‘Short-notice’ children’s home closures show need for greater powers over market – sector heads

The “short-notice” closure of 28 children’s homes by one of the country’s biggest care providers shows the need for greater powers for councils and Ofsted over the market to manage the impact on young people.

That was the message from sector leaders after Outcomes First Group (OFG) closed almost half of its portfolio of 60 homes, reportedly giving commissioners a month in which to find new placements for the children affected.

The company’s actions were labelled “unacceptable” by provider umbrella body the Children’s Homes Association, of which OFG is not a member.

However, the company, owned by private equity firm Stirling Spring Capital Partners, said it had complied with commissioners’ contractual terms and that no decisions were made without the agreement of the local authorities and children’s social workers. It said the decision was driven by recruitment pressures.

The closures – in the context of the widely accepted placement shortages and instability for children – highlighted the need for tighter control of the market, said the Association of Directors of Children’s Services (ADCS), Local Government Association (LGA) and Ofsted.

Call for greater oversight of providers

“We are extremely concerned about the short-notice closure of children’s homes by Outcomes First and the impact of this decision on dozens of children who deserve to feel safe and secure in their homes,” said an LGA spokesperson.

“Such closures are one of the reasons the Local Government Association has been calling, for some years, for far better oversight of large providers, in particular where providers are carrying significant financial risk.”

An Ofsted spokesperson added: “We would expect any provider that was closing a home to be sensitive to the impact on children, and to minimise disruption through careful planning with placing authorities.

“As we have said for some time, the lack of significant oversight in the children’s home market has meant the risks and impact of providers leaving the market, or no longer providing specialist services, are not properly understood. This is leaving parents and local authorities struggling to find the right homes for some of the most vulnerable children.”

The Department for Education (DfE) has pledged to introduce an oversight regime for the largest children’s home and independent fostering providers, to increase transparency of their finances and identify services at risk of closure.

This was recommended in last year’s final report of the Competition and Markets Authority’s children’s social care study.

New council duty mooted

However, ADCS said it may be necessary to go further, by placing councils under a duty to step in and run services where providers quit the market at short notice.

Such a duty exists in adults’ services, in which councils must, temporarily, meet the needs of people – regardless of any duty to do so – when a provider’s business fails.

ADCS president John Pearce said: “A disorderly exit of providers from the market, particularly those operating at scale, would be difficult to manage in every respect, there isn’t a mechanism for local authorities to step in and run children’s homes as there is in adult social care, even in the short term, which begs the question where will those children and young people go?

“There may be benefit in exploring the local authority provider failure duty in adult social care under the Care Act 2014 and how this could be replicated in children’s services to protect children’s best interests.”

Pearce also repeated longstanding ADCS calls for government investment to address the “urgent crisis” in the supply of placements, which ministers are seeking to address through a £259 investment in children’s home provision from 2022-25.

Providers ‘need help with staffing’

The CHA also urged help for the sector, particular in relation to staffing.

“Government and stakeholders have been made acutely aware of the crisis in children’s residential care, and of the factors creating it: record numbers of children in care with an alarming increase in high acuity cases; woefully underfunded local authorities; historically high and persistent inflation; and a severe recruitment and workforce crisis,” a spokesperson said.

“The recruitment crisis is currently the most serious barrier to providers opening new provision to meet local authority sufficiency needs.”

In its statement on the home closures, OFG said: “The group adhered to the contractual terms agreed with the local authorities. Transition plans – agreed by all parties – were in place.

“No placement decisions were made in isolation without the full agreement of the local authority and social worker.”

“We made the difficult decision to close some homes in light of sector wide recruitment challenges.”

They said the homes had been offered for purchase as a priority by local authorities or other residential care providers.

In relation to its other homes, the spokesperson said it was “operations as usual”, adding that 94% were rated good or outstanding by Ofsted.