Children's Services UK Market Report

Children's Services UK Market Report

The fifth edition of LaingBuisson’s Children’s Services UK Market Report is essential reading for anyone involved in this vital part of the UK’s social care sector, be they a provider, a commissioner, an investor, an advisor or a policy maker. Written and researched by leading industry expert and commentator, Philip Blackburn, this industry standard report provides unique and in-depth into all areas of the market, and specifically focuses on children in care markets foster care, adoption, children’s residential care, and special education, and also covers leaving care and safeguarding segments.

Written during the height of the coronavirus pandemic, the report includes an introduction which considers the impact that Covid-19 has had on different segments of the children’s services market. It shows circumstances have created an expectation of increased demand to be met in the wake of lockdown. This highlights funding issues, with an annual gap of several billion pounds identified even before the pandemic.

The report also gives a full assessment of the state of the market in the run up to the coronavirus pandemic, which was characterised by strong growth in residential placements, pupils in special schools and colleges, and spending on care leaving services. Already there was a shortage of suitable residential placements in some areas of the country, especially in specialist care. Ofsted reported a surge in new applications for new children’s residential capacity following the Covid-19 lockdown.

The Conservative Party Manifesto for the 2019 General Election committed to a review of the care system. The impact of Covid-19 on families, children and young people has strengthened the need for a new look at funding priorities and strategic direction within children’s services, as different segments of the market vie for additional funding to meet expanding needs. Will this mean that the government has no option but to commission that review?


FOREWORD
LIST OF TABLES
LIST OF FIGURES
EXECUTIVE SUMMARY AND HIGHLIGHTS
1. MARKET
1.1 Introduction
1.1.1 Activity trends
1.1.2 Improving outcomes
1.1.3 Covid-19 impact on children in care volumes
1.1.4 Government policy overview
1.1.5 The future
1.1.6 Post-Covid policy
1.1.7 Conclusion
1.2 UK estimates and projections
1.3 The UK GDP deflator
1.4 Gross spending on children and young people’s social care in England
1.4.1 Gross spending trends in recent years
1.4.2 Prospects for spending on children’s social care going forward
1.4 MARKET SUB-SECTORS
A. SPECIAL EDUCATION
A.1 Introduction, definitions and Covid-19 pandemic
A.2 Pupils attending, and spending, on special schools and special colleges
A.3 Reforms of the Children’s and Families Act 2014
A.4 Demand for special education in schools
A.4.1 EHC Plan/Statemented demand
A.4.2 EHC Plans/Statements in Independent Schools
A.4.3 Regional share of EHC Plans/Statements
A.4.4 Special educational needs profile in special schools
A.4.5 Special education for school pupils without EHC Plans/Statements
A.4.6 UK special education demand estimates
A.4.7 Demand for post-16-year-old special education
A.5 Future demand drivers for independent sector special schools and special colleges
A.5.1 Population growth
A.5.2 Prevalence of special educational needs and ‘high needs’
A.5.3 Incidence of EHC Plans
A.5.4 Parental/student right to request an educational facility (mainstream vs specialist education and public sector vs independent sector)
A.5.5 Local authority high needs education budgets
A.6 Sources of funding for special needs education
A.6.1 High needs funding streams (public sector, England)
A.6.2 Recent high needs funding trends
A.6.3 Future prospects for high needs funding
A.7 Special school fees
A.8 Supply of special schools and special colleges
A.8.1 Special school and college supply in England
A.8.2 Occupancy trends for special schools and colleges
A.8.3 Relative market power of purchasers and providers
