Children’s Wellbeing and Schools Bill

Public Bill Committee, 28 January 2025.

Clause 7 - Provision of advice and other support

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I beg to move amendment 23, in clause 7, page 12, line 13, at end insert —

“(3A) Where staying close support is provided, it must be provided with due regard to the wishes of the relevant person and a record must be kept of that person’s wishes.”

This amendment would require local authorities to take account of the wishes of the relevant young person when providing staying close support, and keep a record of those wishes.

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss the following:

Amendment 40, in clause 7, page 12, line 22, at end insert—

“(vi) financial support;

(vii) financial literacy”

Amendment 41, in clause 7, page 12, line 28, at end insert—

“(c) the provision of supported lodgings, where the young person and local authority deem appropriate.”

Clause stand part.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

It is a pleasure to serve under your chairmanship, Mr Stringer. As we return to our work on the Bill with clause 7, I want to say that it is still a bit disappointing that we have been through Second Reading, and here we are on the third day of Committee, and we still do not have the impact assessment for the Bill, which could potentially answer some of the questions that we will be raising today. I know the Ministers want to do the right thing in trying to get it out of the relevant committee and published, and I hope they can succeed in doing that pretty soon.

On clause 7, no reasonable person would argue that a young person leaving care does not require some support to live independently. Young people who have not been in care often require years of support to live independently, and they are less likely to be doing so away from home and will be in less difficult circumstances. Again, the Opposition support the Government’s objectives in this clause to provide staying close support, but we have some questions about how it is to work in practice.

First, the Bill gives discretion to the local authority on whether this support is in the best interests of a young person’s welfare. Surely the assumption should be that the support is offered, and it should be the exception to withhold it. One advantage in having the onus turned round would be that the local authority would have to record and explain decisions not to offer that kind of support. What sort of criteria are the local authorities supposed to use to make those choices, and will that be consistent across the country?

Secondly, there is also a question about the process for identifying the person who is to help the young person. The Department’s policy summary quite rightly talks about identifying a “trusted person”, which is obviously very important to this kind of young person. By definition, some young people in care have pretty good reasons not to trust adults around them, so how are local authorities to go about identifying such a “trusted person”? Thirdly, and this is a small point, will there be digital options to support young people? These days, that is clearly the most frequent method that young people use to get information, particularly sensitive information. It gives young people a choice of how they find their information, and there is potentially an opportunity for some good practice here in setting up a good way of communicating with their trusted person.

That leads me to a wider point. As we have gone through this Bill, and we will continue to make this point, there is a risk that local authorities, when confronted with these new duties, will obey the letter of the law, but will they really fulfil the spirit and good intent of Ministers in passing the Bill? Can the Minister be clear that this is not supposed to be just another signposting service? As young people leave care, they need personal advocates who can help them articulate their needs with other agencies, not a phone number or email address to contact. They do not really need more leaflets; they need a human being who can be trustworthy and provide practical help and advice. Signposting can quickly turn into a doom-loop dead end and no help. How does the Minister also envisage the involvement of local charities, some of whom will have had quite long-term links with the young person in care, and how will that be funded?

I will come on to this point on other amendment, but I ask here what the Minister makes of the call from the Our Wellbeing, Our Voice coalition for a national wellbeing measurement of care leavers. That would obviously support some of those points.

Does the Government plan to accept the recommendation of the Family Rights Group to offer lifelong links to all care leavers to help them have better relationships with those that they care about? Again, is there an opportunity here? Many constituency MPs will know people who have been in care and then become carers. There is this cycle—I know several people like this, and I will talk about one of them later on today. If we are getting into the business of continuing relationships after leaving care, which is a good thing, I wonder whether that can become something bigger—a lifelong connection, for those who want it, obviously, as a way of getting much-needed carers to stay in the system.

