Children's Wellbeing and Schools Bill (Sixth sitting)

Munira Wilson Excerpts

Committee stage
Tuesday 28th January 2025 Public Bill Committees

[Stephen Morgan]

We are aware that a provider of children’s social care places suddenly closing their provision as a result of financial failure could have a significant detrimental impact on the care and stability of children and young people where they live. Currently, local authorities have no way of knowing whether a private provider or its corporate owners are at risk of failing financially. If a large provider were to fail and suddenly exit the market without warning, it could be difficult for local authorities to find alternative placements for those children or places that appropriately meet their needs. That is why we are developing a new financial oversight scheme in children’s social care, as recommended by the Competition and Markets Authority, which will for the first time increase the financial and corporate transparency of difficult-to-replace children’s social care providers and allow accurate real-time assessment of financial risk.

The scheme will give local authorities advance warning of failure, so that they can take swift action and minimise disruption to the most vulnerable children. Those in the scheme will be required to submit a recovery and resolution plan containing information on risks to providers’ financial sustainability and plans to reduce those risks. The Secretary of State may also require providers or a corporate group member in the scheme of heightened financial risk to undergo an independent business review. We will provide details of the RRP and the IBR through guidance.

I thank the shadow Minister for his comments and questions and my good and hon. Friend the Member for Portsmouth North for her insightful contribution. The shadow Minister asked a number of questions about how the scheme will work in practice ahead of the regulations, and made a number of points about which providers will be in scope of the financial oversight scheme.

It is worth saying that the scheme will be proportionate and target only difficult-to-replace providers and their owners according to their size, market share and geographical concentration. The scheme will apply to private, voluntary and charity providers of children’s homes, including dual registered special schools and independent fostering agencies operating in England. We will also extend the measure to supported accommodation, and we in the future may look to extend it by regulation to residential family centres. Local authorities routinely manage placements of individual children in the event of closures of smaller services, so we do not think those need to be covered by the scheme.

To answer other questions raised by the shadow Minister, the Bill sets out the foundations of the financial oversight scheme, exercisable through the Secretary of State’s powers. We know that the children’s social care placement market is dynamic and we will use these measures and powers to set out the detail in regulations, which will enable my Department to review and update the details in line with future changes to the market. We will publish guidance alongside the regulations, setting out how the scheme will operate in practice and enabling providers to understand what the scheme requires of them.

The shadow Minister asked why Ofsted is not leading the financial oversight scheme. The forensic financial analysis required to fulfil the scheme’s aims extends beyond Ofsted’s remit as a largely quality-focused regulator. Given that Ofsted is not a financial regulator, we will build on my Department’s existing capabilities and market oversight functions to undertake the specialist work required to develop the scheme. A Department-led scheme means that we can play a stronger co-ordination role should a difficult-to-replace provider exit the market, enabling a quick multi-agency response.

Finally, how many providers will be covered and how many placements they represent, we want the financial oversight scheme to deliver an effective oversight function that is proportionate and not overly burdensome. We therefore want to introduce a scheme that covers difficult-to-replace providers only, as recommended by the Competition and Markets Authority. We will determine how many providers will be subject to the scheme as we develop the regulations. Providers who meet the conditions will include private, voluntary and charity providers; we may look to scale the number of providers in the scheme up or down in future ,according to market developments, to ensure that we continue to meet the aims of the scheme.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Clause 14

Power to limit profits of relevant providers

[Munira Wilson (Twickenham) (LD)]

I beg to move amendment 42, in clause 14, page 28, line 37, at end insert—

“(c) independent schools with caring responsibilities and offering SEND provision.”

This amendment would include independent special schools within the profit cap provision.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 25, in clause 14, page 29, line 25, at end insert—

“(10) Before making regulations under this section the Secretary of State must lay before Parliament a report containing —

(a) details of the number of available placements in relevant establishments or agencies;

(b) an analysis of the expected impact of this section on the number of available placements in relevant establishments or agencies.”

Clause stand part.

[Munira Wilson]

It is a pleasure to serve under your chairmanship, Mr Betts. Clause 14 grants the Secretary of State the power to limit the profits of certain social care providers, so I will say at the outset that I, as a Liberal, support a mixed economy in the provision of public services, but I believe that there must be limits to that. It is clear that we have a market that is not functioning, and there are providers who are shamelessly profiteering. I spoke to my director of children’s services about this last week, and he told me at the moment the average price of a placement in a children’s care home per week is £5,500. That is very much the average price; a number charge multiple times that amount per week. That local authority finances are being utterly crippled by some providers, which are clearly behaving inappropriately in the market because of the lack of supply, leaves me incredulous.

A number of hon. Members have made reference to the Competition and Markets Authority’s 2022 report. It said that the UK had sleepwalked into a dysfunctional market, and that

“the largest private providers…are…charging materially higher prices, than we would expect if this market were functioning effectively”.

