Children’s Wellbeing and Schools Bill

Baroness Barran Excerpts

Thursday 19th June 2025 Lords Chamber

[Baroness Longfield (Lab)]

I beg to move.

[Baroness Barran (Con)]

My Lords, Amendments 142A to 142C, 504A and 505A are in my name. I will not speak to Amendment 142 in the name of the noble Baroness, Lady Longfield, and I thank her for giving me advance notice of her intentions. I will also probe the merits of Clause 15 standing part of the Bill.

Amendment 142A mirrors my earlier Amendments 138D, 138E and 139A, which would have excluded natural persons with a role in the management of a business from receiving personal financial penalties. I have reread the Minister’s remarks in Hansard from our debate on Tuesday, and I confess I am still not entirely clear about the status of a natural person who is registered at Companies House. The Minister said earlier that the figure of 10 operators out of over 2,700 was based on Companies House data. Forgive my ignorance, but I do not know what legal status an organisation registered with Companies House has if it is not a company. If it is a company, I am not sure what the status of a natural person is.

The reason for these amendments is simple, as I set out before. It is based on a concern that, without these amendments, the Bill will limit the number of people who are prepared to take senior management responsibility in such providers and will lead to providers exiting the sector. I may have misunderstood what is meant by “an operator”—namely, that it is the owner of a business rather than the senior management—but perhaps the Minister could clarify both those points when she sums up.

Amendments 142B and 142C would limit the maximum fine for a provider to 10% of its turnover and, if imposed on a natural person, to £100,000. We have heard that margins in the children’s home sector average 22%, although in the LGA-commissioned report this figure is taken from, the range of margins is very wide. If we took 10% of a company’s turnover and accepted an average margin of 22%, that would be almost 50% of its profits, which surely is a very strong incentive to avoid being fined. Can the Minister set out what level of fine the Government expect to impose and what the criteria will be for different levels of financial penalty?

Amendments 504A and 505A would delay the commencement of Clause 15 until the Secretary of State has published a report that sets out the current levels of capacity in independent children’s homes, independent fostering agencies and, perhaps, based on the Minister’s remarks on Tuesday, supported accommodation. Again, I wonder whether she could confirm that last point.

The report would also need to have an impact assessment on the number of available placements in relevant homes or agencies. I am definitely not an expert on regulatory impact assessments, I confess, but the Government’s own regulatory impact assessment has, to my amateur eyes, clear gaps; hence the need for my Amendments 504A and 505A.

In the section of the document titled “Expected impacts on businesses”, it states:

“It is not possible for the department to monetise the impact of any future profit cap at this stage. This is because the impact will depend on both the level at which any future cap is set and the market conditions—including profit levels, supply and demand and diversity of provision—at the time that a cap were introduced. Attempting to include straw man figures at this stage—far in advance of any decision about whether or not to introduce a profit cap—would be unhelpful and would have the potential to adversely impact the market by driving providers to make incorrect assumptions about the future level of any future cap based on such figures”.


My amendments would bridge this gap by requiring the publication of an impact assessment when the Government are clear on what their approach to a profit cap will be and by capturing the baseline data on capacity so that the impact of a future cap can be analysed and understood.

My reason for questioning the approach to capping profits as set out in Clause 15 is based partly on the concerns expressed by the Competition and Markets Authority. It was very clear in its report that

“taking measures that directly limit prices and profits, would further reduce the incentives of private providers to invest in creating new capacity (or even to maintain some current capacity)”.

I wonder what assessment the Government made of this risk which led them to ignore the CMA’s advice. Can the Minister set out what impact the department believes this measure will have on investment in sector? What do the latest figures show?

More broadly, there is an important point of principle here. As David Rowland, the director of the Centre for Health and the Public Interest, wrote in a blog published by the London School of Economics in December 2024, if the Government decide that one sector has excessive profiteering and will cap the level of profit in that sector,

“there is no good reason for it not to be extended to other areas as well”.

I wonder what other areas the Government might be considering. David Rowland’s work has highlighted other areas where companies are profiting from—I quote the right honourable Secretary of State for Education—the trauma and abuse of

“some of the most vulnerable children in our country””.—[Official Report, Commons, 18/11/24; col. 27.]

