Looked-after Children - Children, Schools and Families Committee Contents

Memorandum submitted by the New Economics Foundation (nef)


  1.1  This is the response from nef (the new economics foundation) to the Children, Schools and Families Committee inquiry into looked after children. It draws on nef's Measuring What Matters programme, which is looking at how a system of measurement which maximised social, environmental and economic well-being would improve decision-making and create greater public benefit.

  1.2  Our research has found that competitive tendering within the commissioning process is jeopardising the health and well-being of young people in care and in danger of undermining the aims of Care Matters. As the National Centre for Excellence in Residential Childcare (NCERRC) have recently pointed out,[4] the White Paper acknowledges the need for a sufficient and diverse range of care (including specialist residential) within each borough; yet the bill currently before parliament does not make provision for this. We know that local authorities are in fact making less use of residential care where they can and believe this will create greater instability and result in children being placed further from home, or in unsuitable placements.

  1.3  The problems in commissioning in this area lie in the lack of strategic funding for the third sector and a poor management of the market. An oversupply of beds (which was originally the result of the large perceived profits that could be earned in the sector) has put downward pressure on price. Local authorities, under budgetary constraints and in the absence of information on quality are being incentivised to opt for cheapest rather than best value. This has squeezed smaller, niche providers (often voluntary sector) out of the market, and compromised quality across the board. Indeed, one of the providers participating in nef's research in this area has had to scale back on their residential care because they can no longer compete. This has been exacerbated further by the ramping up of efficiency-savings targets that now require 3% year-on-year "cashable" savings.

  1.4  The introduction of crude, unfettered market mechanisms into the purchasing of person-centred services is putting some of society's most vulnerable young people at even greater risk of exclusion. nef have calculated that this short-term measure will generate huge costs to society in the long run through the burden it will place on social services; more importantly than this it will ruin lives of those that the state seeks to protect.

  1.5  Commissioning should be about achieving greater public benefit not short-term "false economy" savings. Social, environmental and economic outcomes can and should be at the heart of the commissioning process to ensure the sustainability of those organisations that are delivering greatest value and to ensure every pound spent goes further.


  2.1  This is the response from nef (the new economics foundation) to the Children, Schools and Families Committee inquiry into looked after children. This submission will focus on the proposals for change in relation to:

    1. health and wellbeing; and

    2. care placements.

  It will conclude with a list of recommendations for policy makers.

  2.2  nef is an independent think-tank that undertakes innovative research and thinking on economic, environmental and social issues. This consultation response was co-ordinated by the Measuring What Matters team at nef. Measuring What Matters is a research programme investigating how government policy making could be improved by measuring and valuing what matters most to people, communities, the environment and local economies. It seeks to move away from a culture within government that is short-term and target-driven, towards one that enables the pursuit of real social, environmental and economic well-being. One strand of the Measuring What Matters research is focusing on children in residential care, in particular:

    (a) Examining how a more child-centred set of indicators would change behaviour and bring about improved outcomes for children and young people in care and

    (b) Investigating the long-term costs and benefits of investing in different models of care.

  2.3  Two care providers and approximately 50 young people were involved in the research. The young people took part in group work to help us develop a new indicator set and also completed corresponding questionnaires. To develop the economic analysis we drew on aggregate data from the providers and published data.


  3.1  In this section we will set out the findings from our research in relation to two areas:

    —  Commissioning for health and well-being outcomes

    —  Measuring health and well-being, and

3.2  Commissioning for health and well-being outcomes

  3.2.1  Our research into residential care has found that the contestability model in local public services is disincentivising providers from developing services that enhance children's well-being. As Unintended Consequences argues the imposition of centrally driven financial efficiency savings targets, combined with the drive towards greater competition and contestability, is eroding the effectiveness of local public services as commissioners of public services focus on short term costs rather than longer term outcomes for service users. (http://www.neweconomics.org/gen/z_sys_PublicationDetail.aspx?pid=248)

  3.2.2  Our research into looked after children's services has found that this impacts particularly severely on smaller and medium sized providers that place particular emphasis on promoting health and well-being benefits. Providers that we have worked with such as Shaftesbury Young People are scaling back on their residential placements because this is what the market is dictating to them. As they told us during this research: "the market is telling us to move out of residential care". The downward pressure on prices is forcing them to compete with bargain basement placements that do not provide the same level of "wrap-around" and child-centred services that deal with the range of complex emotional and behavioural problems that are common amongst their clients. As there is over-supply in the residential market at present, local authorities are taking advantage of this to negotiate even harder on prices. This scenario has led to providers being forced to view essential psychotherapeutic and advocacy services as "nice to have" and staff being pressurised to slim down their offering to compete on price.

