Children’s Wellbeing and Schools Bill

Committee (5th Day) (Continued)

Amendment 134A

134A: After Clause 11, insert the following new Clause— “Children’s homes: transparency of costAll local authorities must annually publish the prices they pay for private placements in children’s homes.”Member's explanatory statement This intends to enhance transparency and enable local authorities to negotiate effectively with providers to secure the best placement for children at the lowest possible cost. It implements a commitment in the Government’s Keeping Children Safe, Helping Families Thrive policy paper.

My Lords, I rise to speak to Amendment 134A, in my name, which is in one sense a fairly limited amendment compared to some of the other proposals in this group. I understand all that, because what we are trying to deal with in this group is one of the most controversial realities in children’s social care—the reliance on private provision, and in particular the role of private equity firms.

More than 80% of children’s homes are run by for-profit companies—a rise of more than 20% since 2010. A large proportion are owned by private equity groups carrying large debts and creating instability in a sector meant to protect the most vulnerable. It was the concerns about the market that the Minister has mentioned that led to the CMA launching its market study, completed in 2022. It identified a shortage of suitable children’s homes in the right places, as well as high costs. It says that, with local authorities paying excessive fees to private providers,

“the largest private providers of placements are making materially higher profits, and charging materially higher prices, than we would expect if this market were functioning effectively”.

As we have discussed in the previous group, we have seen a rise in the number of children placed in unregulated homes as the pressure to find placements has intensified.

As noble Lords might expect, in the Explanatory Notes for this Bill, and as the Minister has stated, one of the aims is to improve local authorities’ ability to shape the children’s social care placement market and to tackle profiteering. There are a number of measures to address this in the Bill: there are new powers for Ofsted to find unregulated homes across multiple settings in the parent undertaking—although, as we have heard, this may not go far enough; and the Secretary of State will have the power to cap the profit that providers can make. However, as is made clear in the Explanatory Notes, this is a power that would be used only if the other market interventions outlined in Keeping Children Safe, Helping Families Thrive do not sufficiently improve the functioning of the market. Yet, as with the previous amendment that I mentioned, some of the measures mentioned in this Green Paper have not been brought forward in this Bill.

My Lords, I rise to speak to Amendment 140, in my name, and I thank my noble friend Lord Storey for adding his. It would extend the scope of Clause 14 to cover independent providers of supported accommodation. This is a really important group of amendments: the whole area of financial oversight and profit caps is incredibly important, and I suspect we are not all going to have exactly the same views on it.

To put things into context, I welcome the raft of measures in the Bill to strengthen regulation and oversight of the care system, particularly the new provider oversight measures, Ofsted’s new power to fine providers of unregistered children’s homes, the financial oversight mechanism, and the profit cap. I firmly believe that these measures are welcome steps in the right direction in addressing some of the structural problems facing the care system and the sort of issues we have talked about so often in this Chamber: excessively high profit levels and rising care costs, at a time when local authorities are under huge financial pressure; the power imbalance between local authority commissioners and the largest private providers; the risk of sudden market exits due to high debt burdens from private equity-backed providers; and the growth in unregistered children’s homes, which we have already rightly focused on. That is a pretty toxic mix, and we really have to take the opportunity the Bill provides to do something about it.

That is the big picture, but turning briefly to my amendment, as we have already heard, in the last six years there has been a very significant rise in the number of children in care aged 16 and 17 who are living in supported accommodation. It is important to be clear what we mean by supported accommodation. It is for young people, 16 and 17 year-olds, who may have already started to make some sort of transition to more independent living but who still require a fair degree of support. Many supported accommodation settings, such as children’s homes and foster homes, are run by private companies, many of which are very large. Local authorities currently have no way of knowing the debt level being carried by these large private companies and whether there is any risk of the company or provider failing financially—which, of course, could have drastic implications for the children living in these settings. So, given the significant and growing number of children living in supported accommodation, it is important that the new financial oversight measures in Clause 14 are extended to independent providers of supported accommodation as well as providers of children’s homes and fostering agencies. My amendment would achieve this, and in so doing would provide a consistent approach across the different care settings and a safeguard for local authorities, so they can identify and mitigate the risk of providers suddenly closing multiple supported accommodation settings.

