Purpose

To endorse contract award report  Commissioning Children's Homes in Hackney for Children Looked After.

Decision

RESOLVED:

To agree to award a contract to Provider B to deliver residential care and support for children looked after, aged 11-17 for a period of five (5) years with an option to extend for a further two (2) years in annual increments (5+1+1).

Reasons For Decision

1. This report provides the Cabinet Procurement and Insourcing Committee with the outcome of the procurement process of 2 new children’s homes in Hackney, operating out of 2 Council owned properties, for children looked after.
2. Following the approval of the contract award, Officers will proceed with the implementation of the new contract to commence by 15th June 2026. Pending Ofsted registration by December 2026, the homes should be ready for children to move into by early 2027.
3. By commissioning a partner provider we are able to enhance the quality of experience and care for children looked after. This will be done by minimising disruption in their lives by keeping them connected to their communities whilst delivering the savings highlighted. This approach allows the Council to directly influence the quality of care experienced by those children.
4. The partner provider will work with the Children’s Integrated Commissioning Team and Hackney’s Children & Families Service Management Team (predominantly Corporate Parenting) to ensure that the service mobilises, completes Ofsted registration and provides a high quality service for all children looked after.
5. The successful provider is committed to reducing their environmental impact. Their robust sustainability policy details environmental management standards and procedures to minimise environmental impact at both organisational and service delivery levels. The provider has committed to prioritising sustainability through: energy-efficient appliances, durable materials, environmentally conscious purchasing, waste reduction- contributing to net-zero commitments, and child-led energy-saving initiatives such as turning off lights and unplugging devices. This aligns with Hackney’s climate action commitments, reinforcing the shared ambition to create a more sustainable and resilient borough for future generations.
6. To ensure sustainability principles are implemented, there will be staff engagement with sustainability practices and guidance provided. The Children and Young people will be supported to become eco-champions, allowing sustainability goals to be built into daily routines.
7. The successful provider is committed to paying at least the London Living Wage (LLW) to all staff working on this contract, rewarding staff fairly and paying salaries that reflect the local market forces. They are also committed to creating job opportunities that will pay at least the LLW. The social value commitments will form part of the KPIs for the contract and will be monitored as part of the contract management process by the lead commissioners in conjunction with the social value team.

Alternative Options Considered and Rejected

1. This report provides Cabinet Procurement and Insourcing Committee with the outcome of the procurement of two new children’s homes in Hackney that will be delivered by a partner provider.
2. Three delivery options were considered at the Business Case stage:

Option 1 – Do Nothing (Considered and Rejected) Under this option, the Council would continue to commission residential placements through ad hoc spot purchasing arrangements. This model provides flexibility but lacks control over quality and cost, offers minimal influence over placement availability, and perpetuates the issue of children being placed outside the borough. It does not address Hackney’s sufficiency challenges or the strategic ambition to improve local provision. This option was therefore rejected.

Option 2 – Insource (Considered and deemed not viable at this stage) This option involved the Council directly operating and staffing the homes. While this would offer maximum control and integration with Hackney’s practice model, it presents significant financial, regulatory and operational risks. Hackney currently lacks the internal infrastructure, workforce and regulatory experience required to run Ofsted-registered homes. Financial modelling indicated higher overall costs (approx. £18.8m whole-life cost). The reputational and compliance risks of an unsatisfactory Ofsted outcome were also considered significant. This option was therefore not recommended at this time, though it remains a medium to long-term ambition. A comprehensive Insourcing/Outsourcing Options Appraisal was completed and is available as an appendix to the Business Case report (CE S491) that was previously agreed by CPIC in July 2025. 

Option 3 – Commission a Partner Provider (Chosen Option) This option enables Hackney to commission a specialist provider with the skills, workforce and experience to operate the homes to the required standards while the Council retains ownership of the buildings. The Council can maintain close oversight through contract management, influence service quality, and achieve better value for money. The partner provider will be required to deliver systemic, trauma-informed and anti-racist care aligned with Hackney’s STAR Practice Model. This option delivers both improved outcomes for children and financial efficiency and was approved as the preferred route.

1. The preferred option represents best value for money, aligns with the Best Value duty under the Local Government Act 1999, and enables the Council to meet its statutory sufficiency duty efficiently.