  3.2.3  This is very short-termist; these decisions have far reaching and lengthy consequences that do not appear on the balance sheet but which social services, and society generally will be picking up in the future. Our research (forthcoming) has found substantial cost savings from investing in child-centred models through reduced involvement of the young person with social services, as well as savings to the young people themselves from being able to make positive transitions into adulthood. nef is concerned that the market, as it operates in residential care directly contradicts the rhetoric and sentiment in Care Matters and jeopardises the health and well-being of one of the most vulnerable groups in society.

3.3  Measuring Health and Wellbeing

  3.3.1  When we asked children and young people what kinds of things mattered to them they overwhelmingly said that it was important that they felt good about themselves and that they felt loved and cared for. We welcome the fact that Care Matters contains provision for improving the health and well-being of children in care, as well as indicators to measure this in the national indicator set. Taking child self-reports seriously as part of this is essential. In relation to the current indicators, there is a stronger emphasis on physical health, while a factor in subjective well-being, it was relatively less important to how people feel about themselves and their lives than a range of other factors—frequency and type of social interactions, family relationships, how people spend their time, the extent to which people feel autonomous and in control of their lives, Measuring well-being should also take positive well-being into account. For example, relieving feelings of anxiety and depression may be important for some people, but it is not the same as promoting flourishing and fulfilment.


  4.1  This section will focus on two areas:

    —  Use of residential care in the overall provision.

    —  Measurement of effectiveness in placements.

4.2  Use of residential care in overall provision

  4.2.1  There is a move away from use of residential care in many boroughs with Director's of Children's Services preferring to opt for foster and kinship care over residential. There are two reasons for this—residential care is seen as disproportionately expensive and has a poor reputation in relation to outcomes. However, as Care Matters acknowledges residential care should still have a role in overall provision:

    Residential care will always be the placement of first choice for some children and we know that some children say that they do not want to be in foster care. We need these children to be able to enjoy a genuinely excellent care experience, drawing on the best of what homes in this country and elsewhere do now. (4.49)

  4.2.2  Young people echoed this throughout our research, giving the following reasons for why residential care was right for them:

    —  They had come to residential care after many failed foster placements, and had some negative experiences of foster care.

    —  Placements were appropriate because staff in care homes often had specialist skills for dealing with children with more acute emotional and behavioural problems.

    —  As they were older coming into care, young people saw foster care as a threat to their relationship with their birth families and were uncomfortable with this—they liked the fact that residential staff were paid to look after them, as this was more straightforward.

  4.2.1  As mentioned above, commissioning of placements largely being spot purchased and placements are becoming determined by cost rather than need. There is the need to distinguish between unnecessarily high cost and essential high cost. The key to understanding this is instituting a proper system of measurement.

4.3  Measurement of effectiveness

  4.3.1  The residential care population has been relatively stable for many years now (ie demand has not fluctuated). In addition, the teenage population is set to rise in coming years,[5] which could mean an increase in demand. In spite of this many local authorities have now closed all of their children's homes and Directors of Children's Services told us that they do not believe that residential care any longer has a role. No doubt budgetary pressures impact on this decision but the other reason is that it has become associated with negative outcomes. We would argue that this is partly a lack of a robust approach to measuring effectiveness in this area.

  4.3.2  Children in residential care tend to enter care when they are older, and/or have been through a series of unsuccessful foster, or kinship placements. Indeed, some of them will come from secure accommodation, or psychiatric units. All of these experiences will have impacted on their health, well-being and ability form healthy relationships. A residential placement cannot be expected to repair years of abuse, or neglect overnight.

