaigner Terry Galloway said: “The only way an extension of corporate parenting is going to work is in conjunction with a protected characteristic for care experienced people because it provides the mechanism to hear the voice of care experienced people.”
Making care experience a protected characteristic alongside others such as race and sexuality in the Equality Act was recommended by the Independent Review of Children’s Social Care.
It was ruled out by the previous government as potentially stigmatising.
Support for care leavers
The problem
According to children's charity Become, care leavers are nine times more likely to face homelessness than their peers. More than half of children in care had a criminal conviction by the age of 24, compared to 13 per cent of their peers. Studies suggest care experienced people are seven to ten times more likely to end up in prison.
Looked after children often experience a 'cliff-edge' when they leave care with support ending abruptly. They are left to live and manage their lives on their own at a time when other young people still benefit from the safety net of parental support.
The solution
To help plug the lack of assistance care leavers get compared to other young people, the government is proposing mandatory support.
This will be delivered through an entitlement to the Staying Close programme, a third sector collaboration which has improved outcomes and is currently offered in 47 local authorities.
Community-based approach to children deprived of liberty
The problem
A "steep" rise in the number of vulnerable children with complex needs deprived of their liberty has seen an increase in their placement in unregistered or unsuitable accommodation.
The solution
The government plans to create a new framework for local authorities to follow
It will pilot new community-based treatment and care bringing together health, social care, justice and education professionals based on evidence-based models drawing on new research to be published next year.
Agency workers
The problem
Nearly one in five children’s social workers in England was employed via an agency last year, a record high and six per cent rise on the previous year, resulting in spiralling costs and lack of continuity for families. Workers are attracted to agencies for a variety of reasons including better pay, greater flexibility and to escape toxic or stressful work environments.
The solution
The government has already introduced a raft of measures to tackle this, including plans for a regional price cap next year.
It is also proposing to extend this to other professionals in the children’s social care workforce. New rules will give local authorities better accountability over agency workers’ pay, costs and quality assurance.
Virtual school heads
These were created to champion children in care and tackle persistently lower education outcomes.
The government is proposing extending this to children in kinship care and is to consider extending it to children leaving custody.
Reaction
BASW England said: "We support measures to limit profiteering by private providers, improve financial transparency, and strengthen not-for-profit provision. The introduction of multi-agency safeguarding teams and extending Staying Close for care leavers are also positive developments.
"It is right that every area in England should provide the same level of supportive and welcoming family help services, with multi-agency working at the forefront of this work. However, concerns remain about how roles will be defined within these teams. The social work role is crucial, highly skilled, and must not be diluted by sharing safeguarding-specific tasks with professionals who have limited or no background in this area."
It added: "These reforms must be matched with significant investment in the social care workforce. Social workers are already stretched thin, managing heavy caseloads and facing staff shortages. Without sufficient resources, these ambitious plans risk falling short."
Anna Feuchtwang, CEO of the National Children’s Bureau, said: "To achieve these goals, it is crucial that this ambitious rhetoric is supported by adequate funding. This will ensure that local authorities and non-profit partners have the capacity and support they need to step into this space.
"Additionally, the necessary investment in earlier help must sit alongside a better approach to providing needs-led outcome-focused care in specialist settings."
Andy Smith, president of the Association of Directors of Children’s Services, said: “We know some of the largest private equity backed providers carry very high levels of debt which risks children effectively losing their home overnight if a provider fails.
“Again, more financial accountability and a focus on governance is welcome as is the expansion of corporate parenting responsibilities and extra support for care experienced people.”
Adoption UK’s chief executive Emily Frith said: “This document shows that the government is taking its responsibility towards children and families seriously.
“However, with an Adoption Strategy that is overdue for review, these proposals needed to inspire confidence that the government has a robust plan for all care experienced people, including those who are adopted.”
Children in care and care leavers charity Become’s chief executive Katharine Sacks-Jones said: “With almost half of children in care now living out of area and children still being placed in unregistered accommodation – even caravans, barges and tents – we're pleased the government plans to tackle this and the profiteering that has prioritised shareholders over young people’s lives.”
Analysis
Though billed as the “biggest overhaul in a generation” of children’s social care, today’s announcement isn’t quite that.
For a start, there’s no sign of the £2.6 billion funding to “reset” the system recommended by the Independent Review of Children’s Social Care (IRCSC) two years ago.
But it is a start – and the policy statement came with a tantalising promise of more funding in the forthcoming Local Government Finance Settlement.
One thing is for sure – and is underlined in the policy paper: the case for early intervention and preventative work made by BASW and others has been won.
The “crackdown” on profiteering in children’s social care is part of a wider recognition and rejection of a cycle that has seen more children coming into care at greater cost.
Private sector profiteering capitalising on this, fuelled by a lack of social care places, has attracted much outrage in recent years, and is draining local authority funds into shareholders’ pockets.
This growing financial cost has focused the government’s mind on the need to do everything possible to keep children out of the care system by providing earlier support.
The IRCSC’s final report called for a “revolution in family help” backed by £2 billion over five years and £1 billion a year thereafter in community settings.
Its author Josh MacAlister, who is now a Labour MP, said this would save money in the long run.
But the previous government committed only £200 million over two years and a series of pathfinder pilots to test new systems, effectively kicking systemic reform into the long grass.
And yet, despite the slow pace, government policy has been steering towards early intervention, as seen with the rollout of family hubs across the country.
To fully realise this ambition costs money and the government has repeatedly emphasised the financial blackhole at Westminster.
However, it has also expressed a commitment to fix children’s social care and the recent introduction of the Mental Health Bill shows a drive to get things done.
Against this backdrop, there might be some hope that a real reset of children’s social care is coming, not least because it makes financial sense in the long term.