There is a risk that these measures are all very local authority-focused rather than focused on the needs of the young person. Amendment 23 would ensure that the voice of the child is heard and that we have the information that we need to allow for continuous improvement. It is very light touch. Keeping a record of the person’s wishes would help to protect against the loss of knowledge when personnel change. If things are written down, it is easier for a new person to come in and pick up and understand a bit about what that young person has said they want. In the longer term, it also provides a resource for learning and performance improvement. I talked in the previous session about kaizen and continuous improvement. The amendment is designed to support that, to improve continuity and to make sure that the voice of the young people for whom this very sensible form of care is to be provided is heard.

Darren Paffey (Labour, Southampton Itchen)

It is a pleasure to serve under your chairmanship, Mr Stringer. I rise to support clause 8 stand part. [Interruption.] Sorry, my mistake.

Ian Sollom (Liberal Democrat, St Neots and Mid Cambridgeshire)

It is a pleasure to serve under your chairmanship, Mr Stringer. The Liberal Democrats welcome the new requirements on local authorities in the clause to assess whether certain care leavers aged under 25 require the provision of staying close support. The charity Become, which supports care-experienced children, has found that care-experienced young people are nine times more likely to experience homelessness than other young people and that homelessness rates for care leavers have increased by 54% in the last five years. This is a really important clause.

Amendment 40 deals with the definition of staying close support. It uses the existing definition of the services, which should be set out in the local offer from local authorities. Become’s care advice line has found that care leavers are often unaware of the financial support available from the local authority, such as council tax discounts, higher education bursaries and other benefits. That can lead them to face unnecessary financial hardship. That is the reason for the financial support part of the amendment.

More generally, financial literacy can have a huge negative impact on care leavers, who are more likely to live independently from an earlier age than their peers—they are not necessarily living with parents or guardians. We would really like to see local authorities lay out that financial literacy support to help them understand what is available to them.

Amendment 41 would add information about supported lodgings to the list of available support services. Supported lodgings are a family-based provision within a broader category of supported accommodation. A young person aged 16 to 23 lives in a room within their supporting lodgings, which are the home of a host, who is tasked with supporting the young person as they go towards adulthood and independence, giving them practical help and teaching them important life skills such as financial literacy, budgeting and cooking. Requiring local authorities to signpost care leavers to any of the supported lodging provisions in their area could make a real difference to those young people and their lives, so I would really appreciate support for the amendment.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I will speak to amendments 23, 40 and 41 and to clause 7.

Amendment 23 was tabled by the hon. Members for Harborough, Oadby and Wigston and for Central Suffolk and North Ipswich, and I thank them for it. The amendment draws attention to an important principle that must run through the whole approach that local authorities take to listening and responding to the wishes and feelings of their care leavers. When a local authority is assessing what staying close support should be provided to a young person, it should have regard to their wishes, which is why we intend to publish statutory guidance that will draw on established good practice that we want all local authorities to consider. It will cover how that will work, with interconnecting duties, especially the duty to prepare a pathway plan and keep it under a review. In developing and maintaining the plan and support arrangements, there is a requirement for the care leaver’s wishes to be considered.

In response to the specific questions raised by the hon. Member for Harborough, Oadby and Wigston, as I said, pathway planning is already a statutory requirement to eligible care leavers, so the statutory guidance will set out how and when care leavers should be assessed based on their own needs and using the current duties to support care leavers with reference to a trusted individual. Those individuals will often already be known to the young person, such as a former children’s home staff member, and that will clearly be set out in the statutory guidance. We will base that on the best practice that we see already in train.

On the lifelong links, we are currently funding 50 family finding, befriending and mentoring programmes, which are being delivered by 45 local authorities. The programmes will help children in care and care leavers to identify and connect with important people in their lives, improving their sense of identity and community and creating and sustaining consistent, stable and loving relationships. I recognise the points that the hon. Gentleman made. The Department for Education has commissioned an independent evaluation of the family finding, befriending and mentoring programme, which will inform decisions about the future of the programme and how it will work.

