Probing the profit motive

The County Councils’ Network has set out a blueprint for sustainable council services, including a call for a cap on the cost of children’s residential care placements. Ann McGauran reports.

The Manifesto for Counties has laid out a vision for working with the next Government to deliver their domestic agenda and deal with some of England's biggest social and financial challenges.

Sweeping reforms across five key council service areas are called for in the County Councils' Network's (CCN) cross-party blueprint for counties and unitaries launched last week ahead of the General Election.

Among the 167 asks was a call for a minimum four-year funding settlement to include a significant uplift in funding for councils over the next Parliament and the introduction of price caps in the children's services residential care market to limit excess profiteering from private providers.

The need to rein in the cost of private placements is becoming increasingly urgent. The CCN's autumn 2023 budget analysis showed an average of 68% of a county authority budget (excluding education) dedicated to providing care services, with children's services making up almost half the projected overspends. This, said the analysis, is due to a sharp increase in post-pandemic demand in children's services and the cost of care placements rising due to inflation and an acute shortage of accommodation.

The burning need to deal with the cost of placements has been highlighted to The MJ.

Director of children's services at Hampshire CC Stuart Ashley said the independent sector was ‘maximising profit'. He said: ‘Can't we put a sensible cap on profit that allows a vibrant marketplace, but not exploitation of local authorities? It's not reasonable to pay £30-40,000 a week. In exceptional cases those are the prices they charge. That to me is unjustifiable.'

Hampshire's deputy director of children's services Steph How said some providers were insisting they would only take on a placement if funded by the council on the basis of a three-to-one ratio of staff to child.

To tackle high-cost placements the Manifesto for Counties has urged for a package of reforms to include:

  • Price caps based on standard weekly rates assuming no greater than 1:1 staffing, except in exceptional prescribed circumstances
  • Regulation around ‘demand pricing' to ensure the public purse is not exploited at times when demand is high
  • Rules around charging for retainers which allow providers to charge when they hold a bed empty – the tariff should be lower than if a bed is occupied
  • Strict requirements on notice periods to ensure no child should be required to move to a new home at short notice
  • A central placement database system should be set up to ensure all ‘available' placements are logged and visible for any local authority buying places to consult, ensuring councils can see what placements are available without having to consult multiple providers

The manifesto also called for councils to be funded properly to fulfil their statutory duties, with constraints taken into account by regulators. It asked for the financial impact of any policy or regulatory changes to be fully assessed for their financial effect on local authorities – including indirect market costs.

It said councils should not face any new unfunded burdens, such as the impact of new regulation around semi-independent placements. It added that publicly available reviews of provider behaviour should be set up to help eradicate behaviours not currently covered by the regulator, including giving notice on a child ahead of an expected inspection, giving ultra-short notice on a child's placement, charging excessively high cost ‘extras' on which a placement is conditional; or ‘employing unnecessary significant additional staffing which is oppressive to children and their wellbeing'.

In a cross-party CCN statement, the leaders of the organisation's Conservative, Labour, Liberal Democrat and Independent groups, said the manifesto ‘does not simply make blank cheque arguments'

It continued: ‘The council services under the most pressure will only become sustainable in the future if they are coupled with root and branch reform. Councils want to be key partners in this process: setting out solutions and then leading on implementing reform across a host of areas, such as children's services, special educational needs and disabilities provision, and school transport.'


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