North West Regional Update September 2019

Considering Transition for Young People with Learning Difficulties

With a growing cohort of children and young people whose needs are being met through an Education, Health and Care Plan (EHCP), the common challenge of transition to adulthood is of growing importance in the region. As part of the response to this, later this month we will work with our colleagues in North West ADASS to bring together statutory directors of both children’s and adults’ services – including those who deliver both these functions. The session, supported by NWADCS, NWADASS and NHS England, will focus keenly on transition to define:

• Key joint challenges, including transition experience, market shaping and the cost of care

• Level of ambition and the potential for meaningful joint work

• Aims of any joint working, including potential outputs and outcomes expected.

Our intention is that this new way of working, along with our current co-production of a specialist education flexible purchasing system (FPS) which is underway with parent/carer forums across the region, will help create the conditions for an improved and more sustainable experience of transition.

Understanding the Changing Nature of Children’s Services’ Markets

In a context of increased demand and cost, sub-regional collaboratives within the North West brought together two workstreams with agreement to formalise outputs in an analytical resource. Greater Manchester’s work which identified structural challenges in regulating and monitoring providers who deliver at scale, signalling private equity as a driver of company growth and gaps in ownership data. And, market reform work in Liverpool City which identified the growth of private equity finance and growth by acquisition in the increasing costs for residential care. Officers brought these two work streams together to jointly explore the implications of the early analysis which highlighted the following:

• Market oversight, company ownership and debt: Private equity finance is driving a model of adding value to companies through ‘growth by acquisition, financed through increased indebtedness’. Two of the largest providers in fostering and residential care have cumulative debts of £0.76 billion, equivalent to more than £5 million per LA in England

• Impact of private equity in fostering: Private equity models have shifted focus to ‘growth by acquisition’ placing estimated values on each fostering family between £50,000- £125,000 and delivering a larger market share with reduced capacity. Whilst increasing the value of the remaining households, it is hypothesised that the switch of the growth model is a driver in the decline of mainstream foster carers

• Impact of private equity in residential: Increasing consolidation is not leading to reduction in capacity yet has seen prices increase significantly with growing need meaning any decline in performance is not limiting demand or reducing financial returns. There is currently no legislative framework by which Ofsted inspects and holds providers accountable on the efficacy of the organisation as a whole. Provider failure could have a profound impact on children.

For further information, we are happy to provide the full report, ‘The changing nature of company ownership, private equity and the impact on the services delivered for children’ and the Executive Summary, ‘Changing Nature of Children’s Services Markets’.

Responding to the Changing Nature of Children’s Services’ Markets

As part of a wider response to the issues outlined above, colleagues in Greater Manchester are developing small, multi-LA clusters to tackle market shaping collaboratively as a means of forging better working relationships with local suppliers and increasing the number of children placed close to home communities. The cluster approach allows a focus on local provision and partnership working, with sufficient scale to support effective matching and encourage provider investments. The clusters for residential represent around 130 – 140 placements each. This will ultimately include the consideration of differentiated purchasing for local provision and issues of social value to ensure children’s spend is kept within the local economy and centred on delivering for children. The piloting of this approach in fostering is focused around our more complex children in residential who are ready for a family environment. This model is distinct as it enables commissioners to act as ‘stewards’ of working relationships and focusses on behaviours and approaches which will develop services and placements over time. It prioritises long-term collaboration to support more considered matching, providing a balance between local supply and sufficient volume to merit IFA investment.


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