On amendment 40, each care leaver will have their own levels of need and support. Local authorities have a duty to assess the needs of certain care leavers and prepare, create and maintain a pathway for and with them. Statutory guidance already makes it clear that the pathway planning process must address a young person’s financial needs and independent living skills. Where eligible, they will be able to have access to financial support and benefits as well as support to manage those benefits and allowances themselves. That will be strengthened by the support made available through clause 7, including advice, information and representation, to find and keep suitable accommodation, given that budgeting and financial management issues can be a significant barrier to maintaining tenancies for many care leavers. That will include advice and guidance to local authorities to aid in the set-up and delivery, building on best practice of how current grant-funded local authorities are already offering support to access financial services and financial literacy skills for their care leavers.

To respond to amendment 41, we know that some care leavers may not feel ready to live independently straight away; that is where supported lodgings can offer an important suitable alternative. They are an excellent way for individuals with appropriate training to offer a room to a young person leaving care and a way for that young person to get the practical and emotional support to help them to develop the skills they need for independent living. We will continue to encourage the use of supported lodgings for care leavers where it is in the best interests of the young person.

However, we do not feel that amendment 41 is needed. Clause 7(4)(a) specifies that staying close support includes help for eligible care leavers

“to find and keep suitable accommodation”.

That will include support to find and keep supported lodgings where the young person and the local authority consider it appropriate. We will make that and other suitable options absolutely clear in statutory guidance, building on the best practice from the current staying close programme.

Munira Wilson (Liberal Democrat, Twickenham)

It is good to hear that supported lodgings will be referred to in statutory guidance. I heard from the charity Home for Good, which is involved in setting up those networks of local authorities that provide supported lodgings, that in some local authorities money for supported lodgings cannot be found, because the local authority thinks that fostering money cannot be used for supported lodging and that it cannot use staying close support. Real clarity that staying close support funding can be used for supported lodgings is important to make this option work.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I appreciate the hon. Lady’s interest in this matter. We will produce the statutory guidance to make all this absolutely clear.

Before I come to clause 7 stand part, I want to respond to an additional question from the hon. Member for Harborough, Oadby and Wigston that I did not answer earlier. He asked about digital options and, as someone standing here using an iPad, I recognise the importance of that, particularly for young people. The local authorities already work with a range of digital options to connect with their care leavers, and we would certainly expect that to continue, and expect good practice to continue being developed and to be set out in the statutory guidance.

Turning to clause stand part, clause 7 requires each local authority to consider whether the welfare of former relevant children up to the age of 25 requires staying close support. Where this support is identified as being required, the authority must provide staying close support of whatever kind the authority considers appropriate, having regard to the extent to which that person’s welfare requires it.

Staying close support is to be provided for the purpose of helping the young person to find and keep suitable accommodation and to access services relating to health and wellbeing, relationships, education and training, employment and participating in society. This support can take the form of the provision of advice, information and representation, and aims to help to build the confidence and skills that care leavers need to be able to live independently.

The new duties placed on local authorities by this clause will not operate in isolation. They will be part of the existing legislative framework, which sets out the duties that every local authority already owes to its former children in care aged 18 to 24. This clause enhances and expands the arrangements for those children by supporting them to find long-term stable accommodation and access to essential wraparound services. The new statutory guidance will set out what the new requirements mean for local authorities and will draw on established good practice—for example, the role of a trusted person to offer practical and emotional support to care leavers.

On that basis, I hope I can rely on the Committee’s support for clause 7.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I would like to push amendment 23 to a vote.

Clause 8 - Local offer for care leavers

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss new clause 40—National offer for care leavers—

‘In the Children and Social Work Act 2017, after section 2 insert—

“2A National offer for care leavers

(1) The Secretary of State for Education must publish information about services which care leavers in all areas of England should be able to access to assist them in adulthood and independent living or in preparing for adulthood and independent living.

