Children’s Wellbeing and Schools Bill

Baroness Barran Excerpts

Tuesday 17th June 2025 Lords Chamber

[Lord Nash (Con)]

The care sector is slightly different, for the reasons people have mentioned. But what are we going to do—nationalise it for nothing? Are we going to become a communist country? Are we going to pay for it, and if so, where will that money come from? Anyway, even if you deal with the ownership issue—obviously, I do not agree with the idea of nationalisation—threatening people who operate them with fines just does not seem reasonable. That is why I support the amendments on limiting fines and not applying them to natural persons, as opposed to corporations.

[Baroness Barran (Con)]

My Lords, I will speak to Amendment 140A, in my name, and propose that Clause 14 do not stand part of the Bill.

Before I turn to my own amendments, I add my support to my noble friend Lady Sanderson’s Amendment 134A. As we have heard, it would bring much needed transparency to the children’s homes market and help to level the playing field for smaller and larger providers. Of course, this transparency would help the negotiating position of local authorities and regional care co-operatives in future. I thank my noble friend Lady O’Neill of Bexley for making it real and giving us very practical examples.

Equally, the noble Baroness, Lady Tyler of Enfield, made important points about the level of profit in the area of supported accommodation. As I understand it from the CMA report, it has some of the highest margins in the sector and today provides about two-thirds or three-quarters as many places as children’s homes do, at just over 6,000, or 7% of the market for looked-after children.

Amendment 141, in the name of the noble Lord, Lord Addington, seeks, as we heard, to extend the profit cap to independent special schools. As the noble Lord understands extremely well, this is a very complex area, and one has to be careful, given the range of provision. Some of these homes offer short-term respite to foster carers, for example, so any changes would need to be thought through carefully to avoid unintended consequences.

Along with others, and not just on my Benches, including the noble Baroness, Lady Tyler, I cannot support Amendment 174, in the name of the noble Baroness, Lady Bennett of Manor Castle. Our starting point is that there needs to be greater capacity to limit price increases and ensure a choice of suitable care. We were very clear when we were in government that we do not condone profiteering in this market, but we have concerns about how the transition in Wales will work to a market where there are no for-profit providers. Obviously, the problem of very high pricing will only be exacerbated, as my noble friend Lord Nash just explained, if sufficient new capacity is not created quickly or even if capacity is withdrawn. Such an approach cannot be considered in England until the Government have invested in new, not-for-profit or social enterprise capacity, whether that be in the local authority or in the voluntary sector, as the noble Baroness, Lady Thornton, very ably outlined.

I confess that it is slightly curious to be in a position of challenging the Government’s attempts to regulate and limit the profits of some actors in this industry, which have rightly drawn criticism from the CMA, local authority leaders and indeed many in your Lordships’ House. My amendments to this clause and the others in this area are definitely not about defending a group of companies that can well defend themselves; I am simply trying to test the viability and impact of the Government’s proposals. It is important, because there is such a level of frustration with the behaviour of some of the actors in this sector that we risk having a confirmation bias that anything we change it to will be better. We need to test these proposals and be confident that the solution the Government propose will work.

As we have discussed at numerous points in Committee, there is a fundamental problem with the lack of residential care capacity, whether that be in relation to fostering, children’s homes or supported accommodation. The Competition and Markets Authority described the current shortfall as a “fundamental failure” in market functioning, imposing, in its words,

“severe limitations on the ability of the 206 local authorities in England, Scotland and Wales, who purchase placements, to engage effectively with the market”.

We need a clear plan to address this shortage. My fundamental concern is that the measures in Clauses 12 to 18 will not have the desired impact that the Government seek—and that, across your Lordships’ House, we all seek. Amendment 140A is simply an example of why I do not think the plan for a financial oversight regime as presented in the Bill has been properly road-tested and that we can have confidence in its impact.

New Section 30ZI, to be inserted by the Bill, gives the Secretary of State the power to arrange for an independent business review by an external qualified person. You would assume that, in such cases, almost the first thing that they would look at, if it existed, would be the recovery and resolution plan set out at new Section 30ZG, but it is not even mentioned. There is a list of things that they should look at, but the recovery and resolution plan is not mentioned. It would be fundamental for them to look at that plan, given that it covers, according to the Government, the

“nature and extent of any risk to the financial sustainability of the person … the action the person proposes to take”

to address this, as well as

“impacts on local authorities, and children”.