This includes in the management of sexual assault referral centres which serve children, where he cites one business as generating 25% margins after tax—much higher than the 22% margin on earnings before interest, tax, depreciation and amortisation generated by the average children’s home. Might this be an area in which the Government are considering profit caps?

It would also be helpful if the Minister could confirm what operating margin, as opposed to EBITDA margin, the Government think is acceptable for operators of children’s homes, independent fostering agencies and supported accommodation. What is the figure for operating margins today? The figures in the LGA-commissioned report that the Government reference in their regulatory impact assessment are for earnings before interest, depreciation, amortisation and tax, and date from 2023. They are for around the 20 largest providers only. Why have the Government not done their own analysis of profitability across the sector, rather than relying on an external document that is two years old and looks at only part of the sector?

On Tuesday, after I gave my back-of-the-envelope figure of, from memory, £500 million or £600 million, the Minister quoted the sector as having a combined EBITDA of £310 million. But this figure from the Government’s own report, which is taken from the LGA’s analysis, covers just the 19 largest providers of children’s homes. The report goes on to say that the top 22 providers own 40% of children’s homes. That, of course, will not necessarily equate to 40% of profit, but it seems clear that £310 million is not the right number. The Minister should set the record straight at some point—if not now, then in a letter.

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[Baroness Longfield (Lab)]

I have already indicated my intention to withdraw my amendment.

[Baroness Barran (Con)]

My Lords, I thank the Minister for her reply.

On the point of principle—why you would put a profit cap on one area of the economy where you think there is profiteering on the back of vulnerable children, but not on another—the Minister said that there was no intention to extend this; indeed, she said that she hoped it would not be used. I certainly agree with that, but I do not really understand why, where children have been sexually assaulted or raped and companies are making far higher profit margins than the ones we are talking about here, the Government would choose to apply a profit cap on one and not the other. That does not feel very coherent to me.

I also felt that the Minister was slightly selective in the quotes she chose to identify from the Competition and Markets Authority report. The CMA was clear that it thought that a profit cap was not a good idea. I would also like to clarify something for the record. I think the Minister suggested that I said that current margins were driving supply. I said that current margins, according to the recent data, are uneven and actually falling, so I did not suggest that they were driving supply.

[Baroness Smith of Malvern (Lab)]

The noble Baroness cited analysis that expressed a concern that by capping profits, you would somehow or other reduce supply in the market. I was simply making the point that the converse—that is, excessive profits—has not driven supply in the market.

[Baroness Barran (Con)]

I understand that, and I stand by what I said. There is a risk that this will result in an exiting of capacity, and that the reverse of what the Government rightly want to happen will happen: that in some areas that will put even more pressure on capacity and price. I do not accept that you can say on the one hand that these margins are unacceptable, but, on the other, you cannot say what is acceptable.

What we are seeing is a failure of commissioning. One of my amendments in an earlier group—I think it was Amendment 119ZA, but I may be wrong—sought to align the interests of children and those of operators. The commissioning model we have today is not working, and that needs to be fundamentally addressed. Maybe the Government could reconsider their response. We have examples in defence and pharmaceuticals of commissioners setting what is an acceptable margin, and providers bidding or not bidding based on that margin. I do not understand why the Government cannot say what an acceptable margin would be.

I accept that the Minister’s response to my Amendments 504A and 505A goes at least some way towards what I was aiming for. I was more troubled by her response on natural persons. I thought we were talking about 10 sole traders, but we are now talking about finance directors in businesses, so I think that my concerns are entirely valid.

On financial penalties, my recollection, which may be wrong, is that we have a limit on fines in the Online Safety Act. The Minister will correct me if it is in regulations but, if it is in that Act, I do not see why it cannot be in this Bill too. That matters because we need local authorities, charities, social enterprises or the private sector to add capacity in those areas and, without certainty, they could be forgiven for hesitating.

A striking omission in the Minister’s remarks—perhaps she could respond in writing on this—concerns what was said at the Dispatch Box on Tuesday about the level of profitability in the sector. I think I am right in saying that the figure was for 19 businesses and not the whole sector. I repeat: the financial regime that the department wants to introduce is very sophisticated, and I do not think it fair to send a Minister to the Dispatch Box with out-of-date and incorrect data.