(2) For the purposes of subsection (1), services which may assist care leavers in adulthood and independent living or in preparing for adulthood and independent living include services relating to—

(a) health and well-being;

(b) relationships;

(c) education and training;

(d) employment;

(e) accommodation;

(f) participation in society.

(3) Information published by the Secretary of State under this section is to be known as the ‘National Offer for Care Leavers’.

(4) The Secretary of State must update the National Offer for Care Leavers from time to time.

(5) Before publishing or updating the National Offer for Care Leavers the Secretary of State must consult with relevant persons about which services may assist care leavers in adulthood and independent living or in preparing for adulthood and independent living.

(6) In this section—

‘care leavers’ means—

(a) eligible children within the meaning given by paragraph 19B of Schedule 2 to the Children Act 1989;

(b) relevant children within the meaning given by section 23A(2) of that Act;

(c) persons aged under 25 who are former relevant children within the meaning given by section 23C(1) of that Act;

(d) persons qualifying for advice and assistance within the meaning given by section 24 of that Act;

‘relevant persons’ means—

(a) such care leavers as appear to the Secretary of State to be representative of care leavers in England; and

(b) other Ministers of State who have a role in arranging services that may assist care leavers in or preparing for independent living.”’

This new clause would introduce a new requirement on the Secretary of State for Education to publish a national offer detailing what support care leavers are entitled to claim by expanding the provisions in the Children and Social Work Act 2017 which require local authorities to produce a “Local offer”.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I will speak to clause 8. Expert reviews have shown that many care leavers face barriers to securing and maintaining affordable housing. Too many young people end up in crisis and experiencing homelessness shortly after leaving care. Although housing and children’s services departments are encouraged in current guidance to work together to achieve the common aim of planning and providing appropriate accommodation and support for care leavers, that is not happening consistently in practice.

To enable better joined-up planning and support for care leavers, the clause will require local authorities to publish their plans, setting out how they will ensure a planned and supportive transition between care and independent living for all care leavers. Our aim is for local authorities to co-ordinate and plan the sufficiency of care leaver accommodation, to plan for the right to accommodation for each individual, and to make early, clear planning decisions that are right for each care leaver’s needs.

The clause specifies that the information that the local authority is required to publish includes information about its arrangements for enabling it to anticipate the future needs of care leavers; for co-operating with local housing authorities in assisting former relevant children under the age of 25 to find and keep suitable accommodation; for providing assistance to former relevant children under the age of 25 who are at risk of being homeless, or who are released from detention, to find and keep suitable accommodation; and for assisting former relevant children aged under 25 to access the services they need.

Damian Hinds (Conservative, East Hampshire)

The question about securing and keeping accommodation is incredibly important for care leavers; it is closely linked to what the hon. Member for St Neots and Mid Cambridgeshire was saying about financial capacity. What are the Minister’s thoughts on what the default position should be for care leavers in receipt of universal credit? Should there be automatic rent payments from universal credit, or should it be for the individual to manage? Obviously that can change in individual cases, but what should be the default and what discussions has she had with the Department for Work and Pensions?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

As the right hon. Gentleman will know, we work on a cross-Government basis. We have regular conversations with colleagues in various Departments to ensure that the offer we provide to care leavers will give them the best chance to live independently and that the approach of other Departments to these matters complements and co-operates with what this legislation is intended to achieve.

The right hon. Gentleman raises a specific and quite technical question that relates to the work of the Department for Work and Pensions. As I will come on to, we are working hard to re-establish the ministerial working group to support these young people. I am certain that this matter can be carefully considered as part of that work, so I will take it away and feed it on to colleagues. Given the importance of the clause and the changes it will bring to how local authorities work with children leaving care or young people under the age of 25 who have been in care, I urge the Committee to support it.

I turn to new clause 40, tabled by the hon. Member for North Herefordshire, who I believe is not present today.