My Lords, it is a pleasure to follow the noble Baroness, Lady Tyler—whether I agree with her or not. I note the phrase that she used, “toxic mix”.

I think there has been broad agreement around the Chamber, including on the Government Benches, that we have a huge problem. The Minister said on one of the earlier groups that the market has prevent local authorities meeting their duties. Here, I would stress the phrase “the market”. What I am postulating is that “the market” is not the appropriate way to ensure that we have the right care in the right places with the right services—and that is a statement of a Green Party philosophical position. We do not believe that profit should be made from any form of care.

In this case, that is also very clear from what people have been saying. The Minister also said on one of the earlier groups that the current market has driven us to this, and the noble Lord, Lord Russell, said that the market is clearly not working. So, yes, it is my ideological position, but I have an overwhelming argument here for saying that the market is just the wrong model for providing this sort of care for vulnerable young people and children.

My Amendment 174 proposes a new clause that would prohibit the delivery of children’s social care services by for-profit companies. It has two very simple provisions, the first being that any new institutions created under the Bill should be not for profit. It says that within five years of the Bill being passed, what is now for profit would be converted. As the noble Baroness, Lady Sanderson, rightly said, this follows the model of what has already happened in Wales. I acknowledge that Wales is smaller than England, but none the less Wales has shown the way. It is worth looking at why Wales went that way.

On previous groups, there was broad agreement around the Committee about listening to young people. One of the driving forces behind Wales’s decision was that it listened to young people in care and care-experienced young people. They told the Minister, “We do not want people making profit out of caring for us. We think there is something morally wrong with this. We are not eggs being sold in the supermarket. We are vulnerable young people, and we just don’t think it’s right for people to make profit from the way we are treated”. I urge noble Lords to listen to that.

Let us look at what the profit motive does. We talked earlier about regional care co-operatives, and their predecessors are the regional and subregional commissioning frameworks. A 2022 study on what works for children found that the key reason they were not working was a lack of provider sign-up. Providers thought they could make more money from the spot market, so they did not want to sign up to standard contracts. That is a real threat to the regional care co-operative model, one that will always remain while you have for-profit companies.

I take the point made by the noble Baroness, Lady Sanderson, that there is for profit and there is for profit—some are better and some are worse. In many contexts in your Lordships’ House, I have expressed great concern about the impact of private equity and its model of loading with debt, and this picks up the point made by the noble Baroness, Lady Tyler, in her amendment. We have seen this twice already in age care homes; we have been through a cycle in which we got very close to large numbers of homes under one private equity owner closing because they were loaded with debt. Care homes are obviously similar, but in some ways it is slightly less of a risk because so many have been put in the poorest areas with the lowest property prices, whereas age care homes in areas with higher property prices are sold off for development into luxury flats, and that covers the debt. None the less, there is a real risk with that model.

I am sure there are very good people with good intentions running a single home, but I come back to what the children themselves feel: that they are a profit unit. We have talked so much about how badly society has generally treated these young people. I do not think we should treat them as a profit unit for anybody.

I am happy to argue about whether five years is exactly the right time period. I am not wedded to any of the detail in the amendment, but I ask noble Lords to listen to the children.

My Lords, in many ways the test of the Government’s success in reforming public services will be whether we can crack the tough nut of children’s social care. It has been quite clear from the debates on the last three groups that this is a major challenge. I declare my interests as the founding chair of Social Enterprise UK, and I am on the social economy APPG. I am an associate of Social Business International and, for the past 10 years or so, I have been working with leaders of social enterprises that provide public services.

I might have preferred to have made this speech in the earlier debate, at the beginning of the afternoon, but I am afraid I could not make it here in time for its opening. However, this is an appropriate group because we are talking essentially about procurement and finance.

As the noble Lord said earlier, I think it was in the previous debate, the Independent Review of Children’s Social Care, led by Josh MacAlister, described how the current system leads to unacceptable, poor outcomes for children and rising costs—private equity was referred to by the noble Baroness. It found that care packages are dictated by the market, not by children’s needs. Excessive profiteering has minimised resources and created public disgust. His central recommendation was for government to launch a reform programme, a radical reset to fix the broken care market, which has failed our most vulnerable children.