That makes me lose confidence that this has been properly thought through. I hope that the Minister can either add it to the list of things that independent business reviewers will look at, or, more importantly, reassure me and the Committee that this area has been properly considered.

My opposition to Clause 14 standing part of the Bill is probing. The proposed financial oversight scheme for children’s social care represents part of the regulatory response to the market failures identified by the CMA. As with many parts of the Bill, much of this scheme will be set out in regulation. The scheme requires information from parent undertakings, but, as the Minister knows, private equity structures are notoriously complex and opaque. I wonder whether she is concerned whether providers might restructure to minimise oversight burden—how will the Government mitigate this? I am not clear how the scheme will address jurisdictional limitations on enforcement for offshore-based organisations. I would be grateful if the Minister could explain that, or write to me if the answer is particularly technical or it is not at her fingertips. It is reasonable to question whether the DfE has or will acquire the specialised financial and private equity expertise needed to analyse complex corporate structures and financing arrangements effectively—I think this fly in the Chamber has been sent in by a private equity firm.

Similarly, is the Minister confident that local authorities have the capability to respond to advance warning notices? Is she concerned that the act of alerting local authorities about the financial fragility of a provider could lead to them withdrawing placements, leading to the financial collapse that the scheme seeks to avoid? I would be grateful if she could set out how the Government think that the contingency planning will work. I wonder whether the Government have had conversations with providers about how they expect to create realistic plans, given the prevailing market conditions. Surely existing supply shortages will make rapid replacement extremely difficult, and emergency placement costs are already unsustainable.

There are a lot of questions about the impact that this will have on the shape of the market. Will it actually result in more concentration in the market, because the 40 largest providers will have gained the confidence of local authorities? Could it result in financial pressures on smaller providers where there is less transparency?

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Moved by

[Baroness Barran]

135: Clause 12, page 17, line 34, leave out “Improvement plan notice” and insert “Requirement for inspection”

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[Baroness Barran (Con)]

My Lords, I will speak to Amendments 135 to 138C in my name. Clause 12 introduces the provider oversight scheme, which, according to the department’s policy summary, creates the ability for Ofsted to act at scale and pace when there is poor quality in multiple settings and agencies owned by a single provider group. It will require providers of two or more homes or agencies to implement an improvement plan where there are reasonable grounds to suspect that the registration of two or more of their establishments or agencies should be cancelled.

We support in principle the approach of giving Ofsted the power to intervene at a group rather than an individual home level. However, I have three main concerns about the clause. My overarching concern is that this approach may not be effective in getting providers to meet the required standards. Rather, I fear that it risks turning into a letter-writing competition between Ofsted and the providers. I am thinking of a similar approach to independent schools that do not meet the independent school standards, frequently in relation to the teaching of RSHE. These schools face sanctions, and they are required to improve and present a plan for meeting the standards. But during my time in the department, despite the best efforts of officials, the names on the fairly long list barely changed. I appreciate that the context and the reasons for non-compliance are different, but I hope the Minister can convince me that this regime will be more effective.

Secondly, the policy note talks about required standards not being met. Surely there is a spectrum of standards breaches: some that will require the cancellation of the registration, as the Bill is drafted, and some that will require an improvement plan. While I understand that Clause 12 is intended to sit alongside the existing regulatory regime for individual homes, it is unclear how they will mesh together. I would be grateful if the Minister could explain that.

My Amendments 135 and 136 would require an immediate inspection where the breaches of standards indicate concerns about the safety of children. My Amendment 137 would encourage Regulation 44 visitors to make an unannounced visit to establish whether there are lower-level breaches. If these are established, the visitor could make a recommendation to Ofsted about what they have seen—which, of course, it is not obliged to accept. The idea I am trying to get across is that having immediate eyes and boots on the ground, so to speak, is essential where there are serious safeguarding concerns.

I remember a case from when I was in the department where two homes of a particular children’s home group were judged to be inadequate. I requested that all the other homes in the group should be immediately inspected, and that happened. The Minister may say that these amendments are not needed, but it would help to have on record the Government’s explanation of how they expect this to work in practice.