The power in clause 14 is an important backstop if other measures are not successful, but the devil will be in the detail of how the power is implemented if it is triggered. We all know that many of those big companies have deep pockets from which to pay the best accountants and lawyers, and comprise multiple companies in complex structures all over the world; they can put money into all sorts of different places to avoid the intended scrutiny.

Amendment 41 would include independent special schools in the provision. I will say at the outset that there are many independent special schools run by private providers and voluntary sector providers that do an excellent job and are certainly not profiteering; none the less, some do not fall into that category. We are all acutely aware of the crisis in state special educational needs and disabilities provision and the lack of specialist places, which has led to a growth in private provision that is crippling local authority finances. In 2021-22, councils spent £1.3 billion on independent and non-maintained special schools—twice what they spent just six years previously. The average cost of one of those places was £56,710—twice the average cost of a state-run special school place.

It is clear from analysis done by the House of Commons Library for the Liberal Democrats that some of the companies running those schools are the same private equity companies that are running the children’s homes and fostering agencies that the power in clause 14 is designed to address, so I am at a loss as to why the Government have not included independent special schools in the provision. LaingBuisson, which undertakes reports on children’s services, looked at those providers on the profitability measure of earnings before interest, tax, depreciation and amortisation. It says that the profitability of 23 of the major providers, using the EBITDA measure, varied from 27.9%, in the case of the Witherslack Group, down to 4.7%, which is a much more acceptable level; over a third of the 23 major providers had a greater than 20% profitability margin. Typically, it was the private equity-owned providers that had that high level of profitability, not the other private sector providers. I urge the Government to look very seriously at amendment 42, which seeks to ensure that we also crack down on profiteering in special schools.

On amendment 25, tabled by the Conservatives, I actually think the first part of it, about detailing the number of placements available in relevant establishments or agencies, is a good idea. That information should not be published only when the power is triggered; frankly, we should have an annual assessment of the availability of care placements and details of what the Government are doing to boost their availability. It is clear that the lack of provision is what is driving the profiteering. A later clause allows local authorities and others to open new special schools where there is demand. We need a provision that gives local authorities the power and funding to fill a need for social care placements as well, so that we are not filling the coffers of private equity funds and sovereign wealth funds in the middle east, which pay their directors massive bonuses, huge amounts of money, drawn from the public purse, when many of our local authorities are on the brink of bankruptcy.

--- Later in debate ---

[Munira Wilson]

I thank the Minister for his kind remarks about my comments, but he is aware that the SEND system is in crisis—he and his fellow Ministers hear that every other week in the Chamber. He knows that local authority finances are on the brink because of SEND costs, and that those deficits are driven to a certain extent by the spending on private provision. I am curious as to why the Government are so hesitant to take action in this space, yet they are happy to slap VAT on parents wishing to send their children to independent schools. This amendment is about tackling specific providers that are clear outliers in the fees they are charging. It is a targeted intervention that could really help local authorities and, in turn, children who are desperate for more support that local authorities cannot provide.

The right hon. Member for East Hampshire talked about whether we can control profitability. I used to work in the pharmaceutical industry, in which the Government have for many years had a control on not only prices but profits and have clawed back profits. As a monopoly purchaser of services, the Government can act on behalf of NHS trusts around the country, and they could do something similar for local authorities where needed, whether it is with special schools or private social care providers. I would like to press amendment 42 to a vote.

[Neil O’Brien]

I was quite reassured by the Minister’s thoughtful comments and his clear appreciation of the difficulty and extreme number of obstacles to making this power practicably usable. Kenneth Clark said that he did not know what civilisation was, but he knew it when he saw it, and I think quite a few Members of this House, including those on the Government Benches, have the same feeling about excess profits—we feel that they are too high, but we struggle to say what we think an acceptable level would be. That challenge will not get any easier over time.

As ever, my right hon. Friend the Member for East Hampshire is more articulate than I am, and he made the point well that this is not a profit cap but a retrospective clawback mechanism, which is another reason why it will be so hard to use in practice. Unless we are going to get into problems of retrospection and loads of legal action, we will be giving people advance warning, which will give them time to move money around and ensure that things look compliant.

I am keen to move amendment 25 to a vote. I promise that we will make great progress on subsequent clauses; I am not trying to be a dog in the manger. I understand and accept the Minister’s arguments about the things that the Secretary of State would do before commencing such a power—that was reassuring—but there should be a national assessment of the number of available placements. The Minister said that such things happen locally, and that someone could tot them up; I hope the Government will do that. It would be a powerful thing for the Minister to do and would give him huge clout in driving this agenda forward, so I hope he will do it even if the Committee votes against this amendment.

