Look past the headlines and the CMA’s report speaks volumes

The Competition and Markets Authority’s (CMA) interim report on the children’s social care market has grabbed a lot headlines, with the media drawn in by the commentary around private sector profits. One read: ‘private children’s home providers charging councils too much’, while another said, ‘profits for big children’s care providers higher than expected’.

It was obvious which way the press were going to turn, but the report has far more substance to it when you delve deeper and highlights many areas that need focus and consideration by all sides of the industry. The whole process has been politically contentious, but there is a recognition that the market is too important for everyone associated with the sector to let it fail. Apart from the economic consequences for local authorities, the human cost to our most vulnerable children would be significant.

So, aside from the headline-grabbing comments on profits in the private sector, what were the stand-out points from an interim study that falls short of an investigation but has the ability to make recommendations to the sector that could be useful?

One of the most important findings is ‘we do not see significant differences in assessed quality between local authority and independent provision.’ It’s clear from the report that generally speaking children do not experience poorer outcomes in the private sector. However, there is a recognition of a sufficiency issue and this, they argue, does lead to poorer outcomes. This is mainly due to the fact that children are often moved considerable distances from families, schools and communities, not due to an assessed need, but a lack of locally available places.

The report is also clear that there is little difference in the cost of running homes in either sector. Additionally, there is a recognition that the independent sector caters for more challenging young people. ‘For children’s homes across England, Scotland and Wales, we have provisionally found that the prices charged to local authorities for private children’s homes placements are typically not higher than the cost of providing placements in-house. We note that these figures do not take into account the level of needs of the children, and we understand the children placed in independent homes tend, on average, to have more complex needs.’

They argue that the market is failing, as providers are earning too much profit and if more competitors came into the market to supply local demand, better outcomes and lower prices would be the result. This also means that new providers are not encouraged to enter the market as it is very difficult to assess demand in specific areas, due to a lack of public sector engagement. ‘Local authority engagement in the market is not as effective as it could be and there are barriers to new supply being brought to the market.’ However, they also argue that local authorities do not commission well either individually or in groups.

The report does take reasonably seriously the concern that over leveraging in private equity-backed provision could be problematic. It states: ‘To address this, we are considering recommendations focused on measures that would reduce the risk of unexpected disorderly exit (such as a financial oversight regime with clear limits on leverage and financial risk-taking) and mitigate its effects (such as step-in provisions for alternative providers).’

Whilst the report recognises the concerns of some that prices charged and profit levels are too high, it disagrees that a mandatory limit on this is the answer. It argues that whilst this would be a short term benefit, it may actually further limit the supply of placements. It argues that the answer lies in fixing the market dynamics and ensuring a better balance between supply and demand which would create more competitive pricing.

Headlines aside, this is a useful and thought-provoking start to the CMA’s study into the children’s social care sector and sits alongside the wider independent review led by Josh McAllister. It’s important for public and private sector providers to acknowledge the short-comings that this report highlights and address those carefully in a transparent and holistic way, to ensure the central focus in everything we do – vulnerable children and young adults – is not compromised.

Our management philosophy is to operate a simple and care-centric community of businesses that focus, first and foremost, on delivering outstanding care and support. This report will only help to strengthen that approach, as we continue to deliver outstanding social care, through compassion for the vulnerable individual, enriching development for our people, and uncompromising standards for our customers.