While I absolutely welcome the Government’s spending review commitments to fund family help, capital for residential care and fostering and other reforms linked to the MacAlister review, I feel that you cannot throw money at children’s social care and expect things to get better unless we actually also change. I want to see commissioners lever the well-evidenced voluntary sector, social enterprise and other forms of care to have a diverse marketplace in children’s social care.

My Lords, I would like to support my noble friend Lady Sanderson of Welton on Amendment 134A. Noble Lords will not be surprised to know I shall be championing local authorities around the cost of children’s homes.

I want to give noble Lords a bit of a reality check, and to do so I am going to reference two examples. The first is about supported living for care leavers aged 21 to 25. They are nearly adults, need very little support and are very nearly independent. A semi-detached house is created that can take up to five young people with very little supervision. The cost for one young person in that provision is actually £500 per week. That is nearly as much as any landlord would get to rent out that property for a month: £2,000 a month. If you have got five young people in there, that is one hell of a profit margin. You can see why people go down that route and why we are having to grapple with the costs.

The second case is about a property that had been sought and used as secure accommodation with 24/7 support. It was another council that placed it in our borough. It was worth it getting the property and having 24/7 support for secure accommodation. Obviously, it had made the decision that either it could not afford to get that accommodation through normal routes or that this was good value. We first knew about it when we read police reports saying this young person, who is in 24/7 secure accommodation with two people, had gone missing. I was jumping up and down saying, “We’ve got a young child gone missing”. But it was not our child—we did not even know this young person was in our borough. That is expensive accommodation.

Earlier on, the noble and learned Baroness, Lady Butler-Sloss, said that you would know if people were placed in your borough—but you do not. I am sure the Minister will have something to say about that. In addition to the knowledge that this young person is placed in your borough, the cost of 24/7 care and accommodation for one person in your borough is phenomenal. Local authorities are not perfect, but we are grappling with some of these things on a daily basis, which push the costs up, and some of this transparency might deal with it. I look forward to the Minister’s response.

My Lords, I must apologise to the noble Baroness, Lady Sanderson, for missing her first few seconds. When someone said, “I want a quick word with you”, I should have jumped around them as opposed to trying to politely brush them off.

All these amendments are looking at financial control. It is probably overdue, but it is extremely difficult. It is a case of transparency. We need something in here, and, as the noble Baroness, Lady O’Neill, has just pointed out, the Government are actually dealing with it on a last-minute, we-must-do-something basis. Having some control over that is an extremely sensible idea, but they will not get rid of the fact that it will have to be done through emergency contingencies or whatever. It is still going to happen that way. We are trying to extract from the Government the limitations of what they are proposing and to get it more on the record.

On my own amendment—I probably should have slightly reworded it—of all the things accused of costing too much, special educational needs spending is probably right up there, and often it is the private sector. It depends on what you are dealing with, because there is not a right sum of money for that.

I am on a committee looking at the Autism Act at the moment. I just went to see a school that had one full-time member of staff for every two pupils and TAs on top of that, because it is needed. Usually, the private support comes in to support somebody who has struggled in the education system—it may not be autism and it may not be that severe, but they are usually playing catch up and repair, to put it bluntly. So, they are going to have high staffing needs and it is going to vary from person to person. I would hope that this transparency may be a defensive thing from people who are providing a service that is needed.

Knee-jerk reactions and assumptions that, “Oh, they’re just ripping the system off” are often based on the views of people who know nothing. Let us face it. There may be people who are ripping you off as well, but both are out there. In trying to get a good idea of what the Government are actually trying to get out of this, we all agree the principle, but then we have dozens of different assumptions about what that means. So if we can find out what the Government mean in this series of amendments, it will probably be able to work. Hopefully, this will be something that, as much of this Bill has been, is essentially cross-party. It is about how we get the right answer here, because the Government—as in all good democracies—have brought forth a slightly reactive Bill. They are dealing with problems that exist. I do not say that as a great criticism of the Government: it is simply that that is the situation we are in. I hope that the Minister will be able to give us an idea of how the Government’s thinking is going around about the transparency, how we get out and how, for instance, if you think that someone is grossly overcharging you, you are actually saying that is happening. That is what I hope we will get out of this discussion.