Thirdly, my Amendments 138A to 138C would require the department to communicate with local authorities that might be commissioning a provider, where there are concerns, to make sure that these are shared. I appreciate that this might be difficult in reality. But as we just discussed, there is a similar provision in the financial oversight regime, so I assume this is something the department has considered.

Finally, I have a number of specific questions that sit behind my Amendment 138, which might form the basis of some tidying-up government amendments on Report. I do not expect the Minister to have the answer to every one of these; if she would like to write to me, that is absolutely fine.

On page 18, line 8, how is “reasonably suspects” defined? Is that from a recent inspection—and if so, how recent—or is it from wider intelligence? Secondly, how is an individual with

“a significant role in the management of the parent undertaking”

defined? Is that a director? Do they have to be registered at Companies House? What happens if it is an offshore holding company?

In new Section 23A(7) on page 19, line 3, can the Minister confirm that the Bill is correct where it says:

“The period mentioned in subsection (4)(d) must not be less than … 28 days”?


Should it not say that it must not be more than 28 days? I read this about eight times and am still not clear on what it means. The point is: do we not want to receive improvement plans as promptly as possible?

Should new subsection (8) not clarify that the CIECSS—or Ofsted to its friends—can withdraw an improvement notice only if it has strong evidence that it is no longer needed? What evidence does the Minister expect Ofsted to require before it withdraws an improvement notice? In new Section 23B(2), on line 22, should it not be clear that Ofsted must inform the parent undertaking and any subsidiaries within 28 days, and should this not be mirrored for all the stages of the process?

Can the Minister confirm whether the timeline for the communications listed in Clause 12 will be set out in regulations? At the moment, it is not clear what the maximum time periods are for each stage of the improvement notice process, including for Ofsted to inform and respond to the provider. It would be useful for this to be as clear as possible.

In new Section 23B(5), I wondered whether a step is missing from the processes set out in the Bill. Surely the parent undertaking needs to inform the chief inspector when the plan has been fully implemented within an agreed timescale, which is currently not stated, and then the chief inspector should arrange for an inspection or take whatever appropriate action to confirm that that is the case. I beg to move.

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[Baroness Blake of Leeds (Lab)]

As always. That was the point that I was making. For all the reasons given, I would kindly ask the noble Baroness to withdraw her amendment.

[Baroness Barran (Con)]

I thank the Minister for her very detailed reply and for her commitment to write; that is much appreciated.

To respond to the Minister’s remarks, the reason for tabling Amendments 135, 136 and 137 is that the improvement plan is for the parent company or parent undertaking, but it is for when there are concerns about two or more of their establishments or agencies, in the language of the Bill. I understood that to mean, given the severity—that Ofsted suspects that there are grounds for cancelling the undertakings registration—there could within that be concerns about the safety of children in those homes. So the spirit of Amendments 135, 136 and 137 was that we should have really experienced people, either inspectors or Regulation 44 visitors, going in, not to inspect the parent—I am sorry if my amendments were unclear in that regard—but to inspect the subsidiary undertakings. Maybe when the Minister comes to write, she could just reflect on that point.

In the reference to Regulation 44, the amendment should have stated that

“Ofsted may issue an improvement plan notice”,

not

“the local authority may issue an improvement plan notice”.

Of course, the Minister is absolutely right—the local authority cannot issue an improvement plan notice. But again, it was just trying to get at the idea that, if there was a variation in the levels of concern and the level of breach, for a lower-level breach, a Regulation 44 visitor could advise Ofsted. There is an urgency, if it is thought that an undertakings registration should be cancelled, which will not be met by the improvement plan approach on its own.

In relation to the Minister’s remarks about Amendments 138A, 138B and 138C, I think the answer is that, if the process works reasonably quickly, the proportionality that she set out is completely reasonable. If it gets bogged down, and it comes down to, “We sent you a plan, Ofsted doesn’t think the plan is fit for purpose”, and it goes back and forth and back and forth, we would not get the speed that might be needed to prevent other local authorities commissioning a provider when there are grave concerns, as set out in the Bill. The proof of the pudding will be in the eating. In the meantime, I beg leave to withdraw my amendment.

Amendment 135 withdrawn.

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Moved by

[Baroness Barran]

138D: Clause 13, page 22, line 11, after “person” insert “(except natural persons)”
Member’s explanatory statement
This amendment seeks to limit the financial penalties that can be imposed upon the operators of children’s homes to exclude natural persons.

