CMA report of “dysfunctional” children’s social care ‘market’ – our response
For years, children and young people with experience of the care system have struggled to understand why they have to be placed so far away from home, why they can’t be placed with a sibling, or why their placement costs so much given how much care and support they feel they receive in reality.
The typical response to challenges like these has been to point at the ‘marketplace’ that provides placements for children’s social care. The mix of private, voluntary and statutory providers who run fostering agencies and children’s homes.
There has been a sense that this system of providing placements is broken. A sense that if we fixed the market, we could start to solve the very real problems children face when they are far from friends and family in placements that aren’t right for them and leave them feeling lonely and isolated.
And so as the government launched its independent review into children’s social care, the chair – Josh MacAlister – wrote to the Competition and Markets Authority (CMA) to ask them to investigate this market in more detail to see what could be done to improve it.
Today, the CMA has published their report [i] and they’re pretty clear that this “market” isn’t working.
Their press release claims we have “sleepwalked into a dysfunctional children’s social care market” that leaves England’s local authorities “hamstrung in their efforts to find suitable and affordable placements”.[ii]
The CMA cites three important ways in which things are not working. Firstly, the placements children need are not in the right places, at the right time, with the right kinds of support. Essentially the market isn’t providing what children need.
Secondly, the CMA are concerned about the profits being made by some of the biggest providers. Based on their data, they found that for the larger providers of children’s homes, more than one pound in every five (22.6%) spent goes straight into providers’ pockets. This is compared to less than one pound in ten (9.3%) as the average profit margin in the UK for a business that isn’t in financial services. [iii]
Thirdly, they are concerned about debt. Some of the largest providers have significant debts on their balance sheets. If these providers were to collapse overnight, children could lose their homes without warning and local authorities would be left to pick up the pieces at great expense.
This is an odd report to read. It’s odd because as you read about ‘profit margins’, market ‘oversight and contingency planning’ and commissioning through ‘collaborative bodies’, it’s all too easy to lose sight of the fact that this report is about the homes of some of the most vulnerable young people in the country.
And yet, despite the technical economics and the financial language, you cannot help but feel that their analysis is correct – these things certainly are a problem. They are a sign that the system underlying children’s social care is not fit for purpose.
And so, what do the CMA recommend?
Well, they think there needs to be national and regional structures to commission placements and to get better value for money for local authorities. They also think that more foster care, in particular, could be brought in-house and delivered directly by local authorities.
They also feel the current system has too many barriers for those looking to set up new, or additional children’s homes – both in terms of meeting the children’s homes regulations and the current planning system.
Finally, to stop the sudden collapse of companies, the CMA suggests an “effective regime of market oversight and contingency planning”.
But is the prescription the right one, based on the diagnosis?
Given the scale of the problems outlined by the CMA and the consequences of this ongoing failure for children and young people, these recommendations feel a little weak.
We agree that more regional and national coordination of placements is sorely needed. But it’s frustrating that the CMA makes no recommendations to reduce the level of profits large providers are making.
The recommendations to reduce bureaucracy and alter the children’s homes regulations to make it easier for new residential homes to be opened are of real concern.
The children’s homes regulations are based on the best interests of children and have been informed by a long history of serious case reviews where residential homes have failed the children they were supposed to protect and care for. Moves to water them down just to make things easier for profit-making companies are wrongheaded.
The recommendations to prevent the collapse of indebted providers just feel like paper-pushing.
And so where do we go from here?
The CMA says that it is for Government to decide whether or not profit-making in children’s social care is acceptable. But it just cannot be right that we have a system where such huge profits are made on the back of some of the most vulnerable children in the country.
And with that in mind, the long-term outcome of any reform must be a system that allows local authorities themselves to re-enter the provision of children’s residential homes so that, over time, we can reduce reliance on the private sector.
The CMA was never going to suggest a sweeping reform of children’s social care – it’s not their expert subject. But the Independent Review of Children’s Social Care and the Department for Education can. It’s our hope that they read today’s report, accept the analysis of the problem, but ultimately choose to be much more radical in their approach to fixing it.
[ii] https://www.gov.uk/government/news/action-needed-on-dysfunctional-children-s-social-care-market