There should be a German word for a bit of data that we think should exist—we look on the internet and think we should be able to find it, but somehow it does not exist. This assessment of what is available out there is an example of that. I am keen to put our amendment to the vote, to make that point for our friends in the other place when they discuss the Bill, but I am reassured by the Minister’s comments.

Question put, That the amendment be made.

--- Later in debate ---

[Munira Wilson]

I join the shadow Minister in paying tribute to our social care workforce. Social care is an incredibly tough job, and I take my hat off to anybody who goes into the profession.

I understand the Government’s motivation and objectives, which are similar to those behind the provisions on care providers and the costs involved. We should also think about the children’s experience. Whenever I have spoken to care-experienced children, they have told me that their biggest frustration is with the huge turnover of staff, which means that they have to share their stories and relive their trauma a number of times. Often, they have a new social worker every few months. It is therefore important to try to clamp down on the use of agency workers.

However, I share the shadow Minister’s concerns about what the measures will mean in terms of ensuring that we have an adequate workforce. They do not necessarily tackle some of the root problems that motivate social workers to opt for agency contracts. They do not tackle challenges around costs and pay and conditions in the context of the cost of living crisis, nor do they address the fact that workers may get flexibility through agency working that they do not get in a permanent role. We need also to look at supporting continuous professional development for qualified social workers, as we do with doctors, who receive 10 years-worth of funded training and development on the job. We do not do something similar for social workers.

I want to hear more from the Minister about whether the Government have a workforce strategy to address the root causes of more and more social workers opting for agency contracts, which is not good for taxpayers or for the child’s experience. How can we address the fundamental causes and get more people into the workforce?

[Catherine McKinnell]

I thank both hon. Members for their probing of the clause. No amendment has been tabled, and there seems to be general agreement that the principle is right. Over-reliance on agency workers contributes to workforce instability, which has implications for both the workforce and the children it is there to serve. It also puts pressure on local authority budgets. I thank both hon. Members for recognising the challenging but hugely valuable work of social workers, which is often unrecognised and un-thanked. It is good that we take the opportunity to put on record our collective gratitude to them for the difficult work that they do.

Many local authorities are already demonstrating success in transitioning agency workers into their permanent workforces. People who work in social care need the right environment so that they can thrive, personally and professionally. We recognise that regulation alone is not the answer, but the Government are supporting local authorities to attract and retain children’s social workers and provide positive working environments for all who work in children’s social care, because ultimately children will benefit.

Local authorities will still be able to use agency workers if doing so is the most appropriate resourcing option and in line with the regulatory framework, but it is important to reduce local authority spend on agency staff and to allow local authorities to reinvest in the permanent children’s social care workforce. Statutory guidance that has already been issued on this matter has allowed the Government to act quickly to introduce a new framework. The framework focuses on social workers, but other Government Departments are working on the same issue.

Guidance can be departed from in certain circumstances, so introducing regulations on the use of agency workers is appropriate and proportionate. It is important that we strengthen the regulatory framework on the use of agency workers in children’s social care to ensure that it is legally binding, so that we bring greater transparency and accountability to the use of agency workers, as the right hon. Member for East Hampshire suggested. We will continuously consider the evidence, ensuring that we take an informed approach to those regulations.

There is a statutory duty to consult before introducing regulations. We commit to working in partnership with stakeholders across children’s social care, ensuring that any proposals that we introduce are proportionate and effective. We are also working with local authorities and regions on developing price caps. We will look at the data later this year, before introducing those changes, and the raised regulations will be subject to consultation and the affirmative procedure. With those comments and queries responded to, I hope that Members feel that they can support the clause.

--- Later in debate ---

[Damian Hinds]

I am not at all opposed to the clause, but I am curious to know what prompted it. What outside world events made us rethink the regulations? I heard what the Minister said about consulting young people, but I am struggling slightly to picture that conversation, where the kid goes, “You know, what we really need is a change in the employer licensing regulations.” But fair enough.

The changes are in some ways liberalising by increasing the latest hour from 7 o’clock to 8 and allowing Sunday working, but in other ways they are restricting. I am interested in what is behind that. There are risks to guard against in the employment of children, but the employment of children is not in itself an ill to be mitigated. There are many benefits to the child in having that opportunity. In fact, the biggest gripe we hear from employers about young people—it happens again and again—is about what some call soft skills, or employability skills or workplace skills. Whatever we want to call it, those are skills that people develop at work. Many times over the years, whenever I have had a group of leaders and industry together, I have gone round the room and literally asked, “How old were you when you first did a day of paid work?” The most typical, most common answer is 14—some say 15, and for some it is younger. It is important that we learn from that.

