Watchdog decides against full investigation into children’s social care market

The competitions watchdog has decided not to proceed to a full market investigation into children’s social care provision.

The Competition and Markets Authority (CMA) said it invited any persons wishing to make representations on whether it should carry out a full market investigation reference to do so in writing, however no representations were made within the specified period.

The watchdog says this should not be interpreted as finding no concerns in the sector and that it will set out potential concerns shortly in an interim report.

“The decision not to make a market investigation reference should not in any way be interpreted as the CMA finding no concerns in the sector, only that any potential concerns would not be best addressed through a market investigation,” a statement from the watchdog read.

“The CMA is planning to publish its emerging findings in the coming weeks, alongside its early thinking on potential measures to address any concerns it identifies. It will invite submissions on those findings.”

The CMA launched its market study into children’s social care provision in March of this year following a letter from the Chair of the Review of Children’s Social Care in England, Josh MacAlister. The study set out to examine the lack of availability and increasing costs in children’s social care provision, including children’s homes and fostering.

Giving evidence, sector leaders criticised an insufficient supply of places and the presence of private equity firms in the children’s social care market.

Organisations, including the Association of Directors of Children’s Services (ADCS), criticised the ability of providers to be able to “pick and choose” which referrals they accept and at what price, as well as the uneven geographical spread of homes across the country.

The ADCS said its members had also been “concerned for some time” about how private equity is driving rapid changes in the ownership, financial models and service delivery in residential services for vulnerable children.

“The proportion of the market controlled by just a small number of providers, along with multi-million-pound mergers between providers who are diversifying across the sector and buying up smaller firms, increases the risk within the system,” the ADCS submission read, adding: “The risks associated with the impact of provider failure are significant and only increase as ownership continues to contract.”

The LGA also warned of the risks of private equity firms in the children’s social care market and called for a national body to oversee the largest providers, similar to the role the Care Quality Commission (CQC) holds for adult social care provision.

However, the decision by the watchdog not to proceed to a market investigation reference was welcomed by the Independent Children’s Homes Association (ICHA), which represents providers of child care services.

Liz Cooper, Deputy CEO of the ICHA, said: “The ICHA welcomes the CMA decision not to make a market investigation reference in relation to the supply of children’s social care services in England, Scotland and Wales. We value their objective input into this issue and look forward to the report underlining the rationale for this decision and any recommendations that may come out of that report.”