CMA concerned over availability, price and quality of children's care

The Competition and Markets Authority (CMA) recently published its interim report into its market study into children's social care provision, having launched it on 12 March 2021. The final report will be published by 11 March 2022.

It relates to the care of just over 100,000 “looked after children” in the care of a local authorities in England, Scotland and Wales.

The report sets out:

• Summary (pages 6-16)
• Overview of the sector ( with some interesting statistics at pages 17 -24)
• Emerging findings: outcomes from the placements market (where they set out four key outcomes that a well -functioning market would support - supply, quality, price and resilience at pages 25-43)
• Emerging findings: causes of the outcomes they observe (covering effective purchasing, long-term forecasting, market shaping and barriers at pages 44 – 66)
• Possible remedies

Some key points to note at this stage, include:

• There is evidence that some prices and profits in the sector are above the levels they would expect in a well -functioning market with the largest 15 independent providers earning “significant and persistent” profits;
• They expect existing and new providers to create more places to meet demand which would then drive down prices (and profit);
• Their primary focus in on identifying and then addressing factors acting to deter new provision;
• The position of local authorities is inherently weak, made worse by the ongoing under supply of appropriate placements;
• Purchasing decisions today do not provide current and future providers with good information about future needs. Block contracts, procurement frameworks or bulk purchasing discounts are suggested and they are exploring potential recommendations around the need for larger scale national or regional bodies;
• The CMA are also considering potential recommendations around the review of existing regulations;
• They have not seen any evidence of significant variations in quality between independent and local authority provision. In addition, in terms of price and quality, the outcomes from private equity owned provision do not appear any worse than those of independent provision in general;
• The risk of unexpected disorderly exit as the credit conditions faced by highly leveraged companies change is one that needs to be taken seriously, so they are considering recommendations focused on measures to reduce this risk;
• Some have suggested to the CMA that prices / profit should be restricted but the CMA are of the view this cannot be done before the supply problem has been addressed.

Invitation to comment

CMA seek feedback by 12 November 2021 on their analysis, emerging conclusions, drivers of poor outcomes and early stage thinking on possible recommendations. You can email written submissions to [email protected] and the interim report can be read here.