CMA report reveals “significant” concerns on availability and price of children’s care

The Competition and Markets Authority interim report on children’s social care outlines significant concerns about the availability of placements and the profits of private providers.

The interim report finds that there are often no placements available, in children’s homes, with foster carers or in independent accommodation, that fully meet the needs of children – with some being too far away or requiring siblings to be separated.

The interim report finds that because local authorities must find an appropriate placement, often under considerable time pressure, their position in the market is inherently weak. This means they are often paying private providers for those placements at prices that are higher than they would otherwise be.

As a result, large private sector providers of children’s homes and fostering services appear to have been making higher profits in England and Wales than the CMA would expect in a well-functioning market.

The CMA’s analysis suggests many of these problems are the result of the relatively small numbers of children each local authority is placing.

There is also concern about the evidence it has seen of particularly high and increasing levels of debt being carried by private equity-owned firms in the sector.

This could leave the businesses vulnerable to financial distress and ultimately having to unexpectedly exit the market in the event of tightening credit conditions, as seen in other sectors.

Andrea Coscelli, chief executive of the CMA, said: “We are concerned this is a failing system, with children not being placed in the right homes while providers are being allowed to charge high prices and make big profits.

“Vulnerable children rely on these services, but too many are being placed in accommodation that does not meet their needs. And despite many placements not being suitable, local authorities, funded by taxpayers, are paying more than they should to provide them.

“The levels of debt we have seen being carried by private equity-owned firms is also a real concern due to the effect a firm in financial distress could have on the children in their care.

“We are now considering ways to tackle these issues, including recommendations to the UK and devolved governments, and are inviting comments on these. Our priority remains identifying the best ways to ensure children can get the right care.”