In the last 25 years, there has been a sharp decline in the number of under-16s and under-18s doing paid work. That is partly because of the decline in certain job types—there are not many paper rounds or milk rounds any more—and partly because of social attitudes. When we had public exams in the lower sixth and upper sixth for most children, that probably had an impact for the slightly older age groups. One of the reasons that employers find it daunting to employ children is that they are often unclear about what the regulations are, but they have a sense that there are risks, including reputational risks and so on.

The explanatory notes state:

“The Secretary of State will have a power to make regulations in relation to child employment which will replace the power local authorities currently have to make bylaws. The regulations may prohibit the employment of a child in certain types of work, make provision in relation to child employment permits, authorise the employment of 13-year-old children and set out the number of hours children can work per day or week, their entitlement to breaks and leave and to specify other conditions of employment”.

It is quite a list.

Today, to be clear, children can work part time from the age of 14. In some council areas, the minimum is 13. Are the Government now saying that the minimum age will become 13 throughout the country? What limits do they envisage in ordinary times for additional regulation? There is rightly already plenty of regulation about the employment of anybody and further regulation about the employment of people who are below 18. What additional regulation do the Government envisage?

The Government will say that there will be secondary legislation under the affirmative procedure and that it will all be fine, but we know how secondary legislation works—often in this very room—under the affirmative procedure. Often people do not know about it very far in advance. A Committee of Members of Parliament comes here and debates the secondary legislation—I was going to say that the MPs vote on it, but often they do not—the legislation cannot be amended, and then it moves on. Given that we are talking about the primary legislation, it would be helpful to get on the record what the Government are thinking about doing in this area.

As my hon. Friend the shadow Minister rightly said, having a standardised system of permits nationally is okay in principle. Indeed, benefits may well come from that, but it goes somewhat against the direction of travel from a Government who are introducing devolution in local government and changing the levels at which responsibility is held. The danger with a national system for something like this is that we could lose some of that local knowledge and variability, for example, in rural areas of the country with heavy agricultural sectors. Employment can be different there. In seaside towns with more seasonal employment, that might affect the employment of children. Can the Minister give us some reassurance that there will not be scope creep, for example through the introduction of further regulations for the employment of children in the family business or activities such as babysitting? Can she also assure us that the minimum age exemptions with a performance licence for the creative industries—theatre, film and television—will not be lost?

[Munira Wilson]

I do not have a philosophical problem with this clause either. I was slightly surprised to find it when I was reading the Bill and to hear where it came from, but I understand what the Government are attempting to do.

Before press releases start going out suggesting that the Lib Dems want to promote child labour, I will preface my next question with some feedback from the National Network for Children in Employment and Entertainment. It has raised some concerns that the later hour set out in the legislation does not fully address the employment of young people in televised and live sporting events. That is particularly the case where we now have the benefit of floodlights and roofs—I think of the late matches on centre court at Wimbledon, when we have ball boys and ball girls from the local area working there. I understand that there is a different licensing regime if children are participating in sport, but this measure would apply to some of the children working at those sporting events. What consideration have Ministers given to those sorts of situations? Have they spoken to the National Network for Children in Employment and Entertainment?

For organisations with particular shift and working patterns—for example, those involving non-performance roles in theatres, including in lighting or backstage—the National Network for Children in Employment and Entertainment suggests allowing hours later than 8 pm on a Friday or Saturday for older teenagers, provided that the next day is not a school day. I am not necessarily suggesting that that is the right thing to do, but that is a suggestion made by that organisation given its needs. It would be good to get some clarification on when the current byelaws for child employment will cease and when regulations from the Secretary of State will replace them.

Importantly, what consideration has been given to safeguarding and DBS checks of employers where young people are working? The right hon. Member for East Hampshire touched on that. We have self-employed young people offering their services as tutors, babysitters and gardeners. I understand that some of them are offering their services through apps and things nowadays, and they are presumably not touched by these regulations, so what consideration have Ministers given to children in those sorts of services?

[Catherine McKinnell]

Considering the level of agreement on this provision, there is a significant amount of interest and questions around it. It might help if I clarify that currently a child can work for a maximum of only two hours on a Sunday and up to 7 pm at night, which restricts employment opportunities. It may not make business sense to employ a child who is able to work only a very short shift. We spoke with children while developing this policy, and they were pretty universally of the view that they would like to have more flexibility in when they can work, not necessarily in the amount that they wish to work. Clause 20 will not change the overall number of hours that a child can work, but it will give children much greater flexibility to maximise the opportunities that hopefully will become available to them as this area becomes more clearly set out as part of the legislation.

Employers and sector bodies have set out the difficulties in being able to offer employment to a child either on a normal trading day or when they experience peak demand when the child has worked their requisite two hours. That often closes down opportunities that children could easily have had and would have enjoyed having. Businesses would appreciate having those children as part of their team, but the restrictions in the current arrangements often make that difficult to accommodate.