[Baroness Barran (Con)]

My Lords, Clause 13, as we have heard, introduces monetary penalties for non-compliance with an improvement plan or for running an unregistered children’s home or fostering agency. My Amendments 138D, 138E and 139A seek to exclude natural persons from the power to impose financial penalties on individuals involved in the management of these organisations. As my noble friend Lord Nash said earlier, there is a reasonable concern that this will result in a dearth of people who are prepared to take such a risk, particularly as the financial penalty regime is being set out in regulations and could therefore be altered at any point. Having said that, given that the fines, as I understand it, are currently unlimited, perhaps that is not the greatest worry, but obviously if that concern were to materialise, it would have an impact on provision.

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[Baroness Blake of Leeds (Lab)]

There is a deafening silence. I turn to group six and the amendments, all in the name of the noble Baroness, Lady Barran, which concern Clause 13: Amendments 138D, 138E and 139A. They seek to exclude natural persons from the provisions relating to the issue of monetary penalties. Clause 13, as drafted, gives Ofsted an additional power to issue monetary penalties to providers that have breached requirements set out in, or under, the Care Standards Act, including operating a children’s home without registering with Ofsted, which they could also prosecute as a criminal offence.

Ofsted will also be able to issue a monetary penalty to provider groups for failure to comply with new requirements set out in Clause 12 of the Bill. This measure will ensure Ofsted has a full range of enforcement powers so that it can act proportionately and at pace, which will act as a deterrent. This includes individuals who operate children’s homes, other establishments or agencies. It is difficult to see why a natural person running a children’s home, other establishment or agency should not be subject to the same enforcement powers as a partnership or organisation when they have breached the law, and where Ofsted could prosecute that natural person for the relevant breach.

Furthermore, based on data from Companies House, these amendments would result in Ofsted being unable to fine 10 individuals who currently operate children’s homes if they breached the law, compared with the 2,738 companies that operate children’s homes. Ofsted have told me directly that it strongly opposes any amendment that would exclude natural persons and limit who financial penalties can be imposed on for illegally operating children’s homes without being registered. Individuals will—and do—gain financially from illegally operating children’s homes without being registered, and should not be excluded from the potential consequences of doing so. All the discussions in Committee have been about protecting children and making sure that they are safe. We have to make sure that, in this area, in spite of the comments made by the noble Baroness, children and their safety are at the forefront of our minds. It is also worth noting that it is common in legislation for natural persons to be subject to financial penalties in the same way as operations and companies.

For example, the Tenant Fees Act 2019 enables fines to be imposed on landlords, who may be natural persons, for breaching the ban on letting fees being charged, and the Data Protection Act 2018 enables the Information Commissioner to impose fines on persons, including natural persons, who have failed to comply with various notices issued by the ICO.

I have already stated the reasons for the need and intent of these additional powers. However, I add that the clause ensures that Ofsted has an alternative to prosecution where that is currently the only enforcement action. Ofsted will not be able to impose a monetary penalty on a person for the same conduct where criminal proceedings have been brought against them in relation to that same conduct. Further, and importantly, to act as a deterrent and to ensure transparency for the public, the clause gives the Secretary of State the power by regulations to require Ofsted to publish details about the monetary penalties it has issued. Ofsted must also notify local authorities when a monetary penalty has been issued, as it is currently required to do in relation to other enforcement action it takes. A monetary penalty may be used by Ofsted as grounds for cancellation of registration.

I assume it will come as no surprise to the noble Baroness that I will have to write to her on the financial assessment and the other questions she raised on the specific requirements in place. I am more than happy to do that, and to share it with any interested parties. Therefore, for the reasons I have outlined, I kindly ask the noble Baroness not to press her amendments and that the clause stand part of the Bill.

[Baroness Barran (Con)]

I thank the Minister, and I will keep my remarks brief. It was very helpful of her to set out the examples of where natural persons are fined, as in data protection and with landlord and tenant. I did not quite follow, but I think she said there were 10 people who might escape this, which seemed like a small number in the totality. I suppose I would still argue that criminal proceedings could be brought, even if they could not be fined, but it was helpful to get those examples and I look forward to her letter. I beg leave to withdraw my amendment.

Amendment 138D withdrawn.