A.8.4 Regional variations in supply of independent sector special education
A.8.5 New independent special school and college capacity
A.8.5.1 Special schools
A.8.5.2 Special colleges
A.8.6 Quality Ratings
A.9 Regulatory/inspection changes in England
B. FOSTER CARE
B.1 Profile of children in foster care
B.2 Demand for foster care
B.2.1 Recent demand trends
B.2.2 Fostering by sector
B.2.3 Regional fostering trends
B.3 Supply of fostering services
B.4 Spending on foster care
B.5 Foster care prices
B.6 Government policy on foster care and future trends
B.6.1 Promoting longer-term fostering arrangements
B.6.2 Pool of foster carers
B.6.3 Spending, prices, profitability and commissioning
B.6.4 Independent sector share and a level playing field
B.6.5 Service diversity and outsourcing partnerships
B.6.6 Quality
C. ADOPTION
C.1 Adoption demand trends
C.1.1 Recent demand trends
C.1.2 Adoptions by age
C.2 Adoption supply
C.3 Spending on adoption services
C.4 Government policy on adoption and future trends
D. CHILDREN’S RESIDENTIAL CARE
D.1 Profile of children in children’s residential care
D.2 Demand for children’s residential care
D.3 Average stay and placement stability
D.4 Supply of children’s homes (registered children’s homes, secure children’s homes, and residential special schools (open all year))
D.4.1 Regional supply
D.5 Spending on children’s residential care
D.6 Children’s residential care prices
D.6.1 Average children’s residential care prices
D.6.2 Price movement over time
D.6.3 Pricing structure
D.7 Future trends and issues for children’s residential care
D.7.1 Future demand and increased outsourcing
D.7.2 Spending and prices
D.7.3 Sufficiency duty
D.7.4 Smarter commissioning and commissioning efficiencies
D.7.5 Benchmarking commissioning prices (Fair Price for Care)
D.7.6 Quality
D.7.7 New areas of demand
D.7.8 Primary resource, not last resort
D.7.9 Unregulated Settings and Children’s Home definition
E. OTHER CHILDREN’S AND YOUNG PEOPLE’S SERVICES
E.1 Leaving care support services
E.1.1 Leaving care demand trends
E.1.2 Spending on leaving care services
E.1.3 Government policy on leaving care services and future trends
E.2 Safeguarding – social work, commissioning and strategy, and local safeguarding support
E.2.1 Social services referrals, children in need and Child Protection Plans (CPPs)
E.2.2 Spending on safeguarding
E.2.3 High usage of agency social workers
E.2.4 Outsourced/delegated social work activities
E.2.4.1 Independent Children’s Trusts
E.2.4.2 Financial performance
E.2.4.3 Improvement monitoring
E.3 Other children and young people’s services
2. INSPECTION AND REGULATION IN CHILDREN’S CARE AND PROTECTION
2.1 Quality and regulatory overview in England
2.1.1 Impact of Covid-19
2.2 Regulatory overview in Wales
2.2.1 The Regulation and Inspection of Social Care (Wales) Act
2.2.2 The Social Services and Wellbeing (Wales) Act 2014
2.3 Regulatory overview in Scotland
2.4 Regulatory overview in Northern Ireland
2.5 Quality ratings and provider risk in England
2.5.1 Independent sector children’s homes
2.5.2 Fostering agencies
2.5.3 Adoption agencies
2.5.4 Local authority children’s services
2.6 Future regulatory and inspection developments for children’s care and wider children’s services
3. PAYORS
3.1 Children’s and young people’s services
3.2 Special (high needs) education
4. MAJOR PROVIDERS
4.1 Overview of major providers
4.1.1 Integrated services and the pyramid of children and young people’s services
4.1.2 Differentiation of services
4.1.3 Sector ownership
4.1.4 Concentration of major providers
4.2 Market leaders
4.3 Growth and consolidation of major providers
4.3.1 Organic Growth
4.3.3 Future growth
4.4 Financial profile
4.4.1 Profitability (for-profit companies)
4.5 Review of major providers
5. INVESTORS
5.1 Investment activity
5.2 Valuations
5.3 Historical activity
5.3.1 Priory Group
5.3.2 Cambian
5.3.3 Kisimul Group
5.4 List of UK children’s care and special education major equity investors
5.4.1 Antin Infrastructure Partners
5.4.2 Ardenton
5.4.3 Ashridge Capital
5.4.4 August Equity
5.4.5 Bridges Fund Management
