Out-Law News | 15 Mar 2022 | 1:59 pm | 2 min. read
The UK Competition & Markets Authority (CMA) has expressed concerns about the funding model for private providers of children’s homes after a year-long market study.
The CMA said a ‘fragmented’ system for commissioning children’s care services meant there was a shortage of placements of the right kind and in the right places. It said children are not consistently getting access to care and accommodation that meets their needs.
In its final report (134 page / 1.26MB PDF), the CMA raised concerns about children being placed far from ‘home’ and being separated from siblings, and about difficulties in finding placements for those with more complex needs.
The market study, which began in March 2021, found the largest private providers of placements are making materially higher profits, and charging materially higher prices, than the CMA would expect if this market were functioning effectively.
The report said the best way to address these high levels of profit and the capacity shortfall was to address the common causes of both problems – the weak position of local authority commissioners
when purchasing placements and unnecessary barriers to the creation of new provision.
The study also found some of the largest private providers of children’s homes are carrying very high levels of debt, creating a risk that disorderly failure of highly leveraged firms could disrupt the placements of children in care.
The CMA said that local authorities could save money on fostering services by bringing them in-house. It recommended that pilots are run in certain local authority areas to bring more fostering services in-house.
In setting largely similar recommendations for the UK, Scottish and Welsh governments, the CMA said commissioning of children’s home and foster services could be improved by having some functions performed via collaborative bodies, providing additional national support and supporting local authority initiatives to provide more in-house foster care.
It said barriers to providers creating and maintaining provision could be reduced by reviewing regulatory and planning requirements, and supporting the recruitment and retention of care staff and foster carers. The CMA recommended an assessment of the likely future need for foster carers and said the UK government should take the lead in implementing an effective strategy to improve recruitment and retention of foster carers.
The report also recommended an ‘effective’ regime of market oversight and contingency planning for children’s home providers to reduce the risk of children experiencing negative effects from providers exiting the market in a disorderly way.
Competition law expert Giles Warrington of Pinsent Masons said: “The government should not ignore the recommendations coming from the CMA and must find a way to work with children’s care providers to seek solutions to the issues highlighted.”
“Sustainable funding is needed to ensure that providers can meet the varying and complex needs of children under their care. We cannot underestimate the importance of the services they are providing, and, at present, some are having to do this against incredibly challenging financial backdrops. Collaborative solutions need to be found,” Warrington said.
The CMA considered but ultimately rejected recommending limits on ‘for-profit’ provision and the adoption of price regulation.
It said increased local authority foster provision should be encouraged. However, it recognised the need for a strong independent fostering sector to ensure quality of care across the full range of needs.
Warrington said that while the CMA’s recommendations are not binding, they are likely to carry some weight in the ongoing government policy processes in respect of children’s social care.