Children in Care – a scandal with a procurement angle

Rochdale - For Sale at £94,950 through

Rochdale property is cheap. Just hold that thought for a moment, as you look at this perfectly acceptable, modernised three bedroom semi-detached house, in a quite cul-de-sac, with a large garden, available for less than £100K.

Now, apparently changing the subject... First there was Outsourcing.  Then there was Offshoring, Insourcing, RightSourcing and SmartSourcing. We invented Stupid Sourcing just to liven things up a bit.

Now the “nearshoring” term is getting a lot of press. Whereas offshoring is moving work to low-cost foreign countries, nearshoring is using locations that are closer to home – but still lower cost than the home country. So we are seeing large US retailers using sources of supply in Mexico rather than China; or European firms looking to outsource component manufacture to Poland or the Baltic States rather than India.

But who would have guessed that UK local authorities would prove to be innovators in this field? Because the excellent expose by the Times last week (behind their paywall unfortunately) of practices used to handle children in care has shown that what we might term “in-country nearshoring”  is used by many authorities.

Councils in the more expensive parts of England – from a property perspective – have been shipping their children in care off to parts of the country where property is cheap. As property costs form a large part of the overall costs of accommodating such children, this makes some economic sense. So certain areas have become “hubs” for children’s’ care providers. The most shocking statistic was that Rochdale, population 205,000, has more children’s homes (47 in all) than 14 inner London boroughs combined, population 1.3 million.

A house in Rochdale is cheap, as we pointed out earlier. A similar 3-bedroomed property in Kensington or Chelsea could cost between £2 and 5 million. So taking advantage of this arbitrage makes some sense if we look at it from a purely commercial perspective.

But this isn’t a purely commercial matter. We’re talking about young, often very vulnerable children and teenagers. And not only does this practice move them away from their home area (which sometimes is necessary, but usually isn’t), it has led to these places also being “hubs” for child exploitation, prostitution, rape and abuse as we’ve seen in recent shocking cases.  The 15 year old girl at the centre of the recent sex abuse trial was sent from Essex to live in Rochdale, where she was abused by at least nine men.

It's just shocking to imagine what life is like for many of these young people.  Kids, 200 miles from home, knowing no-one in their new place of residence, are wide open to unscrupulous new “friends”.  Even the economic issues are not so clear – the long-term cost to society, financial and social, is huge where a child becomes a problem adult for the rest of their lives, perhaps becoming a problem family, with the consequent costs of benefits, healthcare, interventions, and possibly the justice and prison system.

The related issue which the Times highlighted is how venture capital and private equity firms have seen this market as ripe for consolidation – and of course profit.  Advanced Childcare, the biggest operator in the UK with 143 homes, was purchased by GI Partners, a US private equity firm, last year. They now own the home in which the girl mentioned above was housed.  Castlecare, another firm owned by private equity, charged annual fees of £378,000 for one place at a home.

The Government has now accelerated a review of children in care led by the deputy children’s commissioner.  Let’s hope that includes taking a good look at the market, and the procurement / commissioning issues around this topic, because they are key. There are points to consider such as how the market works, what the supply base looks like, whether suppliers are making excess profits, performance and contract management issues (we talked about some of this a while back).

I’d hope that some of the procurement community can offer useful input into the review. And I’d love to see some of the smartest people in both local government procurement and the Government Procurement Service getting stuck into these issues, even if it takes their eyes off the ball in terms of the latest Whitehall copier paper contract. There’s a question of priorities here, I can’t help thinking.


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Voices (10)

  1. bitter and twisted:

    Why make a distinction between ‘policy’ and ‘procurement’ ?

    1. Final Furlong:

      So you think social care policy and procurement is joined-up?

  2. Final Furlong:

    I’m stunned why folk are so surprised by this (the commercial side…).

    Venture capitalists bought the biggest care home provider – with 752 homes and 31,000 (vulnerable) residents – to its knees, entirely due to greed (built on short-term gains). The DH had known for years that this was an area of high risk, yet closed down the team (in the DH) that was focused on attempting to identify and manage those risks.

    For years, Loc Gov outsourced much of the delivery of these services – in becoming ‘strategic commissioners’ – without first building the capacity in the market nor the internal capacity to manage the (new, emerging or existing) markets. Currently, there are many many transformation programmes within Loc Gov that are focused upon these ‘pathways’, and these are taking considerable time (and effort) to come to fruition. And some have actually run reverse auctions across care home and domiciliary providers! (Horses for courses…?)

    We need to make a distinction between ‘policy’ and ‘procurement’.

    When vulnerable kids (or adults) are exposed to any bunch of nefarious scum (for they are nothing more than that…), this can only be addressed by a specialist team who can identify these types of activities. As we know, even the best care home providers in the UK have employed folk who seem to enjoy shouting at, and sometimes beating, vulnerable, older people, and only hidden cameras caught them – not a clause in a contract.

    Sending vulnerable kids 200 miles away is a stupid policy decision not a stupid procurement decision. Procurement can play a role in shaping and developing local markets (and managing supply chain risk), but here’s an interesting example….

    I was alerted to a scenario where a child was sent to a place 5 miles from where they lived (costing £30,000 p.a.), where he was extremely happy and ‘doing very well’. He was then moved to a new place, because it was cheaper. At the new place, the child had to be reassessed due to ‘behavioural issues’ (ie: the new place couldn’t manage the child). The parents then tried to move their child back to the original place only to be told that they had lost their place. The child was then assessed again and relocated 120 miles away to a new place costing £150,000 p.a.

    Policy or procurement? (I think you already know the answer…)

  3. bitter and twisted:

    I dont grasp how this is something that the private sector can be cheaper at.

  4. Susie:

    After 11 years inolvement with aggressive, callous, social services and a very aggressive children’s ‘charity’ private care provider, I am certain that children in care are simply commercial commodities and social services are in on it.

  5. David Atkinson:

    Well done for highlighting this, Peter.

    It’s another good example of whole-life costs being ignored by government and its agencies.

  6. Ian Taylor:

    As it happens NEPO (the North East Procurement Organisation) is in a procurement process now to create a more competitive and better managed market for residential care homes for children and young people in the north of the region. The problem we are trying to fix is the lack of good quality places and the premium prices that can often be obtained as commissioners struggle to find a suitable home for children in some of the most challenging circumstances, often in a crisis at the time. The real issue is how to achieve better integration between residential care, fostering and adoption and avoiding family breakdowns in the first instance. But one step at a time!

    1. Al Collier:

      Peter you are absolutely right that this is a significant procurement issue, but you shouldn’t assume that no-one in the profession is addressing it. Here in Norfolk we worked with our commissioning colleagues (no idea why some people on these pages are so hung up about commissioning, btw) to increase availability of fostering places, which has reduced our spend per looked after child significantly. We have also renegotiated with a number of residential care providers and got some decent price reductions. And we currently have a PIN out because we want to talk to the market before going to tender.

      Absolutely agree with Ian Taylor’s point that avoiding family breakdowns in the first place is key – and there is good evidence that interventions such as Family Nurse Partnerships can help achieve this. The other thought is that actually we need to take a more joined-up approach to the procurement of residential homes and boarding schools.

  7. Care Agency UK:

    This is a much needed topic to be concerned; children should get the ideal protection and care from the certain team. So hope deputy children’s commissioner will take ideal moves as far as this matter concern.

  8. Phoenix:

    Good call, Peter. I totally support this, particularly your final paragraph.

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