Written evidence submitted by Children England


Education Select Committee inquiry on children’s homes

Children England submission



Children England is the membership body for children’s charities, founded in 1942 as The Constituent Societies of the National Council of Associated Children’s Homes. For nearly 80 years we have had an overview and detailed understanding of the services, conditions and systems affecting care for children, and we have a body of significant works over the last decade in particular that we believe could be of interest to the Committee in its inquiry into children’s homes.


Children England’s submission will deal with the sufficiency of places in children’s homes, and the location of children’s homes, to the extent that these issues are affected by the current commissioning system. It will also touch on the use of unregulated provision where this is a related issue. Our knowledge is drawn from our membership, many of which organisations are involved in the provision of care for children and supporting services, and from partnerships beyond our membership including academics, local government experts and social work professionals.





Insufficiency of places in children’s homes, including of the type and in the location that children need, is a widely acknowledged problem. It cannot be addressed on a local or regional level because the situation arises from a lack of national commissioning and oversight. Whilst the responsibility to place children in appropriate homes when their family cannot care for them sits clearly with local authorities, no single body or organisation has responsibility to ensure those homes exist. Not only does this lack of national commissioning activity leave local authorities reliant on individual providers in the short term, it leaves the country without any strategy to ensure that capacity is planned to meet need in the longer term. That is because residential care for children is a market, and one which lacks any of the features and controls needed to function effectively for its consumers - children.


A particular feature of this market, based on ownership of relatively expensive fixed assets - buildings - is that children’s homes are more profitable in areas where property is cheaper. In a trend that is logical for the market but clearly illogical for children, there are now more children’s homes in the North, for example, than in London and the South East, relative to numbers of children who need them. Thus a child from London who needs a place in a children’s home is more likely to be placed in a home miles - sometimes several hours’ travel - away from their original home.


Lack of national planning also means that children’s homes with specialisms are not distributed strategically, but left to the market. Many independent providers offer specialist care with appropriately trained staff, but local authorities whose children need those placements have no influence over the location or quantity of them. This results in local authorities having to weigh up the necessity of a specialist placement with its distance from the child’s home area and the price charged for that placement by the provider. This decision-making process is far from putting the child’s best interests first, especially in a time of constrained budgets. Establishing a children’s home is relatively expensive, requiring investment in buildings, quality standards and a relatively high ratio of staff to children amongst other costs. These high barriers to entry mean there are always likely to be relatively few providers, and therefore a scarce supply of placements, as well as a likelihood of mergers and takeovers leading to even fewer providers with more price-setting power.

Providers in this market, whose customers - local authorities - are competing for a scarce supply of any given type of placement, can and are incentivised to inflate their prices. This is especially true where specialised care is being provided for children with higher needs. Local authorities cannot choose not to buy the placement, and it is the child who suffers the consequence of being placed in the wrong sort of home or the right sort of home in an area distant from their family and other support networks. This, in turn, will affect how settled and stable children can become in their children’s home, and where local authorities cannot afford to make the optimum placement for a child, placement breakdown and repeated moves from one home to another are much more likely.


The use of unregulated accommodation by local authorities is another symptom of the dysfunctional market: local authorities would prefer to place children in regulated homes that guarantee proper ‘care’ for each child, but are forced by high prices and lack of appropriate provision in regulated care to rely for some placements on unregulated accommodation which may be cheaper and/or closer to the child’s home area. The fact that under 16s, for whom this ‘semi-independent’ accommodation was never intended, are also being placed there, indicates how desperate the situation is for some local authorities. Government has now legislated to ban the use of unregulated homes for under-16s but this alone will not ensure that local authorities have better alternatives. Children England supports the extension of the ban to all children under 18, and believes that a national commissioning strategy and central investment is essential to ensure we have safe, caring homes for any child who needs one.


We have described the inherent unsustainability of this ‘monopsony market’ in Kathy Evans’ paper Correcting a History of Market Failure, which we encourage the committee to read for the history and economics of children’s homes provision. The most important conclusion for those of us who want to make children’s homes work better for children is that the market itself will not and cannot ensure the homes children need - indeed it is inherently precarious, and all recent reports indicate that the level of profit being made is becoming unbearable for local government budgets, as the Local Government Association reports. It is clearly undesirable and irresponsible to encourage or permit providers to squeeze every penny of profit out of a race to the bottom, which will inevitably damage the quality of care children receive. The risk to children of independent providers, which now make up almost three quarters of provision, closing or otherwise withdrawing their services is as profound as the risk of local authorities, their ‘parent’, effectively being driven to bankruptcy.


The current investigation by the Competition and Markets Authority, while welcome, is not sufficient to find the solutions.


As Kathy said in Correcting a History,

“There is lack of effective strategic oversight in the market for residential care because it was never decisively designed to be a competitive market, and doesn’t work at all well as one. The responsibility for attempting to reverse, ameliorate and prevent the many deep-rooted problems and failures in this ‘market’ from here onwards simply cannot, therefore, be parked solely at the doors and budgets of its customers. This structurally imperfect, failing market requires decisive management and a cogent ‘design’ for how it should operate better, more sustainably and more reliably, long into the future.”


Whole-system change is needed. It is clear that a national commissioning system is essential, to ensure a sufficiency of homes and placements across the country, and to ensure the types, sizes, specialisms and workforce skill sets children need are deployed in the right areas. A national body with responsibility for planning, commissioning and investing in children’s homes provision should be created. Corporate parents - as with birth families - should be free to make placement decisions prioritising each child’s best interests. Children’s own view of their care should be the measurement by which we judge any placement a success.


Some members of the Committee may be familiar with Children England’s paper Children in Charge, which proposes the elements of a new system, including a National Care Bank which pays for every child’s placement and leaves local authorities ‘price-blind’ when looking for the best home for each child. The child, supported by their social worker, would be the driving force in placement decisions and evaluation, and it would be their views that the Care Bank’s spending decisions would be based on. This would address a much-lacking emphasis on the voice of the child in children’s homes provision, including a trend towards investment in homes children found to be ‘good’ and away from homes children found to be unsuitable for their needs.


Importantly, the Care Bank would act as a single dynamic purchasing system for all care - including fostering and adoption as well as residential care - removing the hierarchy in which residential care is viewed as the undesirable last resort because of relative cost and perceived impermanency. Children would be supported to choose what is right for them, irrespective of cost or perception.


Children England would be very happy to provide more information and explanation of our insights to the Committee, as well as discussing how our proposals for reforming the care system could be interrogated, developed or refined.


April 2021