Amendment 142 withdrawn.

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Debate on whether Clause 19 should stand part of the Bill.

[Baroness Barran (Con)]

My Lords, this stand part notice is to probe, and therefore understand, what changes the Government intend to make to the regulation of agency social workers and how those changes will work in practice.

I am very well aware of the concerns about social worker recruitment, but I was in fact slightly surprised when preparing for this debate to find that, as of 30 September 2024, there were 34,300 children and family social workers in total, which I gather is the peak since data started to be collected in 2017; and 6,500 agency social workers, which is the lowest since data collection started. Vacancies fell by 6.9% year on year, there was a drop in staff turnover of 13.8% and the average caseload fell to 15.4%. The vacancy rate is still high at 17%, but down from 22% in 2022, and 76% of vacancies were filled by agency social workers. Retention has improved, with the number leaving to work in an agency falling by 38%, while the number of social workers leaving the profession entirely fell by 5.3%. So I know the situation on the ground is extremely difficult, but I think it is helpful to have a bit of context.

As I understand it, in terms of the current regulatory environment, agency children and family social workers are covered by the Agency Rules: Statutory guidance for Local Authorities on the Use of Agency Child and Family Social Workers of September 2024. As I understand it, this has the same aims as the proposed regulations: to control costs, improve quality, reduce turnover and ensure that governance is retained by local authorities. Two main requirements are planned to be implemented this year: first, there must be data collection by local authorities on the number of agency workers, with the first submission having happened in April and May 2025; and, secondly, that local authorities must submit plans on locally agreed price caps by this October. The main thrust of Clause 19, therefore, is to make regulations for what is already covered in statutory guidance.

The department’s policy summary says that the Government intend to regulate

“a broader cohort of agency workers than child and family social workers including, but not limited to, social workers”—

forgive me for being slow, but it is not the clearest explanation. The summary goes on to state:

“The regulations are likely to include similar provision to the current statutory guidance which currently applies to social workers only, but to a wider cohort of workers”.


Sir Humphrey would be proud.

In the other place, the Minister for School Standards said on 28 January that this could include

“agency workers delivering targeted early intervention or family help”.—[Official Report, Commons, Children’s Wellbeing and Schools Bill Committee, 28/1/25; col. 234.]

I therefore ask: are the Government’s plans restricted to these two groups only, and if not, who else will be covered? How many of those workers are there nationally? And what is the current cost of agency workers in the different categories to local authorities? The proposal to expand the replacement regulations to a wider cohort is not defined anywhere in the Bill or the accompanying policy summary, so it would help to understand the Government’s intentions better.

Can the Minister also explain how the regulations will differ in terms of local discretion from the current statutory guidance? I am unclear on this, but perhaps suspicious that it might result in a more directive approach from the department and less discretion for local authorities themselves. Can she confirm that there will be exceptions to the specific requirements detailed in the regulations, for example for payments above the national rate if there is a local staffing crisis?

The Minister knows that the use of agency workers varies greatly across the country, but the powers in this clause are wide-ranging and—yet again—are going to be set out in regulations. The powers in new Section 32A(4)(b) and (c) appear to be very broad indeed, including about how social workers will be managed and the terms on which they may be supplied, including the amounts that may be paid under such arrangements. This would allow the Secretary of State to set payment rates from Whitehall. I wonder whether the noble Baroness can explain to the Committee why this is a good idea.

The fundamental problem underlying this clause is, as we debated in the area of children’s homes and foster placements, a shortage of capacity. No local authority is using agency workers other than because it has no choice but to do so. The previous Government had taken steps to address this with the Step Up to Social Work scheme and the creation of social work apprenticeships. Can the Minister update the House on the progress of these? I beg to move.

[Lord Storey (LD)]

My Lords, the noble Baroness, Lady Barran, gave the background in terms of the statistics and figures, which make for quite a salutary understanding. Agency workers are, as we know, three times more likely to leave a case mid-assessment compared with permanent staff, which obviously would increase risks to children. Let us remember that local authorities spend £500 million annually on agency social workers—on average 60% to 70% more per worker than on permanent staff. Inconsistencies of local policies allow agency staff to move frequently between councils, undermining safeguarding and continuity and, of course, causing resource churn—what a phrase, “resource churn”.

