We need interventions to address “failing” market system for children’s residential provision, ADCS President tells MPs

The President of the Association of Directors of Children’s Services (ADCS) has called for interventions to address what he describes as a “completely failing market system” for children’s residential provision.

At an Evidence Session with the Education Select committee yesterday (26 March), concerns were raised by local authority representatives on the rising demand for children’s social care, the rising cost of procuring residential accommodation from private providers, and the negative impacts of placing children out of area.

The Children’s Charities Coalition found that between 2012-2020, 75% of children’s social care costs came from residential care.

John Pearce, President of the ADCS, said: "The biggest issue with placements out of area is a lack of sufficiency and a lack of choice. We're not making proactive, positive choices to place children far away from their homes".

Stuart Ashley, Director of Children’s Services at Hampshire County Council, meanwhile warned that although provision may be high cost, it is not necessarily high quality.

He observed the challenges that can occur when children are placed out of area due to a shortage of local provision, such as the difficulties of working with agencies from out of area, and the impact on children of being away from family and friendship links.

Ashley told the committee: “If children’s services are getting better at supporting children to remain in their home when it’s safe and appropriate, those coming into care will be the most complex, so we need a national framework around foster care, giving them the right skills and tools to manage the changing needs of children we see.”

Hampshire County Council has also found that “insufficient” specialist NHS mental health services has seen high needs children pushed into mainstream social care.

The select committee hearing considered the cost for local authorities of procuring residential accommodation from private providers.

A 2022 report by the Competition and Markets Authority (CMA) said private providers were making “materially higher profits” than would be expected if the market “were functioning effectively”, while some were also carrying high levels of debt, posing risks to the stability of supply.

Dr Mark Kerr, CEO of the Children’s Homes Association, outlined barriers to the opening of children’s homes. He said: “For some of our most high-quality providers, it’s taking up to 12 to 18 months to get planning permission.

“If you combine high interest rates, the shortage of registered managers, problems with planning permission and the overall toxicity towards private providers – no one wants to open up more provision.”

He told the MPs that there is now a “perverse incentive” financially for local authorities to move children into semi-independent care too soon.

Dr Kerr told the committee: “If I was to predict anything – it would probably be that at some point in the next 1-2 years there will end up being a judicial review on a child / children in semi-independent care that should be in a regulated children’s home.

“This thorny issue of what is care and what is support will end up being a challenge for a High Court judge to decide.”

Turning to the issue of reunification, Anna Firth MP noted that research from the NSPCC and Action for Children found that more than half (56%) of councils don’t have a reunification policy or strategy.

Asked whether local authorities were focusing enough on reunification with birth families, Roger Gough, Children’s Services Spokesperson at County Councils Network (CCN), highlighted a number of practical challenges in delivering this.

He said: “Family circumstances may have changed […] their housing arrangements may no longer be fit for the purpose of having a teenager or older child coming back into their lives”.

Gough added: “There is undoubtedly a need, if you’re going to take [the reunification process] forward, for quite material support by the local authority”.

He described reunification as a “promising” area to look at, while acknowledging “significant real world constraints”.

The Education Committee meeting can be viewed here.

Lottie Winson