5.4.6 CapVest
5.4.7 Charme Capital Partners
5.4.8 G Square Healthcare Private Equity
5.4.9 Graphite Capital
5.4.10 Stirling Square Capital Partners
5.4.11 Waterland Private Equity Investments
6. MARKET POTENTIAL
APPENDIX 1. GLOSSARY
APPENDIX 2. TERMINOLOGY
APPENDIX 3. UK GDP DEFLATOR
APPENDIX 4. BIBLIOGRAPHY
APPENDIX 5. REGULATORS
APPENDIX 6. TRADE BODIES AND ASSOCIATIONS
APPENDIX 7. MAJOR PROVIDERS
LIST OF TABLES
Table 1.1 Number of children in care (looked after children), UK, 2006–2019, and number ofcare applications received by CAFCASS, England, 2009/10–2019/20
Table 1.2 Children in care (looked after children) as a % of the under 18-year-olds populationby region, and growth in under 18-year-olds penetration by region, 2014 and 2019
Table 1.3 Children and young people’s social care services1 and special education spending(market value) in England, 2018/19 (2019/20 projection), and in the UK,2018 (2019 projection)
Table 1.4 Gross spending on local authority children and young people’s services (excludingchildren’s centres and early years), annual real growth, and real expenditureindex, England, 2010/11–2018/19
Table 1.5 Share of children and young people’s services spending by service type,England, 2013/14 and 2018/19
Table A.1 Pupils attending and spending (market value) on special schools and specialcolleges by sector in England, March 20202, and UK whole market spendingestimate, 2019
Table A.2 Number of pupils with Statements of Special Educational Needs/EHC Plansby school sector, England, January 1995–January 2020
Table A.3 Number of pupils with EHC Plans/Statements of Special Educational Needsin independent special schools, England, January 2010–January 2020 (SEN2returns and SLAC returns)
Table A.4 Number of pupils with EHC Plans/Statements of Special Educational Needs inindependent special schools and other independent schools, England, January2010 to January 2020
Table A.5 Regional (local authority) share of pupils with EHC Plans/Statements andpenetration of population in independent special schools, other independentschools, and non-maintained special schools, England, 1 January 2020
Table A.6 SEN penetration of all school pupils– SEN pupils with EHC Plan/Statement andSEN pupils without EHC Plan/Statement – by sector, England,January 2001–January 2020
Table A.7 Top up and other funding for high needs education by education sector andprovider type, £000s, England, 2015/16–2018/19
Table A.8 Number of independent special schools and special colleges and places offeredby sector (for-profit and not-for-profit), by groups and non-groups, and occupancy(as implied by Department for Education’s Register of Schools and Colleges, andOfsted), England, March 2020 75xii Children’s Services, fifth edition LaingBuisson
Table A.9 Share (%) of independent special school places and special college places byregion, England, March 2020
Table A.10 New registrations by Ofsted of independent special schools, England, 2013–2019
Table A.11 Distribution of Ofsted quality ratings (most recent) for independent special schoolsand special colleges, by for-profit/not-for-profit status
Table B.1 Number of children looked after in foster care in the UK and penetration of theunder 18-year-olds population, UK (England, Scotland, Wales and NorthernIreland), 2010–2019
Table B.2 Number of children looked after by foster carers sourced by IndependentFostering Agencies (IFAs) and IFAs share of total fostered children, Great Britain(England, Scotland and Wales), 2010–2019
Table B.3 Share of foster placements by region – local authority agencies, independentfostering agencies and total (including penetration of under 18-year-olds),England, at 31 March 2015, and local authority agencies, England,at 31 March 2019
Table B.4 Foster care fill rates for local authority agencies (LAs) and independentfostering agencies (IFAs), England, 2010 - 2019
Table B.5 Duration of fostering placements ceasing during the year ending 31 March,England, 2014-2018