  4.3.3  When comparing the "performance" of this group it should therefore be with an appropriate benchmark eg other "in difficulty" groups (children that were known to social services but not taken into care), rather than the general population of young people. Also, baselines are completely absent and without them it is impossible to compare the difference individual organisations have made. It is not just about comparing homes but also about looking at what was happening before the child came into care and whether their progress has improved. Rather than taking a blunt snapshot at 16 we would advocate measuring "distance travelled" by each young person. If these the same tool was used across all services this would enable commissioners to match different levels of need to different models at care. At present it is impossible to do this, and the sector (and local authorities) has become associated with outcomes that they are not necessarily responsible for.

  4.3.4  In other European countries such as Denmark and Germany where outcomes are better more use is made of residential care. However, the models of care differ greatly; they follow a pedagogic philosophy, staff/child ratios are higher and staff are well trained. There is not a huge variation in price between these approaches and those used in England and Wales.[6] The more residential care becomes marginalised as a "place of last resort" within the sector, the more demoralising it will be for staff and young people the worse the outcomes and the stigmatisation will become.


5.1  Commissioning for better outcomes

  1.  There is the need for an investment strategy to sustain the third sector that are providing essential services to children in care. nef advocates a mixed funding approach that includes grants as well as commissioned services.

  2.  Abandon competitive tendering that is failing young people and return to a system where providers cost their services and local authorities chose to purchase them if they are suitable.

  3.  Make greater use of block contracts and longer term contracts which are essential to the sustainability of providers. Stability for young people is a key target for the government, and yet short contracts proliferate. A system is needed that ensures the finance of a placement is assured for as long as the placement is needed.

  4.  As stated in Care Matters, local authorities need a comprehensive commissioning strategy that ensures a sufficient and diverse provision of quality placements are available and that the sustainability of providers is protected. This may involve sharing beds across borough boundaries to ensure that there are places always available but the costs of maintaining them are not burdensome.

  5.  Efficiency savings targets, which were ramped up in the Comprehensive Spending Review have put further pressure on local authorities to deliver more services for cheaper, and the impact of this is being felt by smaller, niche providers. These targets need a massive rethink, particularly in relation to services for vulnerable groups where errors can have catastrophic impacts on people's lives. A proper system of measurement should be introduced that enables councils to commission for social, environmental and economic outcomes.

  6.  Our research shows that commissioners need better information in order to (a) understand the link between different types of care and outcomes for young people and (b) the impact that placement decisions have on young people's life chances.

  7.  There is a need to drive up standards in residential services, which have suffered from the "race to the bottom" approach described above. Our research found that carers were more likely by a ratio of 3:1 to report more negatively about the progress of the young people than the young people themselves. This may point to an institutionalised negativity within residential care. Young people should be involved in the design, delivery and measurement of services, so the services are "co-produced" and the contribution and strengths of young people are valued.

5.2  Measuring What Matters

  1.  A system of measurement that provides better information on the impact of different types of care on outcomes for young people is required to improve placement decisions but also to give greater accountability to young people.

  2.  This will require a more sophisticated system of data collection that would include:

    —  Taking baseline measures are when young people enter care.

    —  Measuring distance travelled and over the long-term.

    —  Using realistic benchmarks.

  3.  Measure the things that would matter to any young person, or their parents, in their journey through childhood and adolescence. Our research to date has found that the types of indicators being used focus too much on outputs and processes, rather than the things that really matter to young people, such as the quality and stability of relationships (with carers and birth parents) and general health and well-being. The result is a system of service delivery with a disproportionate emphasis on adhering to policies and procedures. In addition, data on the performance of services is geared towards minimising harm and risk to young people while in care, rather than maximising their strengths and abilities. Using more child-centred indicators would, we believe, incentivise a more child-centred approach within care homes. Initial findings from our research suggest that measures based on reports from young people and their carers would enrich the information that is used to measure progress.

February 2008

4   Unpublished paper by setting out a need for an amendment to the bill regarding diverse and sufficient care. Back

5   Hicks et al, 2007 Managing Children's Homes, London: Jessica Kingsley Publishers. Back

6   Petrie et al, 2006 Working with children in care: European perspectives, Maidenhead: Open University. Back

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