In November 2024, the Government unveiled a comprehensive reform plan aimed at overhauling the children's social care system through the policy paper, ‘Keeping Children Safe, Helping Families Thrive’. 

Many of the proposed reforms are due to be enacted through the Children’s Wellbeing and Schools Bill (which is currently at its second reading in the House of Lords), which captures the Government’s vision of tackling a number of key issues in the sector.

Increased budget

The Government’s autumn budget announced £90m, which has been set aside to create an additional 200 open children’s home beds, to reduce the number of local authorities placing young people in unregistered settings. 

Bringing transparency to costs

Local government spending on looked-after children has increased from £3.1 billion in 2009/10 to £7 billion in 2022/23. Considering this, the Government plans to enhance transparency around the costs of children's homes. Currently, there is limited comprehensive data on the costs of different types of children's social care provision. By engaging with the sector, the Government aims to share cost information more effectively, so that this can be considered by local authorities when negotiating the costs of a placement.

Diversifying the market

The Government aims to encourage new not-for-profit providers into the sector, such as charities, voluntary sector providers, and ethical investors. Recognising that initial set-up costs are often a barrier, the Government plans to introduce funding mechanisms such as social outcomes partnerships to support these new entrants.

UK ownership

The Government is exploring the introduction of a requirement that any new provider must be owned and domiciled in the UK, including corporate owners and majority shareholders. 

Location assessments

To reduce regional imbalances in the availability of children's homes, the Government plans to strengthen location assessments. This will ensure that new homes are established in areas with local need, improving access to care for young people across different regions.

Ensuring financial stability

The Department for Education will also implement a financial oversight scheme to increase transparency for local authorities and assess the financial health of care providers, similar to the CQC’s Market Oversight Scheme. This will ensure that providers have contingency plans in place to prevent sudden market exits, which could disrupt the care of vulnerable children and young people.

Legislative action

If the current reforms do not effectively address rising costs, the Government states that it will consider introducing secondary legislation to cap the level of profit that can be made from children's social care placements. This would involve setting a limit on the profit that providers can make each financial year from specified placements.

The government also want to increase Ofsted’s enforcement powers so that they can issue civil fines against providers of unregistered settings. 

What does this mean for children’s social care providers?

While there are some positive aspects to the Government’s proposals such as new opportunities for social businesses, the Government’s reforms do not address many of the issues currently being faced by providers, such as the recruitment and retention of staff, inconsistent practices between local authorities and the potential barrier planning rules and processes provide for development.

With Ofsted and its regulatory regime also going through a period of reflection and change (e.g., changes to the social care common inspection framework), providers will need to follow what is occurring carefully and ensure they are in a position to comply with any new or updated obligations and adapt to the regulatory regime.

Should you require support or advice around children’s social care issues, please get in touch with the team on regulatoryteam@anthonycollins.com.