Some rural and high-need areas rely on agency workers due to staff shortages, with poorly defined regulation risks shrinking this vital stopgap workforce. Do we ensure that the training, supervision and caseload standards for agency workers are the same as those of permanent staff? I worry considerably that we see permanent local authority staff taking early redundancy payments and then reappearing as agency workers. In some cases—I do not know whether this is the case with social workers; my research has not shown me that yet—they are then reappointed by other local authorities. That surely cannot be right.

The noble Baroness, Lady Barran, is right to raise that, but—I hope she will not take this the wrong way—the figures that she cited are as much the responsibility of the previous Government as they are figures that the present Government have had to inherit. Towards the end, she mentioned some of the initiatives that her Government had started; I do not know whether the Minister has a briefing on them, but it would be interesting to know whether they have at all been helpful.

One thing I cannot understand—well, I can understand it—is that many public services face a shortage of public service workers. It is not just social workers; it is right across the board—teachers spring to mind. Yet at the same time our universities face shortages of students wanting to come to university. Surely, that is a way of sorting that out. Why do people not want to go into social work? I know why; you know why. Why do people not want to go into teaching? I know why; you know why. That is the answer to the problem: we want to make people want to be teachers and social workers, and we want our higher education and further education sectors to be geared up to that. The Government’s mantra, which we all agree with, is, “Training, training, training”, but training is no use if people are not prepared to take it up. This is a classic example of the problem we face.

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[Baroness Smith of Malvern (Lab)]

My Lords, through the introduction of a regulation-making power, Clause 19 allow the Government to take stronger action to alleviate the significant affordability and stability challenges that have arisen from the increase in the use and cost of agency workers in local authority children’s social care in England. The noble Baroness, Lady Barran, identified some of the progress being made in the staffing of children’s social care. I can confirm that the current level of agency use in the sector stands at 16.2%, a small fall on the previous year, but she is also right, of course, that this varies considerably from authority to authority.

What I would say about that 16.2% is that, in essence, more than one in eight of the people who are working in children’s social care do not have the long-term association with their employers that we would expect to see in any service where we were able to provide the training, the stability and the certainty about future costs that we would want. It is considerably higher than in similar sectors, whether in the health service or in education.

Agency work continues to be a considerable issue within children’s social care. That is not to say that there is not excellent work being carried out by individual agency social workers—I know from my previous experience in Sandwell Children’s Trust that there are many excellent agency workers. Nevertheless, the cost and stability issues that I have outlined remain serious for local authorities and those providing children’s social care. This clause ensures that while agency workers will remain an important part of local authority children’s social care, they will not become a long-term replacement for a permanent, stable workforce. It will allow the Secretary of State to introduce regulations on the use of agency workers in English local authority children’s social care services.

I accept that progress has been made since the introduction by the last Government of the statutory guidance relating to local authority children’s social care services, but that was limited specifically to social workers. We want to extend the framework beyond social workers to the wider local authority children’s social care workforce, including workers such as those delivering early intervention or family help.

A new phenomenon has come into the workforce, and particularly agency provision within children’s social care: that of project teams, where agencies provide not just individual workers but teams to respond to particular challenges. In doing that, partly through the associated management costs and partly through the range of different workers, there are even larger uplifts in the amount of money charged to local authorities. I have seen from personal experience that it is not unusual for social workers and other staff in those teams to be earning £50 an hour or upwards. We may well think that people who are doing this important work are worth £50 an hour, but that is a considerable and, some might argue, unaffordable premium over social workers and other workers who are employed on a permanent basis with teams.

There is a broader range of workers that we should cover here, and a requirement to strengthen some of the principles in the statutory guidance, both by widening it and by this legislative provision. We will of course work in partnership with stakeholders across the system, including agencies, to ensure that the proposals implemented are proportionate and effective. They will make clear to local authorities, the recruitment sector and agency workers what they should expect from one another, and the consistency that this brings to the market will benefit all parties. If we are able by doing this to reduce local authority spend on agency workers, that will allow local authorities to invest more in services supporting children and families and enhance the offer to permanent employees.