Graham Stringer (Labour, Blackley and Middleton South)

I am told that she is unwell.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Do I still respond to the clause?

Graham Stringer (Labour, Blackley and Middleton South)

It is within the scope of this debate, so the Minister may respond if she wishes to.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I am happy to respond to new clause 40, which would require the Secretary of State to publish a national offer for care leavers, mirroring the requirement on local authorities to publish their local offer. There are already examples of additional support provided for care leavers from central Government that complement the support provided by local authorities. Care leavers may, for example, be entitled to a £3,000 bursary if they start an apprenticeship and may be entitled to the higher one-bedroom rate of housing support from universal credit.

We have re-established the care leaver ministerial board, now co-chaired by the Secretary of State for Education and the Deputy Prime Minister. It comprises Ministers from 11 other Departments to consider what further help could be provided to improve outcomes for this vulnerable group of young people.

Damian Hinds (Conservative, East Hampshire)

I wonder whether that reconstituted group will pay particular attention to the role of enlightened employers. Bearing in mind the immense breadth of unique life experiences that many people with care experience bring to a business—it will benefit the young person as well as the business—will employers take an extra chance on a care leaver and give them that opportunity? Being in work and having a regular wage opens up so much else in life.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

The right hon. Gentleman raises an important point and advocates powerfully for this vulnerable group of young people. There will indeed be representation on the ministerial group from various Government Departments, including the Minister for business—[Interruption.]

Graham Stringer (Labour, Blackley and Middleton South)

Order.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

There will be a Minister from the Department for Science, Innovation and Technology. That area will form part of the discussions, I am sure, as the purpose of the group is to give the best chance to care leavers—this very vulnerable group of young people—and ensure that we as a Government are working collaboratively to make that effective.

We recognise how important it is that care leavers have clear information about the help and support they are entitled to, both from their local authority and central Government Department. We are therefore reviewing our published information to ensure that it is accessible and clear and that care leavers can quickly and easily understand and access all the support they are entitled to. Once that review has concluded, we will consider how best to publish this information. Therefore, I ask for the new clause to be withdrawn and urge the Committee to support clause 8.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

This is a good and sensible clause, and the Opposition support its inclusion in the Bill. I would note that although all these clauses are good, they come with an administrative cost.

We have already discussed the importance of ensuring that the measures are properly funded, but I want to press the Minister for a few more insights on clause 8. There is a list of details about the local offer—that it must be published, must anticipate the needs of care leavers—and it refers to how they will co-operate with housing authorities and provide accommodation for those under 25. This is all good stuff.

The discussion that we have just had prefigured the question that I wanted to ask, which is about co-operation with national bodies. The clause is quite focused on co-operation between local bodies and drawing up a clear offer. That is a good thing—although, obviously, some of those housing associations are quite national bodies these days.

In the “Keeping children safe, helping families thrive” policy paper published a while back, the Government set out an intention to extend corporate parenting responsibilities to Government Departments and other public bodies, with a list of corporate parents named in legislation following agreement from other Government Departments. When we were in government, we also said that we intended to legislate to extend corporate parenting responsibilities more broadly, so I wondered about that connection up to the national level. We have already had one excellent and very canny policy idea from my right hon. Friend the Member for East Hampshire about setting the default for care leavers when it comes to how their housing payments are made. The Minister raised a good point about bursaries and making sure that care leavers are clear about what is available to them on that front. However, there is a whole host of other opportunities to write in to some of these—

Damian Hinds (Conservative, East Hampshire)

Will my hon. Friend also comment on the particular situation of those young people from care who go on to university? Of course, come the holidays the vast majority of people in higher education go home, but the situation is very different for those who have been in care. Some enlightened universities—including the University of Winchester, in my own county—do very good work in this regard, but will he expand a little on how those young people in higher education can be supported with the offer?

