Industry News: Welsh Government consulting on eliminating profit-making provision for children in care
Independent provider bodies claim plans risk 'serious' negative impact on looked-after children, while BASW gives 'full' backing to ending profits but says investing in more social workers will be crucial to policy's success
The Welsh Government has opened a consultation on plans to eliminate profit-making residential and fostering provision for children in care.
The proposals, which form part of a cooperation agreement between the Labour administration and the Plaid Cymru group in the Welsh Senedd, would restrict registration of service providers to those operating a non-profit model.
New providers seeking to register with Care Inspectorate Wales would have to demonstrate not-for-profit status from 1 April 2026, with existing for-profit firms needing to transition by 1 April 2027, under new primary legislation sought by the Welsh Government.
Consultation documents said work was “currently being undertaken” to support private providers wishing to move away from profit-making models, and to assist non-profit organisations looking to expand their provision.
Plan to cut care population
The documents added that local authorities are also being supported to “better model and forecast future placement requirements, alongside reducing the number of children in care”.
Cutting those totals and ensuring more children can remain with their families is a key aim for the Welsh Government.
“Our ambition is to redesign how we look after children and young people, and eliminating private profit from the care of children is a key component of this,” said Julie Morgan, the Welsh Government’s deputy minister for social services.
“Children are at the heart of everything we do, and they have told us that they do not want to be cared for by privately owned organisations that make a profit from their experience of being in care.”
Reliance on private sector
As of March 2021, the rate of Welsh children in care was 115.3 per 10,000 of the population, far above the 67 per 10,000 for their English counterparts.
Of 1,068 residential places available as of July 2022, 85% were with private providers, consultation documents said, with nine of Wales’s 22 local authorities wholly reliant on private-sector children’s homes.
In March this year, a review by the Competition and Markets Authority (CMA), the UK government’s competition watchdog, described the children’s social care market as “dysfunctional” and in need of overhaul to tackle high prices and a shortage of placements.
The CMA warned that profits among the largest providers of both residential and foster care were higher than would be expected in a well-functioning market.
However, it rejected restricting for-profit provision, arguing that doing so would not necessarily deliver significant cost savings and could choke the supply of places, at least in the short term.
‘Invest in keeping families together’
Alison Holmes, the national director of BASW Cymru, said removing profit from the care of looked after children and young people was something the organisation “fully supports”.
But Hulmes said the potential impact on placement availability – including possibly meaning more children being sent further from home – was a concern.
“We would like to see an investment in the numbers of social workers we have in Wales, who can use their skills in strengthening families to remain together, so we don’t keep on removing children into the care system,” she added.
“Addressing the recruitment and retention crisis in social work is essential and we will continue to work with the Welsh Government, the regulator, and key partners to find sustainable, ethical and long-term pro-family solutions.”
Meanwhile Peter Sandiford, the chief executive of the Children’s Homes Association (CHA), which represents independent providers, said he was “significantly worried” about the consultation, including the potential cost implications of the proposals.
Sandiford said there was a “significant risk” that the proposals would “result in large-scale closure of good provision without any alternatives being put in place”.
He added that more children could end up placed in unregulated provision, or sent over the border to England, where they may be deprived of being able to interact in their first language.
“We are also concerned about the consultation being commenced in the summer holidays and that there is nothing included about how children, their families, their carers and others will be able to respond taking into account their understanding of these complicated technical issues,” Sandiford said.
Sandiford said the CHA continued to favour reform of commissioning practices, in line with the recommendations of the CMA review, and that he would be writing to the Welsh Government “to set out our views and express our concerns”.
The new consultation includes discussion of action around commissioning, which would complement registration restrictions by limiting local authorities to purchasing placements from non-profit providers.
Such a measure would go far further than the CMA’s recommendation that new regional bodies be set up to strengthen local authorities’ hand in sourcing the right placements for children.
‘Too little advance thinking’
Harvey Gallagher, the chief executive of the Nationwide Association of Fostering Providers, also cited the CMA’s recommendations and claimed the Welsh Government had done “too little advance thinking” despite eliminating profit from the care system being a manifesto commitment.
Gallagher, who has been involved with an implementation board for the policy, told Community Care that he had not seen evidence of robust prior consultation with young people from the administration, with a planned summit to seek their views on profit-making coming too late.
“This programme has caused anxiety amongst independent fostering agencies of all shapes and sizes, for profit and not for profit,” Gallagher said. “Many were started by foster carers or social workers who wanted to offer something different and better, and local authorities by and large value the services provided.”
He added that in his view, the consultation “does not easily lend itself to addressing tough issues” around sufficiency, and potential legal hurdles including around competition and adequately defining ‘profit’.
The consultation documents acknowledge that the impact of the Welsh Government’s plans could be undermined by “practices that go against [their] spirit and intention” by providers’ parent firms inflating fees or otherwise extracting profit via backdoor routes.
Gallagher said the NAFP “will continue to actively engage with Welsh Government and sector colleagues to try to ensure that children do not come off worse as a result of this policy”.
Expanding mandatory reporting of risk
Besides the proposals to eliminate profit-making in provision for children in care, the new consultation also seeks input on a range of other topics. These are:
The Welsh Government’s consultation runs until midnight on 7 November 2022.
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