Children and Young People: Local Authority Care

Lord Wood of Anfield Excerpts

Thursday 18th April 2024 Lords Chamber

[Lord Wood of Anfield (Lab)]

My Lords, I also thank the noble Lord, Lord Laming, for this timely debate—to use the cliché, The sad truth about our children’s care system is that it is always timely because the crisis just keeps going and getting worse.

The basic statistics, some of which the noble Lord, Lord Laming, referred to earlier, make very grim reading. Some 84,000 children are now in care—up 20% in a decade. Also, in the last decade there has been a tripling of the percentage of over-16-year-olds in care and a tripling of unaccompanied asylum-seeking children. The system is under increased pressure, particularly since the financial crisis, and these pressures are worsening month by month. The LGA has estimated a shortfall of £4 billion in our local government care system. As the noble Lord, Lord Laming, pointed out, there has been a shift in spend away from early intervention, which has reduced by nearly 50% since 2010, towards late intervention, which has increased by nearly 50% in the same period. The result is a big shortage in local authority-funded placements. Sixteen secure homes have shut since 2002.

The real crisis, though, comes from how local authorities—purely through constraint and pressure—have been forced to respond in different ways. First, there has been a huge increase in private sector residential care, which is now 85% of all homes. Why is this important? It is important because this is when local authorities lose control of the type, location and cost of provision. It is when private equity involvement increases, often with up to 20% margins for the largest companies. This sometimes leads to dangerously high levels of debt, the risk of which is borne ultimately by the local authorities and the very children whom they are supposed to be protecting.

Secondly, hundreds of vulnerable children are now being sent to unregulated homes because of a chronic shortage of places. There has been a 277% rise in the number of children placed in unregulated children’s homes since the pandemic. Just think of that; the most vulnerable children of all are in illegal placements.

Thirdly, there has been a tripling of children living in supported accommodation without any care at all. NGOs such as the Family Rights Group worry that the Government’s new regulatory approach will unintentionally confirm this as the new status quo. There is also the greater use of placements that involve distance and separation from family. Over one-third of children in the system are separated from their siblings. The average distance from family is now 18 miles, and over 20% of children live over 20 miles from their families.

We also have the inadequate use of kinship care, although I applaud the Government and officials for taking steps towards rectifying this in recent months and years. Groups such as Become and Kinship, as many noble Lords will know, have championed this issue ferociously. At the moment, however, only 15% of all children in care are in kinship care. The care system has not traditionally explored these options early enough, nor offered enough help to those family and friends who might provide that kind of care.

On top of this, there are labour shortage issues, with a 20% vacancy rate in social worker posts, a very high turnover in children’s homes and a declining number of fostering households.

It is a bleak picture, but we should acknowledge, as the noble Lord, Lord Laming has said, that the Government have taken some steps forward. Commissioning the MacAlister review was one, along with the development of local family hubs and the provision of more funding. Michael Gove and the Chancellor recently made some announcements on the children’s care estate. Of the percentage of funding that MacAlister envisages, something like 10% to 12% has been put in place so far.

Some of the things Government should do are not really about extra funding, although they will involve some extra funding. Take kinship care as an example. The organisation Kinship estimates that, for every 1,000 children looked after in well-supported kinship care rather than local authority care, the state saves £40 million and increases their lifetime earnings by £20 million. We also need stronger enforcement of the existing obligation for local authorities to have a kinship care policy. More than one-third do not have one, even though they are required to. We need more proactive strategic planning involving families—a shift to state support rather than simply increasing child protection inquiries, over 70% of which do not result in further action. We also need much better regulation of children’s homes to stop the debt problem and the leakage into the unregulated sector.

We need considerably more money, and I have a small suggestion of a down payment. Some £600 million per year comes from the carried interest loophole in the private equity sector. Many of the companies within that run these children’s homes. That would be a very small down payment to an increase in funding for this much-neglected sector.

This House and the other House have to make sure that we keep this as a priority. It is a sector that does not have the strong voices, sharp elbows or the champions that other children’s and health issues have. It gives us more responsibility to keep that voice strong.

Children’s Care Homes: Private Equity

Lord Wood of Anfield Excerpts

Tuesday 30th January 2024 Lords Chamber

Asked by

[Lord Wood of Anfield]

To ask His Majesty’s Government what regulation they are planning in response to the findings of a recent investigation by the Observer that private equity firms’ investments in children’s care homes in England have doubled since 2018.

[The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)]

My Lords, we recognise the concerns that the noble Lord refers to, particularly around large providers with complex ownership structures. We agree that sometimes placement costs are too high. That is why we are providing £259 million of capital funding to support local authorities to increase care placements and ensure that they meet children’s needs. We will introduce a new market oversight regime that will increase transparency on debt structures and profitability.

[Lord Wood of Anfield (Lab)]

My Lords, I thank the Minister for that Answer. The problem, however, is that the current mixed economy in the children’s care market is completely broken. Private equity providers are making high profits in the sector, increasing their margins and carrying large levels of debt, yet expanding their share of the care market at the same time. Meanwhile, increasing numbers of councils face crisis or even bankruptcy. Can the Minister tell us how the Government plan to eliminate specifically private equity profiteering in this sector? Can she also clarify whether it is government policy to substantially reduce the presence of private equity firms in the children’s care market?

[Baroness Barran (Con)]

I am glad that the noble Lord used the word “profiteering”: he beat me to it. As he has heard me say before, the Government are not against profit-making but they are against profiteering. Having much greater financial transparency will go some way to addressing his concerns, but the fundamental thing that has to shift is having fewer children in children’s homes and more children in foster care. That is why the Government place such emphasis on supporting foster carers and, indeed, kinship carers.

