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Scott Darraugh & Ross Murray – Tackling the crisis in children’s residential care with local, cooperative solutions

Myriad challenges in children’s residential care, including increasingly complex needs and business models driven by scale, are resulting in poor outcomes for some of the most vulnerable children. Chief Executive of Social adVentures and Mutual Ventures associate Scott Darraugh and Mutual Ventures consultant Ross Murray argue that provider models based on cooperative principles, such as the Fair Care Alliance in Greater Manchester, provide a template for transforming this broken market place.

Caring for our most vulnerable children is perhaps the most important role of local authorities. They are responsible for providing safe and loving homes, including, where required, through placements in children’s homes.

But in discharging these duties, they grapple with a series of interconnected and growing challenges. Many of these stem from a marketplace where provision has become distanced from local communities, and the model of public service based on social partnership, coproduction, democratic engagement, and social value—cooperative principles—has faded away. The result: costs are spiralling out of control, and outcomes are not improving.

What issues are we facing in children’s residential care?

The challenges are multifaceted.

Firstly, the supply of residential care places has failed to keep pace with demand. The number of children in care has increased by 30% between 2010 and 2023, creating a wide gap between those requiring a placement and the number available. This is compounded by a range of barriers to increasing supply such as difficulties finding suitable properties, obtaining planning permission and challenges recruiting and retaining staff.

Low levels of provision have given providers far too much power in the market, driving up the cost of placements. The cost of children’s residential care has become a key driver in the increasingly dire overall state of council finances. Between 2018/19 and 2022/23, there has been a twelvefold increase in the number of placements costing £10,000 a week or more.

Secondly, the private sector dominates the market. Figures from Ofsted show that private companies operate 79% of children’s homes across England, with local authorities running 16%, and the third sector just 5%. The Competition and Market Authority’s 2022 investigation found that the largest private providers were making higher-than-expected profits (averaging 23%) and carrying very high levels of debt, particularly those financed by private equity. This poses a growing risk of providers suddenly going bust, causing yet further disruption to children’s lives.

Whilst there are some excellent providers, all of this adds up to a situation where councils are too often failing in their responsibility to provide placements that properly meet the needs of children. 37% of children in residential placements in England are placed at least 20 miles away from their home base. Many are separated from siblings even when their care plan calls for them to be placed together, and are unable to access the care, therapies, or facilities they need. There has also been a significant increase in the number of children in unregulated placements, where the child may receive accommodation without the proper regulatory oversight.

What can be done?

Two years ago, the Greater Manchester Combined Authority (GMCA) took action and embarked on a mission to enhance support for local children. They convened third-sector organisations to collaborate on delivering high-quality residential care by exploring alternative delivery models.

This effort led to the establishment of the Children in Care Social Enterprise Taskforce (CIC SET) to improve both the quantity and quality of local residential placements. Following engagement with care-experienced children, five organisations – Social adVentures, Action for Children, Big Life Group, Bolton Lads and Girls Club, and the Together Trust – came together to form the Fair Care Alliance. The Alliance aims to disrupt and rebalance the residential care market in Greater Manchester.

Getting started as a children’s residential care provider is challenging, so the Fair Care Alliance members are working together to support each other to enter the market and provide a different, more community-based alternative to the options currently available.

The Alliance follows a collaborative model with an umbrella legal entity (a Limited Liability Partnership) which allows the combined heft of the Alliance to support individual members to start their residential care home journey. To do this, the Alliance members will provide each other with support such as quality assurance, systems implementation, workforce development, property development as well as a vehicle through which to bid for funding. A common framework sets out key fidelity elements while allowing flexible delivery according to local needs. This provides peer support for new and aspiring social sector providers, a single point of contact for commissioners and a novel investment platform for social investors.

Where has this got to?

With the support of the Fair Care Alliance, founding member Social adVentures is opening its first home in July this year. The journey to this point has included securing investment from leading social investor Social and Sustainable Capital, finding a suitable site, and all the processes necessary to run a home safely and effectively. As an organisation that exists to help people and communities, Social adVentures has plans to open more in the future as do the other members of the Alliance. Watch this space!

The Fair Care Alliance provides an example of cooperative principles in action, creating provision rooted in the local community and innovation based around responding to need rather than simply a ‘gap in the market’. In a system where demand for children’s residential care is increasing, innovative solutions like this offer an opportunity for meaningful change.

In the city that was the birthplace of the cooperative movement in the 1840s, applying similar principles in the twenty-first century, the Fair Care Alliance aims to disrupt and rebalance a broken marketplace – and provide better care for local children.

Read more about the themes in this article and access all our resources on Mutual Ventures website www.mutualventures.co.uk.

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