Table B.6 Local authority gross spending on foster care split by provider sector (independentand public), real growth and real expenditure index, England, 2009/10–2018/19,2019/20 (projection), and UK 2013–2019 (estimates)
Table C.1 Adoption orders in courts, England and Wales, 1998–2019, and adoptions fromcare, England and Wales, 2008–2019
Table C.2 Number of looked after children for adoption at 31 March, Great Britain(inc. estimates for England, Scotland and Wales), 2010–2019
Table C.3 Children waiting to be adopted from care, and average time waiting for adoption,England, 2009–2019 R
Table C.4 Share of adoption orders in courts by adopted child age group, England andWales, 2014 and 2019
Table C.5 The number of adoptions by leading voluntary adoption agencies, UK,2015/16–2018/19, and England ,2013/14
Table C.6 Local authority gross spending on adoption services for children and young people,England, 2009/10–2018/19, 2019/20 (projection), and UK,2013–2019 (estimates)
Table D.1 Number of children looked after in residential care at 31 March, UK, 2010–2019(including estimates for England, Scotland, Wales and Northern Ireland)
Table D.2 Time spent in placement which ceased in children’s homes (including secureunits and hostels) , England, 2011/12–2018/19
Table D.3 Children’s home capacity by provider sector, England, 2005/06–2020
Table D.4 Children’s home capacity by sector and type of home, England, 31 March 2020
Table D.5 Growth in children’s homes and places by region, England, 31 March 2016and 31 March 2020
Table D.6 Local authority gross spending on children’s residential care, England,2009/10–2018/19, 2019/20 (projection), and UK, 2013–2019 (estimates)
Table E.1 Number of children and young people aged 16+ leaving care (no longer lookedafter) and the number leaving to live independently with supportive accommodationduring the year, England, 2010–2019
Table E.2 Local authority gross spending on leaving care support services for children andyoung people, England, 2009/10–2018/19, 2019/20 (projection), and UK,2013–2019 (estimates)
Table E.3 Referrals to children’s social services, children in need, and Child ProtectionPlans, England, 2005–2019
Table E.4 Local authority gross spending on safeguarding, England 2010/11–2018/19,2019/20 (projection), and UK, 2013–2019 (estimates)
Table E.5 Local authority gross spending on other categories of children’s services, realgrowth and real expenditure index, England, 2010/11–2018/19
Table 2.1 Distribution of quality ratings across independent sector children’s homes,independent fostering agencies, and voluntary adoption agencies, England,31 March 2012–2020
Table 2.2 Distribution of Ofsted quality ratings for independent sector (private/voluntary)children’s homes and local authority children’s homes, England, 31 March 2020
Table 2.3 Distribution of Ofsted quality ratings for independent sector (private/voluntary)children’s homes subject to a full inspection, England, 31 March 2020
Table 2.4 Ofsted ratings for local authority children’s services, England, 30 September2016–31 March 2020
Table 4.1 Top 25 independent sector providers of children homes by number of homes, andtop 12 independent fostering providers by volume of looked after children, UK,mid-2020 (estimates)
Table 4.2 Leading providers of independent special schools and colleges, top 25 in orderof capacity, England, at March 2020 (pre-Covid-19)
Table 4.3 Leading providers of children’s care and special education services by revenue,UK, 2014–2019
Table 4.4 Council-owned independent providers of children’s care and special education services by revenue, UK, 2014–2019
Table 4.5 Consolidation deals in the children’s care and special education sector, 2014-2020
Table 4.6 Profitability of (for-profit) leading providers of children’s care and special education – EBITDAR and pre-tax profit/loss margins, %
Table 5.1 Private equity investors in children’s care and special education sector – schedule of current investors, and schedule of investors in the recent past
Table 5.2 Ownership history of NFA 2006 - 2015
Table A1 Implied GDP deflator at market prices, 2000–2016 and 1999/2000–2016/17
