Government unveils reforms intended to rebalance children’s social care system in favour of early intervention and crack down on profiteering

The reforms will also give new powers to Ofsted to crack down on “exploitative” children's care providers and introduce a “backstop” law to put a limit on the profit providers can make.

According to analysis by the Local Government Association (LGA), there are now more than 1,500 children in placements each costing the equivalent of over £0.5 million every year, while the largest 15 private providers make an average of 23% profit.

The new rules aim to challenge profiteering by requiring key placement providers to share their finances with the government. Where providers do not voluntarily put an end to profiteering, a “backstop” law will put a limit on the profit providers can make, the Department for Education said.

The DfE noted: “Increasing financial transparency will ensure the providers that have the biggest impact on the market don’t unexpectedly go under and leave children without a home.”

The Government also revealed plans to introduce a "community-based approach" to provision for children that can be deprived of their liberty, with the creation of new forms of provision for children with complex needs.

The DfE said: "We will amend primary legislation to provide a statutory framework for LAs seeking to place children in a new type of accommodation, where they may be deprived of their liberty, but where the accommodation is not explicitly designed according to the same design specification as current Secure Children’s Homes.

"For some children, and for a limited period, accommodation under the Secure Children’s Home model will be most suitable. Other children would best be supported in provision that is able to respond more flexibly to their changing and fluctuating needs (i.e. in provision that can reduce restrictions at times when it is safe for the child), as well as provide the crucial therapeutic care and, when necessary, restriction.

"This new legislation will ensure that, where a secure children’s home cannot meet a child’s needs, there are clear criteria for when children may need to be deprived of liberty and mandatory review points to ensure that no child is deprived of liberty for longer than is required to keep them safe."

Other key measures to be announced today include:

A new duty on parents where if their child is subject to a child protection enquiry, or on a child protection plan, they will need local authority consent to home educate that child.
The requirement for every council to have ‘multi-agency’ child safeguarding teams, involving children’s schools and teachers, stopping children from “falling through the cracks”.
The requirement for all local authorities to offer the Staying Close programme – a package of support which enables care leavers to find and keep accommodation, alongside access to practical and emotional help, up to the age of 21, ending the “cliff-edge” of support many experience at 18. 
The introduction of a consistent “child identifier”, making sure information can be shared between professionals so they can intervene before issues escalate.
New powers for Ofsted to investigate multiple homes being run by the same company.

Bridget Phillipson, Education Secretary, 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 want to break down the barriers to opportunity and end the cycle of crisis through ambitious reforms to give vulnerable children the best life chances – because none of us thrive until all of us do.

“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.”

Family Rights Group commended the Government on its “bold intention” to mandate local authorities to give families the opportunity to come up with solutions before issuing care proceedings.

However, it advised that “for this radical ambition to be achieved, the offer to families must be of a family-led, robustly evaluated approach that has been tried and tested in the UK and abroad, namely family group conferences.

“They operate to clear standards and reduce the likelihood of a child entering or remaining in care. For children who cannot remain at home, they enable prospective carers to be identified from within the family.”

Andy Smith, President of the Association of Directors of Children’s Services (ADCS), said: “The suite of measures aimed at addressing excessive profiteering from the care of vulnerable children and young people and more support on creating, as well as commissioning, the right placements in the right place at the right time is helpful. 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.”

He added: “[…] The results of various pilots and pathfinders trialling some of the measures outlined here as well as further detail to better understand how new policies will translate into practice is needed to understand the implications for children’s services and children’s lives, such as the unique child identifier. Similarly, new powers for Ofsted to fine providers must link up with other reforms, including the work of a national task and finish group looking at joint solutions for the small cohort of children and young people with very complex needs that we simply cannot find placements for amongst registered providers. We will work with the government, and others, on developing the details of new policies and measures as well as implementation and delivery.”

Cllr Roger Gough, Children’s Spokesperson for the County Councils Network (CCN) said: “The CCN strongly welcomes the government’s intention to reform children’s social care. Over a number of years our organisation has highlighted the need for the system to address market dysfunction, rebalance the system towards early help rather than late intervention, and – most importantly – improve the experiences and outcomes of the country’s most vulnerable children and families in contact with the care system.

“The government’s intention to intervene more proactively in the children’s social care placement market is particularly important. Our recent analysis showed that, unchecked, councils could be spending £12bn a year on children in care by 2030, with local authorities having to operate in a false economy of increasingly paying astronomical sums for placements and less on preventative services. Whilst it is recognised the private sector is an important partner in delivering these goals, the clear signal that excess profiteering at the expense of threadbare local authority budgets will not be tolerated is necessary and long overdue."

Cllr Gough also said it was hoped that the Government's announcement would be a first step towards embedding the recommendations of Josh McAlister’s Independent Review of Children’s Social Care into policy and practice, "while looking to go even further".

He added: "CCN stands ready to support this agenda in any way it can, building on the recommendations of our recent report with IMPOWER on reforming children’s placement commissioning.

“However, it is vital that reforms are supported by the appropriate resources to ensure that their ambition can be delivered. While we welcome the recent increase of £600m for adult and children’s social care, our analysis suggests this additional funding will most likely be entirely consumed the increases in National Living Wage and National Insurance Contributions for employers. That’s why we have called for a further increase in funding through the social care grant to help meet immediate demand pressures next year.”

Children’s Commissioner Dame Rachel de Souza warned that children are paying the price of a “broken” social care system that allows profits over protection.

She said: “They are enduring things no child should ever have to: living in isolation in illegal children’s homes, often at enormous cost, deprived of their liberty without due process, often surrounded by security guards instead of receiving love and care.”

Lottie Winson