I take the broader point that one important way of solving this problem of agency workers is to ensure that those permanently employed, either as social workers or doing other work in children’s social care, get the rewards that they deserve, receive the training that they need in order to get the career satisfaction and progression that they would want, and are employed by local authorities and children’s trusts in ways that value them and provide them with the resources they need. All those things are important, and the Government are addressing them all, but that does not remove the requirement that we believe exists for a stronger ability to make regulations covering children’s social workers and to broaden the scope of those regulations, which is what this clause enables us to do.

[Baroness Barran (Con)]

I thank the Minister for her response and her explanation. I think I understand now the scope that the Government intend in terms of the wider social care workforce, although I did not hear her give the Government’s estimate of the number of agency workers involved in that area and the cost to local authorities. Maybe if the department has that data, it could write to us and put a copy of the letter in the Library.

The noble Lord, Lord Storey, rightly raised the issue of social workers retiring and then reappearing, magically, as agency social workers, and the noble Lord, Lord Meston, highlighted the impact of that in a court setting, with the obvious cost to the local authority and the disruption and lack of continuity. Given that this builds very much on the statutory guidance that we prepared when in government, we hope that this works really well for the Government in achieving greater affordability and continuity of staff.

I guess we are in a world where the working environment has changed, and social workers can now do a couple of days a week of agency work and work from home the rest of the time. Those are challenges that I am sure the Government are wrestling with, and we wish them every success in so doing.

Clause 19 agreed.

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[Baroness Berridge (Con)]

I am grateful to be able to respond, as this is Committee. With the child protection authority, the question is about what scope that will have. If it is to have an inspectorate function, which is what was recommended by IICSA, will it have a role to inspect out of school settings? That is the way that, I would say, it comes within the scope of the amendment. But I accept it is a probing amendment. We need to make sure that we put the DfE and Home Office together to keep children safe .

[Baroness Barran (Con)]

My Lords, I congratulate the noble Lord, Lord Mohammed of Tinsley, on his powerful speech. I listened to his maiden speech, and this is the second time I have heard him speak. I see that he will be an important addition to the expertise in your Lordships’ House.

In relation to his Amendment 159, I am slightly puzzled and look forward to the Minister’s response. As the noble Lord said, the Government have accepted the recommendations of IICSA to create a child protection authority and this will initially, as I understand it, form part of the child safeguarding practice review panel. My noble friend Lady Berridge made good points about out of school settings although, in general, I worry about the extent of regulation that might fall on very small organisations and the impact that might have. I remember thinking about this when in office. One of the organisations we met with said there were no incentives in the system today to encourage organisations to do the right thing; there are just penalties if you get it wrong. Maybe that is a constructive path for the Government to consider.

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[Lord Storey (LD)]

It is wonderful to be surrounded by so many supportive people, including someone in the Official Opposition, who has just told me it should be the other way round.

What I originally said should have been the other way round. You have only to look at the NHS to see that: when we had clear targets in the NHS, we could see the progress that was being made or not being made. As soon as we did away with targets, we did not know how successful or unsuccessful we were. I support this amendment because it says, “If we are going to deal with child poverty, we need to say what we want to achieve and the targets we want to set”, and we can monitor them and know whether we are successful or unsuccessful. I apologise for misleading the Committee.

[Baroness Barran (Con)]

My Lords, I begin by stressing that reducing child poverty is a goal that we clearly share across the House, and tackling the challenge of child poverty must be a priority for every Government. This Government have been very clear on that point.

Understandably, the amendment from the noble Lord, Lord Bird, reflects his desire to drive forward real progress on this issue, and he brings extraordinary experience from his own life. My remarks and caution about the noble Lord’s amendments are in the spirit of honesty and respect to the noble Lord and in no way diminish the aims of his amendment but raise, I hope, reasonable questions about the approach.