Independent Review of Children’s Social Care

Lord Wood of Anfield Excerpts

Thursday 8th December 2022 Lords Chamber

[Lord Wood of Anfield (Lab)]

I also thank my noble friend Lord Watson for this debate and for giving us a chance to refocus our attention on one of the most vital reviews commissioned by any recent Government. It is the kind of report that, if you read it in one sitting, as I did, lives with you for a long time.

The review is vital for lots of reasons. First, it goes to the heart of the Gandhi test—maybe it should be called the Watson-Gandhi test, seeing as my noble friend also mentioned it—which states:

“The true measure of any society can be found in how it treats its most vulnerable members.”


We have failed this test for tens of thousands of children for many years.

Secondly, the report reveals not just a catalogue of problems but a genuine systemic crisis from top to bottom, from the handling of individual cases to the strategic management of the system and from private care providers to consistency across local authorities.

Thirdly, the review is vital because we know that unless there is a restoration of the functioning of the system as a whole, this problem will get worse in the coming years, as my noble friend Lady Morris said. The report estimates a nearly 20% increase in the number of children entering the system in the next decade and a worsening of outcomes for those children. Crucially, it explains the false economies of thinking that sorting these problems out now is too expensive when, in fact, the current system is on course to cost more than £15 billion a year in a few years—a 50% increase on the current costs.

The review is full of detailed recommendations, but I want to focus attention on three genuinely systemic aspects that the MacAlister review discusses. I ask this directly: are the Government committed to implementing and endorsing those big but systemic aspects of change that are called for?

The first aspect is around a theme that recurs throughout the report: if the children’s care system is to shift away from expensive and ineffectual crisis intervention, there must be multiagency and multidisciplinary work throughout the service. This is the idea at the heart of the proposal, which has been discussed by many noble Lords, for a single category of family help for different kinds of cases to reduce fragmentation, reduce the number of handovers in the system and enable families to get early, integrated support.

A similar model of multidisciplinary team working is envisaged in the section on child protection, with the idea of a bespoke child protection safety plan. The review demands that when children emerge from the care system and face the challenge of establishing their own independence as adults, public services, employers and educational providers share a joint mission to act as what it calls “corporate parents” for looked-after children.

We all know from our experience in politics and government that among the hardest things to deliver is a reform that crosses departmental boundaries and binds in organisations with a common agenda that report to different Ministers, let alone requiring them to work together in a genuine way. Similarly, it is incredibly hard for Whitehall to countenance any reform that pools money, knowledge and professionals in local community institutions and genuinely allows them to make on-the-ground decisions tailored to the needs of individual children. That model of accountability is considered risky in a Whitehall system in which departments are directly called to account for their particular slice of a more complex outcome. Anyone who reads the review knows that this call for change is not an optional extra but absolutely at the heart of saving the system from further collapse. Beyond exhortation, what will the Government do practically to make this multiagency preventive focus a reality?

Secondly, aside from the heartbreaking stories of individual children failed by the system, I found the most moving sections—which have been referred to by noble friends and colleagues here—to be on the networks of informal care provided by grandparents, uncles, aunts, brothers and sisters. The report brings out a shameful contrast between, on the one hand, the extraordinary caring role played by these extended family networks—often very informally, and provided by people who themselves face huge, complex challenges—and, on the other, a system of rules and funding that ignores these networks, makes decisions without them and often in spite of them, does not provide funding or other kinds of legal protection for them, and often forces them into decisions such as becoming foster carers to receive financial support from the local authority.

Again, the child-first rationale is easy to applaud, but we all know that it is very hard for Whitehall to genuinely prioritise this kind of approach, coming as it does with the risk of different solutions for different kinds of children, outcome variations, the requirement for significant financial flexibility, et cetera. But making the money follow the logic of supporting the most trusted networks of care is absolutely at the heart of the report. Will the Government take the risk across departments of introducing the measures that the MacAlister review recommends in this report?

Lastly, the review is unambiguous about reforming the overall governance of the system. For all the amazing work done by many individuals in the system, as a whole it is not one in which securing these loving relationships is the priority. It is a system in which many providers of care are making profits out of their services, and outcomes for children vary not because of local decisions made in the interests of children but because of sheer randomness in the application of existing duties and programmes across different areas. This lack of strategic coherence goes all the way up to national government. As MacAlister says:

“There is currently a lack of national direction about the purpose of children’s social care and national government involvement is uneven.”


That is a pretty damning sentence.

Addressing this problem of strategic grip and securing unambiguous strategic authority is a priority. This means taking seriously issues such as revising the funding formula for children’s social care so that resources go more effectively to where they are needed, changing the metrics used in inspections, and lots more besides. At the heart of this is the innovation that the MacAlister review talks about—these new regional care co-operatives—to make local authorities inescapably responsible for care provision, fostering and commissioning activities. This issue was also touched on by the CMA review, which has been discussed. Will these regional care co-operatives form part of the Government’s response?

I have one last very quick point. The report shows that there is a very big difference between saying that lots of things are failing in children’s social care and saying that the system of provision is in need of overhaul. That is quite a big difference, and I hope that the Government’s response does not become the former rather than the latter.

Are the Government going to provide a loud, bright signal of intent that they are serious about changing this system and having collaborative working across departments, and between levels of government, at the heart of a new system? It is the hardest thing of all for any Government to introduce, but it is the most vital thing if you have read this report and take its impetus seriously.