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

That excellent point is another example of exactly what we are talking about. In one sense, I regret not having an amendment that would insert a specific paragraph about the local offer from national organisations. On the other hand, it is pretty clear that the Minister is very interested in this question and is pursuing it. Anyway, there may even be scope to write that into the Bill as it goes through the Lords.

The DFE’s explanatory notes for the Bill say that, although the housing and children’s services departments are encouraged in guidance—in part 7 of the Children Act 1989, I think—to work together to achieve the common aim of planning and providing appropriate accommodation and support for care leavers, that is not happening consistently in practice; the Minister alluded to that.

My question to the Minister is: what do we know from current practice about where that does not happen and why not? It seems obvious, and something that every well-intentioned social worker—every person who works with care leavers—would want to do. What does the good model of effective provision of that support look like? Are there local authorities that are the best cases of that?

Other than providing the administrative and legislative hook for better gripping of this issue, I do not know whether the Minister has a specific plan to do anything else to try to achieve it more consistently—given that, of all the different things that one wants to join up for the care leaver, the provision of a safe place to live and a stable housing arrangements is probably No.1. Is anything more being done? Does the Minister have thoughts about how that can be done best and where it is done best? Where it has not been done as well as we would hope, why is that?

Darren Paffey (Labour, Southampton Itchen)

I appreciate your patience, Mr Stringer—this is not the first time I have stumbled over Committee procedure and no doubt it will not be the last. I welcome the Minister’s comments and the inclusion of clause 8, which I strongly support. I want to address the sentiment of new clause 40 as well.

The extension of the requirements around accommodation, extending the Children and Social Work Act 2017, requires councils to publish that local offer. That is crucial. Many of us have served in local government; it is at that local level that these crucial services, which can often make or break opportunities for care leavers, are delivered. The clause also takes steps towards making good on the Prime Minister’s commitment to guarantee care leavers a place to live.

We would all recognise, from the context of our own constituencies, that the barriers faced by care-experienced young people are numerous. The likelihood that good outcomes in life will be harder for them to achieve is simply a fact. It is absolutely right to bolster the local offer, as clause 8 seeks to do. The new provisions will further strengthen what many local authorities, including my own in Southampton, have begun to do over a number of years. As the right hon. Member for East Hampshire suggested, there are measures of good practice under local councils that we now ought to be bringing into this standardisation of the offer.

In terms of a national offer, the new clause certainly has its merits and it is something good to aim for. I had the opportunity to speak to the Under-Secretary of State for Education, my hon. Friend the Member for Lewisham East (Janet Daby), who is responsible for children and families and whose remit this issue comes under. She has agreed to meet me to explore it further, but as my hon. Friend the Minister for School Standards has already said, there is a cross-ministerial group. I really welcome the work that it is doing to take these measures forward, because building on the existing measures, which strengthen that national focus, is crucial. It says to young people with care experience that they matter.

I have worked very closely with young people in care over the years, and I know that too many of them feel let down by the systems there to protect them. This is about showing that the Government get what it is like for them, are focused on acting for their good and doing so from the very top. Having that national focus goes a long way towards making those people’s journey to adulthood stronger and as smooth as possible and towards ensuring that they are fully supported to thrive.

Again, I welcome the Minister’s comments and further assurances about the work taking place. I would say, from personal experience, that we should be doing everything, both within this Bill and beyond it, to try to move the dial for care-experienced young people even more, so that we can reduce the gaps in educational attainment, employment, training, the quality of housing they have and their general success as they move from care into adulthood. I would really welcome further discussions, beyond the Bill, on how we can build on the excellent measures in clause 8.

As someone who grew up in care myself, I want every action of the Bill to break down the barriers that care-experienced young people face. That is one thing that I personally committed to when I was elected to this place, hence I fully support the clause, the wider action that the Government are taking and the further assurances that we have heard this morning: that these measures are the start, not the limit, of the Government’s ambitions.