LIST OF FIGURES
Figure 1.1 Trends in numbers of looked after children, England, 1995–2019, and UK,2006–2019
Figure 1.2 Net change in numbers of looked after children by age group, England, 2009‒2019
Figure 1.3 Net change in numbers of looked after children by type of placement,England, 2009‒2019
Figure 1.4 Children and young people’s social care services and special education marketvalues by provider sector (independent sector and public sector (‘the state’)),England, 2019/20 (projections for children’s social care services), and 2019(estimates for special education)
Figure 1.5 Independent (private/voluntary) sector share of local authority children’s servicesspending by service type, England, 2018/19
Figure 1.6 Gross spending on local authority children and young people’s services (excludingChildren’s Centres and Early Years) in nominal and real terms, England,2010/11–2018/19
Figure A.1 Number of children with EHCPs attending education settings (daily) in England,23 March 2020–7 July 2020
Figure A.2 Special school demand trends by sector (public and independent),England, 2007–2020
Figure A.3 Breakdown of special education by provider sector, market share by volume andvalue, England, 2019
Figure A.4 Pupils with EHC Plans/Statements of Special Educational Needs by type of schoolpupil is attending, England, January 1995 to January 2020
Figure A.5 Number of pupils in independent special schools and other independent sectorschools with EHC Plans/Statements of Special Educational Needs, England,January 2016 - January 2020 (School Level Annual Census Returns)
Figure A.6 Pupil profile – distribution of pupils in maintained and non-maintained specialschools by category of need, England, January 2020
Figure A.7 Distribution of pupils in maintained and non-maintained special schools by maincategories of need, England, January 2010–January 2020
Figure A.8 SEN penetration of all– SEN pupils with EHC Plan/Statement and SEN pupilswithout EHC Plan/Statement – by sector, England, January 2001 – January 2020
Figure A.9 Share of school pupils with EHC Plans/Statements for England, Wales and NorthernIreland, 2005/06, 2010/11, 2015/16 and 2019/20
Figure A.10 Regional (local authority) share of pupils with EHC Plans/Statements in specialist
Figure B.1 Percentage share of primary placements provided by fostering households by typeof household placement, England, 31 March 2019
Figure B.2 Children looked after in foster care at 31 March by sector of placement (IFAs and localauthority in-house), England, 2009–2019
Figure B.3 Spending on foster care at 31 March by sector of placement, England, 2009–2019
Figure B.4 Average gross local authority spending (price) per looked after child placed in fostercare - IFA and local authority (LA) agency (in-house), England, 2010/11–2018/19
Figure C.1 Court adoption orders, England and Wales, 2011 Q1 - 2020 Q1
Figure C.2 Number of children ceasing care (being looked after) with a special guardianshiporder by guardianship type, England, 2010/11 to 2018/19
Figure D.1 Distribution of children looked after by type of home (or equivalent), England,31 March 2014 and 31 March 2019
Figure D.2 Looked after children in registered children’s homes whether inside or outsidecouncil boundary, England, 31 March 2015-2019
Figure D.3 Children looked after in homes by provider sector, England, 2010/11–2018/19
Figure D.4 Share of places in children’s homes by region, England, 31 March 2020
Figure D.5 Expenditure on children’s homes by sector of placement, England,2009/10–2018/19
Figure D.6 Average weekly price per looked after child in children’s derived by LaingBuisson,England, 2009/10–2018/19
Figure 4.1 The pyramid of children and young people’s services offered by independent sectorproviders of children’s care and special education
Figure 4.2 EBITDAR margin (for children’s services only) of largest five major providers ofchildren’s homes and special education, 2008–2019
Figure 5.1 Selected key providers

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