Government gives Ofsted powers to crack down on ‘exploitative’ providers

The government has announced major reforms to children’s social care to ‘end years of neglect of the children’s social care support system’.

A wide range of new reform measures will be set out in Parliament, which the government hopes will deliver better outcomes and a more secure life for children across the country.

The government says the reforms will ‘empower’ social workers, and all those that work with children, to take action against children’s placements providers that deliver subpar standards of care at sky-high costs to councils and focus the system on early intervention.

It comes as local government spending on looked after children has ballooned from £3.1 billion in 2009/10 to £7 billion in 2022/23, with social workers all too often burdened by heavy caseloads, struggling to deliver the help that children and families need before problems escalate.

“Our care system has suffered from years of drift and neglect,” Bridget Phillipson, Education Secretary, said, adding: “It’s bankrupting councils, letting families down, and above all, leaving too many children feeling forgotten, powerless and invisible.”

“We want to break down the barriers to opportunity and end the cycle of crisis through ambitious reforms to give vulnerable children the best life chances – because none of us thrive until all of us do.

“We will crack down on care providers making excessive profit, tackle unregistered and unsafe provision and ensure earlier intervention to keep families together and help children to thrive.”

The challenge comes as private providers are making ‘excessive profits’ and ‘siphoning off money that should be going towards vulnerable children’, the government says, while others are running unregistered homes that don’t meet the right standards of care.

According to analysis by the Local Government Association, there are now over 1,500 children in placements each costing the equivalent of over £0.5 million every year, while the largest 15 private providers make an average of 23% profit.

New rules will require key placements providers - those that provide homes for the most children - to share their finances with the government, allowing profiteering to be challenged. Increasing financial transparency will ensure the providers that have the biggest impact on the market don’t unexpectedly go under and leave children without a home.

There will also be a “backstop” law to put a limit on the profit providers can make, that the government will introduce if providers do not voluntarily put an end to profiteering.

Not-for-profit providers and those backed by social investment are being called on to come forward to set up homes to strengthen the system.

To protect quality and safety in children’s homes, Ofsted will also be given new powers to issue civil fines to providers, working more quickly to deter unscrupulous behaviour than with existing criminal powers.

Cllr Arooj Shah, Chair of the Local Government Association’s Children and Young People Board, said the moves are ‘positive’, but warned that “moving forward, progress will be limited by the significant funding and workforce challenges within children’s social care, councils and amongst partners more widely.”

“It is vital that the Government uses the forthcoming Spending Review to ensure that all those working to keep children safe and to help them thrive have the resources they need to do that well.”

Other key measures announced include new powers for Ofsted to investigate multiple homes being run by the same company; and a commitment to introduce a consistent child identifier, making sure information can be shared between professionals so they can intervene before issues escalate.

Also announced is a requirement for all local authorities to offer the Staying Close programme – a package of support which enables care leavers to find and keep accommodation, alongside access to practical and emotional help, up to the age of 21, ending the cliff-edge of support many experience at 18. 

There will also be a new duty on parents where, if their child is subject to a child protection enquiry, or on a child protection plan, they will need local authority consent to home educate that child.

Josh MacAlister, Member of Parliament for Whitehaven and Workington, said the reforms announced delivered on ‘a lot’ of the recommendations of his landmark 2022 review of the children’s social care system. Writing on social media, MacAlister said the changes “show this government is serious about reform and they are extremely welcome.”

“Achieving the reset needed across a big and messy system like children’s social care will mean breaking a cycle of escalating need and crisis intervention, and forming a new virtuous cycle. Today is a big step forward in creating this new cycle.

“None of the above would have happened without the voices of children in care, care experienced adults, parents, kinship carers, foster carers and practitioners who shared their experiences to call for change. “

Further plans for funding for children’s social care including investment in preventative services, are set to be laid out in the coming weeks in the upcoming Local Government Finance Settlement.