Purpose

This proposal sets out how the
Council intends to help meet the accommodation needs of the
borough’s current and future Children Looked After through
the development of two residential children’s homes in
Hackney. The Council believe this will help to shape the market,
make financial savings and enable greater choice to Hackney’s
Children Looked After.
 

Content

RESOLVED:
 
1. 
To Agree to a competitive tender to commission a block
contract for the provision of residential care for Children Looked
After in Hackney. The service will provide 6 places in 2 homes that
are owned by the Council. The contract term will be for 5 years
with an option for two further annual extensions at an estimated
maximum total cost of £17.86m.
 
Reasons For Decision
 
The London Borough of Hackney is seeking
approval for the competitive procurement for the provision of a
block contract that would provide 6 places for Children Looked
After, in two homes located in Hackney that have been identified by
the capital team as internal assets. The buildings would remain
owned by London Borough of Hackney and would be rented to the
prospective care provider for the duration of the contract on a
peppercorn rent basis.
 
Children’s homes provide support and
care for some of our most vulnerable children and young people. The
Council wants each child in our care to be provided with the right
home at the right time, and for residential care to be a positive
and beneficial choice for children and young people. By developing
our own resource the Council have an
opportunity to deliver significant improvements to the outcomes for
children living in children’s homes by developing and
coproducing our own specification. By utilising buildings within
our capital asset portfolio, the Council can ensure children are
kept closer to their communities, reduce social worker travel time
and costs, provide local training and employment opportunities and
ensure that the children are supported by highly skilled staff who
represent the cultural diversity of our borough.
 
The scoping phase of the work has been
completed, liaising with other local authorities and some potential
voluntary partners. That has resulted in an option appraisal (see
Exempt Appendix 2) for different operating models. CLT have signed
off the opportunity assessment (See Exempt Appendix 3) and agreed
upon the operating model of the homes (namely to commission a
partner to run the homes).
 
The London Borough of Hackney has not operated
a children’s home in several decades. Historically, a Hackney
children’s home operated in Oswald Street. Over time, a large
number of local authorities, including Hackney have moved away from
managing and operating children’s homes, following national
scandals over abuse and a desire to place children in more family
settings. Commissioning out this provision in the early days
provided more competitive pricing, access to more specialist
services that were nationally located. In addition 2010 austerity measures significantly
curbed local authorities' abilities to invest in their own
children’s home provisions which resulted in a move towards
the private and voluntary sector.
As things stand, there are only two registered
children's homes in Hackney. One is a specialist disabled
children’s home that was established for a specific sector of
the community and the other is a very small, relatively new private
market provider.
 
In 2023 the government launched its vision for
the future of children’s social care in England: Stable
Homes, Built on Love: Children’s Social Care Reform 2023. One
of the six central pillars is ‘Putting love, relationships
and a stable home at the heart of being a child in care’.
Hackney is already part of the North East London Commissioning
Partnership (NEL), which began in 2017/8. The partnership of 7 East
London Boroughs and 2 independent children’s homes providers
secured Department for Education Funding in 2019 to establish a
network of local children’s homes, under an initial
8 year contract. To date, 5 homes have
been established. Negotiations are underway for an extension of the
contract. London Borough of Hackney has maintained a high level of
utilisation of this block contract, securing value for money,
however the changing and increasing complexity of needs of Children
Looked After and the increase in demand for smaller homes with the
use of deprivation of liberty orders has limited maximising this
resource. In addition, none of the five homes are located in
Hackney itself.
 
Aside from the NEL homes, there are no other
block contracts for commissioning residential children’s
homes within Hackney. The Hackney Children and Families Placement
Management Unit (PMU) relies mostly on spot purchasing, which is
high cost, difficult to manage, and has very little influence over
the market as an individual local authority. Spot purchasing occurs
on a case-by-case basis and often results in local authorities
within the sub-region competing against each other for limited
placements with trusted providers. This in turn drives up the price
over time. When a residential children’s home is required,
Placements Officers can contact upwards of 50 individual homes via
email and telephone to identify a suitable placement for just one
child. There are upwards of 200 children homes providers in the UK
registered with the Independent Children’s Homes Association,
and out of those providers approximately 100 individual homes are
currently in London and rated good or outstanding, these providers
are always approached first. However
there has been an increase in demand for these homes, leading to
the local authorities competing against each other for
children’s homes spaces. Providers are therefore able to pick
and choose which referrals they accept, as demand for good or
outstanding homes is exceeding supply currently. Individual Local
Authorities have limited influence over private providers who are
able to increase their prices in the absence of a block contract.
Over the last five years the national demand for good homes has
outstripped the supply. This is also the case locally, where good
and outstanding homes are constantly full and some have not been
able to keep up with the increasing risk/needs of the children
coming into care. This has resulted in local authorities having to
use new home providers more often, who are not yet been inspected
by Ofsted which carries with itself an additional level of risk but
these providers as are newly established have a higher costing
operating model and often struggle to provide value for money for
local authorities.
 
In response to increasing concern about the
privatisation of the children’s home market, in November 2024
the government announced plans to prevent companies that run
children’s homes in England from making excessive profits.
New proposed measures include requiring large providers to disclose
their profits and introducing new powers for Ofsted to issue
private providers, including unregistered homes, with civil fines
to ‘deter unscrupulous behaviour’. Whilst this action
is very welcome for the long-term picture, in the short-term, it
may have the effect of driving some providers out of business,
which will further exacerbate supply pressures.
 
The Council is aware that many neighbouring
boroughs are investing in children’s homes. Newham Council
have agreed up to £8m capital spend on this objective; Camden
Council have existing provision in-borough in partnership with a
third sector provider; Enfield Council have opened a new home in
the past two years and have another one in development, in
partnership with Barnardos; Tower
Hamlets Council have a similar proposal going through governance;
and Haringey Council has their own home and are planning for a new
Short Breaks provision and Parent and Child residential.
 
The Council has considered the option of
in-sourcing the provision. At this time, the financial, regulation
and staffing risks, plus the timeframes required to deliver this,
mean this is not our preferred option. However, this does remain
our medium to long-term ambition. See Exempt Appendix 4
Insourcing/Outsourcing Options Appraisal for details.
 
Alternative Options
Considered and Rejected
 
Do nothing:
The Council could continue to spot purchase
suppliers, but this is an inefficient commissioning arrangement,
which does not secure better value for money, has poor quality
control and is time inefficient. Neither does this option address
challenges in local sufficiency, which will continue to result in
children in care living at a distance.
 
The Council has considered the option of doing
nothing and continuing with the current service. However, this
represents poor costs and quality control, an ongoing reliance on
spot purchasing and ongoing local sufficiency challenges, resulting
in children in our care living at a distance and spiralling
placement cost having an adverse and unsustainable impact on
council budgets.
 
Operate the homes within the
existing NEL consortium project:
This would create local homes for Hackney
children in care, thereby helping to improve outcomes for them;
build on existing, established relationship with a partner provider
and regional partnership - with admin resources for coordination
and a shared vacancy risk structure already in place, which is in
line with government’s vision of Regional Care Cooperatives;
the provider would take on the responsibility of administration,
regulation and staffing, and leaves the option open to in-source in
the future. However, this option would still require the
appropriate planning permission and capital investment; places for
children created would have to be ‘shared’ with 7
partner boroughs in the NEL and the homes created within NEL to
date have not been suitable for children with the most complex
needs.