26 May 2022

England’s child social care is broken – but reform must not mean junking the private sector

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Children’s homes have become a goldmine for profiteers, and some of society’s most vulnerable children are at risk of neglect and exploitation as a result. A vitally important report published this week has uncovered shocking examples of corporate greed in social care, and lobby groups will soon be piling pressure on the Government to step in and take control of the sector. That would be a mistake – we need to beware sleep-walking into nationalisation and choking supply.

Yes, there are children’s homes charging councils extortionate fees to house an ever growing number of children in care. New research this week found the average weekly cost of housing a child in care is well in excess of £4,000 a week. Eton could only dream of charging such fees. These are not the providers we should be concerned with saving.

However, taking the general view that there is often not a clear-cut answer to private or state provision of public services doesn’t mean aligning with those out to make a quick buck.

It’s worth bearing in mind that the vast majority of England’s residential care is delivered by private providers. This isn’t a euphemism for big corporates – there are plenty of smaller providers too, but there can be little defence of profit margins averaging 22%, or to put it another way, 22p of every £1 of taxpayer’s cash. When the Competition and Markets Authority looked into this market, they found profits had shot up by almost a third in recent years with little to suggest this profit is being made from improved provision or even better staff, sticking with the job for longer.

So, there is no doubt that the market in child social care is broken. But the state has fallen woefully behind in providing places for growing demand. This week’s independent review reported that half of local authorities are failing to plan effectively for the burgeoning need for children’s homes in their area. 

Nonetheless, there will soon be huge pressure to move completely away from all private provision in children’s social care. The independent review proposes council-run ‘regional care co-operatives’ to commission care. If we want to avoid nationalisation of care homes we need to think fast and come up with a model that works.

The demand for care is growing rapidly and supply is struggling to keep up. Outrageous fees for housing children in care also need to be stopped, but there is little evidence the state, through your local council, does it any better or worse than private companies.

When the Children’s Commissioner last looked at Ofsted ratings for children’s homes and broke this down by private providers and local authorities, there was very little difference between the two, 43% of state run homes were ‘good’ or ‘outstanding’ vs 40% of those run by private providers. Private providers actually do marginally better at getting good or outstanding judgements from inspectors than ‘voluntary’ run homes, delivered by charities. 

This is where regulation comes in, with a big role for Ofsted in regulating the market. It’s a sensible place to end up if the urge to drive out private providers can be resisted. The paradox for those who advance a ‘four legs good, two legs bad’ approach is that even the Children’s Commissioner recognised that the data showed ‘large (private) providers tend to have higher Ofsted ratings than smaller providers’. 

And yet, what should be a vital policy issue is barely discussed in a political culture obsessed with minutiae, tittle-tattle and clickbait. The woeful state of child social care is one of the reforming issue of our time, but gets too little airtime. There isn’t an easy answer to this which is probably why the Children’s Minister has sent his officials away to come up with some solutions. We should all hope they can rise to that huge challenge.

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Frank Young is editorial director at the Civitas think tank.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.