As the noble Lord said—I have never heard the phrase used like this before, but I thought the concept of inherited poverty was very helpful—we know that child poverty stems from a number of different interconnected factors, including employment patterns, housing costs, structure of families, educational opportunities and regional economic conditions. My overriding concern is that having binding central targets risks oversimplifying this very complex challenge and could overlook local interventions that genuinely improve children’s lives. The challenges and underlying causes of a child living in poverty in Hackney or in Jaywick are significantly different, despite them being only about 50 miles apart. In fact, I would argue that, for a child growing up in poverty, the differences between Bristol and Weston-super-Mare, which are on each other’s doorstep, are also very great.

We have seen repeatedly how targets can distort behaviour and priorities. When governments and local authorities face binding targets, there is a risk that they are driven to pursue interventions that improve statistics rather than outcomes. This can lead to short-term fixes that artificially move families just above the poverty threshold without addressing the underlying causes; somewhere back to the empty stable and bolted horse that the noble Lord, Lord Bird, referred to. However, I absolutely recognise the reality behind the call that the noble Baroness, Lady Lister, made to make particularly deep poverty more comfortable—a slightly curious concept, but I think we all understand exactly what she means.

Child poverty, as noble Lords know, manifests differently across England—from rural communities that face challenges with transport and access to employment, to urban areas grappling with housing costs and concentrated deprivation. What works in Manchester would be inappropriate for rural Devon, and I would argue that local authorities, combined authorities and community organisations are perhaps often better placed to understand and respond to their specific poverty challenges than central government.

Setting binding targets risks creating a hierarchy of government priorities which may not reflect emerging needs or, indeed, changing subjects. Such targets risk us focusing on specific areas rather than the underlying causes of child poverty. So again, I do not agree with the approach set out in the amendment of the noble Lord, Lord Bird, but I do agree with his ambition; and I also agree with the call of the noble Lord, Lord Hampton, for action as well as words.

As I said in opening, I know that the Government are very focused on reducing child poverty, and I look forward to the Minister’s remarks.

[Baroness Lister of Burtersett (Lab)]

Before the noble Baroness sits down, may I just ask her why she thinks that all the charities working in the field and with local authorities, as well as academics, are calling for legally binding targets, if they would have the effect she says and would not help to address the systemic causes of poverty?

[Baroness Barran (Con)]

Obviously, I respect their opinions, but there is plenty of evidence—and the noble Baroness will know this in other contexts, not necessarily about child poverty—where targets have distorted behaviour, not always delivering on the aspiration of those who recommended them at the time.

Before I sit down, I would like to put on record a clarification about my closing remarks earlier on the first group that we debated today. I remain very concerned about the lack of a comprehensive and up-to-date dataset and analysis of the financial position of independent providers won from the Government, but I was wrong to say, in the earlier debate on Tuesday evening, that the figure the Minister quoted regarding the profits of the independent children’s home sector was for the whole sector. When I reread Hansard, possibly for the third time, it was clear that she had stated that it was for the largest 20 providers. In fact, the figure was for the 19 largest providers, but none the less I apologise to the Committee, to the Minister and to officials.

[Baroness Falkner of Margravine (CB)]

Before the noble Baroness sits down, can I inject one further thought that she might agree with? While the sentiments adduced in this debate are entirely right, and the concern is absolutely an important concern, does she agree that, in that discussion of centrally imposed targets versus the removal of targets, looking at the particular circumstances is profoundly important? The targets were removed after what those of us who do financial services call the global financial crash, when GDP declined considerably—in fact, we are still seeing the effects of what happened in 2008—but, because child poverty is relative, a decline in GDP has a material impact on whether child poverty goes up or down. I wonder whether that should be part of the consideration of where the targets fit. My own view is that some targets are important, but it is more important to get GDP going, which I think is the Government’s intent in this case, so relative child poverty of itself becomes less of a problem.

[Baroness Barran (Con)]

The noble Baroness makes a very helpful point, and I absolutely agree with it.

[Baroness Meacher (CB)]

Very briefly, I support my noble friend Lord Hampton in saying that education is fundamental here. You do not resolve poverty unless a child is put through education successfully. Therefore, my plea is that the main message from this debate should be that local authorities should prioritise promoting education for children in poverty. That is actually the way to a successful resolution of this problem.