Children’s Wellbeing and Schools Bill

Baroness Sanderson of Welton Excerpts

Tuesday 17th June 2025 Lords Chamber

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[Baroness Sanderson of Welton]

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.

[Baroness Sanderson of Welton (Con)]

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.

One notable exception is the proposal to improve the data that individual local authorities hold on the prices paid for private placements, and to improve the sharing of that data—hence this amendment, which would require local authorities to publish annually the prices that they pay for private placements in children’s homes. This would

“ensure that local authorities are supported to better understand, shape and commission placements that suit the needs of children in their area and bring transparency to the cost of placements”.

That last bit is a direct quote from the Government’s own policy statement, so I am rather hoping that the Minister might agree with me.

If I may, I would like to give an example of why this data is important and how the current system works in the interests of the larger providers while threatening the viability of the smaller operations. I have a friend who runs a children’s home. He has one property; he runs it well and, as a result, has children who often stay with him for a number of years. Every year, he has to fill out a spreadsheet to justify any price uplift to the local authority for existing placements. He is told that this information is supposed to ensure that uplifts are transparent and fair across the board—but it is not transparent, as it is not shared with him, nor is it fair. Typically, his uplifts have run at about 2%, although one year it was only 0.2% However, if you are in a home with regularly changing children, it is possible to set the price for placements each time. As a result, and only through a chance conversation, he discovered that he was being paid £1,500 per week less than one of the large private providers in his area offering the same one-to-one support for a child with very similar needs.

The net result of all of this is that my friend continually struggles to keep his head above water, despite being a responsible provider running the type of home which we are all agreed we need more of. If he was able to see the data on payments made to other providers in the area, it would help him negotiate more equitably with the local authority, which in turn would shore up his perennially fragile position. There are benefits on the other side, too, for the local authority. As in the words of one practitioner, “If we were all more transparent then there would be less chance that private providers can pick us off one by one, re prices”.

The Government have said that they will engage with the sector to bring about greater cost and price transparency, but, as we know, local authorities are not great at sharing data. Would the Minister consider mandating the publishing of this data as part of this Bill? I understand—it has been mentioned previously—that Governments are rightly cautious about the number of requirements that they place on local authorities, but given the level of distortion in the market and the urgent need for more suitable homes, there is a solid case to be made in this instance.

I suspect that in her response the Minister will point me to the regional care co-operatives, which will of course lead to greater data transparency. However, what it does not do is to solve the problem for the smaller providers. As with other measures in this Bill, it is another late-stage intervention, so it is a step to be taken, such as imposing fines, when things have already gone wrong. What seems to have got lost along the way are some of those positive preventive measures that originated from the Government’s own policy paper; they have just fallen by the wayside. To be honest, I am slightly puzzled as to why that is the case, but perhaps the Minister can shed some light on the matter, or perhaps, dare I suggest, she might consider reinstating them into this Bill.

I turn to some of the other amendments in this group. My amendment does not go as far as Amendment 174, from the noble Baroness, Lady Bennett of Manor Castle, which seeks to remove private companies from the market as has happened in Wales. I think that our mutual agreement thing may have fallen down now, because I do not think that it is feasible or desirable to ban private provision; that would only increase the capacity shortfall, and we need responsible private investment. I do not think that we should disincentivise private providers from investing in new capacity or do anything to further destabilise the market. That is why I understand the concerns of my noble friend Lady Barran about the proposed profit cap, which the CMA thinks would be unworkable. It is also why I support her Amendment 142A, which would exclude individuals from financial penalties.

While I have purposely limited my amendment to children’s homes, the same principle of data sharing to create a fairer market certainly applies to fostering agencies, where there is a similar problem. While private investors operate less in the space of supported accommodation, it is not unheard of, so I understand the reasoning behind Amendments 140 and 142, which would include supported accommodation a little more in the Bill.

Finally, on Amendment 141, from the noble Lord, Lord Addington, I am afraid that this is not my area of expertise, but I look forward to hearing his reasoning behind it. I beg to move.

[Baroness Tyler of Enfield (LD)]

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.

Finally, nine times out of 10, the noble Baroness, Lady Bennett, and I agree on pretty much everything. We often support each other’s amendments and speak in the same debates, but I do not quite share her position on removing the profit motive altogether from children’s social care. Far more needs to be done to regulate it, but there is a place for the private sector in the children’s social care market; it just has to be properly regulated.

--- Later in debate ---

[Baroness Sanderson of Welton (Con)]

My Lords, I thank the Minister for her response, and I thank all noble Lords for a really interesting debate. We said it would be controversial, and so it proved. I will not speak for long as we are getting late again, as usual, but I say very quickly to the noble Baroness, Lady Bennett of Manor Castle, that I genuinely have real sympathy for the children she mentioned and how it makes them feel. I am a big believer in the voice of the child; it would be hypocritical to say otherwise.

I agree with the noble Lord, Lord Addington, that in some senses this is a reactive Bill, while we are dealing with problems that we have here and now. As my noble friends Lord Nash and Lady Barran said, a root cause of a lot of the problems that we have spoken about on all these days in Committee is capacity. We have to address the fact of capacity and its geographical spread.

I particularly thank my noble friend Lady O’Neill because she brings her experience and is able to tell us what it is really like and what actually happens. I was really pleased that she said she thought this could be helpful in grappling with some of the problems that local authorities face, because if my noble friend says it could be helpful then it probably will be helpful. I was very encouraged by that, and it might be helpful in other areas.

I apologise to the noble Baroness, Lady Tyler. I think I was slightly ill advised on the extent of the supported accommodation market and the levels there.

The noble Baroness, Lady Thornton, made some really interesting points. I was going to suggest that the Government take her up on the offer of the round table because I was very interested in social value procurement, but they are doing that already.

I kind of knew, having sat through last Thursday’s debate, that I was going to end up in the Minister’s “not everything’s for legislation” box, and so it proved. I take the point. Of course there is a wider body of work; on the last amendment that I spoke to, I mentioned the money that the Government had put in and the wider body of work, and I am very happy to acknowledge that. I just think the difference here—everyone says this—is that while it is great to have better data and to have that improvement with local authorities, I am not clear how it will help the smaller private providers and therefore the problems of capacity that we have mentioned. Unless we mandate that publishing, I do not think it will happen—and that feels a little one-sided, so I am afraid this is back out of the “not everything’s for legislation” box. On that note, and with that in mind for now, I beg leave to withdraw the amendment.

Amendment 134A withdrawn.