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More outsourcing of specialised social services

A new report suggests that outsourcing of children’s homes, foster care and special education services is accelerating as councils struggle with budget pressures.

These three specialist areas have a total market value of £7bn across the UK (£5.9bn in England), according to ‘Children’s Social Care & Special Education Services 2013’, show that 34% of special education, 46% of foster care and 67% of children’s homes by value is now being provided by the independent sector on contract to councils.

The report’s author, LaingBuisson CEO William Laing, said: “Ultimately, value for money will be the determinant of the trajectory of outsourcing of children’s social care and special education in the future. LaingBuisson believes that the current outsourcing momentum still has some way to run in each of the sectors covered in the report, though it is unlikely to extend as far as outsourcing of adult social care, where independent sector provision now accounts for 90% of the market.”

The children’s home sector has witnessed “more or less static capacity and volume in recent years”, the report says, while special education capacity has seen a modest rise in both capacity and demand. This could be in reaction to the previous Government’s policy preference for inclusion and educating children with special needs wherever possible in mainstream education.

Fostering services “are also on a rising trend both in terms of the numbers of children placed and on expenditure by local authorities”, it says.

Across these specialist services, the role of private sector providers has shifted from supplementing generic local public sector provision with niche services for the most challenging needs, towards competing for mainstream services.

Laing said: “On the one hand, councils may be incentivised to sweat their own assets first, but on the other capital shortages will encourage them to opt for outsourcing solutions when their in-house assets require replacement or refurbishment.”

DCLG figures suggest that 2013/14 budgets for children’s social care across England are 1.9% up on the previous year, while social care budgets for older people have been cut by 2.9% on average across England in 2013/14.

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