Tom Hayes (Labour, Bournemouth East)

It is a pleasure to serve under your chairship, Mr Stringer, and it is an honour to follow my hon. Friend the Member for Southampton Itchen, who is a powerful champion for care-experienced people in speaking from his own personal experience—and the fact that he is my office room- mate helps.

I want care leavers to reach their potential and to be active members of society in Bournemouth and Britain. I want them to have the same opportunities in life as other young adults. As young people in care approach adulthood, they need to be supported to think about and plan their future—to think about things such as where they will live and what support they may need to find accommodation, employment and take part in their communities.

But as my hon. Friend just explained, so many care-experienced people are held back. Some of the statistics are truly startling and appalling. The National Audit Office report entitled “Care leavers’ transition to adulthood” identified poorer life outcomes for care leavers as a “longstanding problem” with a likely high public cost, including in mental health, employment, education, policing and justice services. The Department for Education’s 2016 policy paper entitled “Keep On Caring” said that care leavers generally experience worse outcomes than their peers across a number of areas.

Here are the statistics. It is estimated that 26% of the homeless population have care experience; 24% of the prison population in England have spent time in care; 41% of 19 to 21-year-old care leavers are not in education, employment or training, compared with 12% of all other young people in the same age group; and adults who had spent time in care between 1971 and 2001 were 70% more likely to die prematurely than those who had not. It is no wonder that the independent review of children’s social care described the disadvantage faced by the care-experienced community as

“the civil rights issue of our time.”

In reading those statistics, and in reading that report again, I am struck by just how much of a privilege and an honour it is to be in this Committee contributing to the work of the Bill so early in this Parliament. That is why I particularly welcome clause 8, which is a care leaver-led change that responds directly to the voices of care-experienced people and care leavers.

While we are talking about clause 8, I want to dwell briefly, as my hon. Friend the Member for Southampton Itchen did, on the good practice that exists in local government, particularly in my patch of Bournemouth, where Bournemouth, Christchurch and Poole council has done a couple of things to respond to, work alongside, and listen to care leavers and care-experienced people. That includes the 333 care leavers hub in Bournemouth, which is a safe space for care leavers to visit and relax, and which focuses on wellbeing and learning by helping to teach people practical skills from cooking to budgeting. Care-experienced young people also take part in the recruitment of social workers, sitting on interview panels to make sure that potential social workers have the necessary skills to support care-experienced people.

There is good practice in our country, but that good practice is not consistent across the country. I therefore welcome the efforts in this clause—indeed, in much of the Bill—to make sure that we have that consistency. Requiring the publication of information will mean that care leavers know what services they can access, and, critically, that professionals feel supported to advise on and signpost offers. When professionals have huge demands on their time, and face significant struggles in delivering support, having that additional support available to them will be critical.

I therefore commend this clause, because it is a care leaver-centred approach, a pragmatic approach, and, frankly, a much-needed approach.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank my hon. Friend the Member for Southampton Itchen for his powerful and personal testimony, and for his clear commitment to these issues. I also thank my hon. Friend the Member for Bournemouth East for his clear and important contribution.

My hon. Friends have set out the reasons why we are providing that continuity of support when care leavers reach the age of 18, through the Staying Put programme, and why we are now legislating to add Staying Close to the duties of local authorities. It is to provide that care to leavers; to help them to find suitable accommodation and access services, including those relating to health and wellbeing support; and to help them develop and build their confidence and their skills as they get used to living independently. It is also why we are investing in family-finding, mentoring and befriending programmes to help care leavers to develop those strong social networks, which they can then turn to when they need advice and support.

Clause 9 - Accommodation of looked after children: regional co-operation arrangements

Stephen Morgan (Labour, Portsmouth South)

It is a pleasure to serve under your chairmanship, Mr Stringer. I look forward to working through the measures in this landmark Bill with all Members, as has been the spirit so far.

The children’s social care market is not working effectively. The Competition and Markets Authority and the independent review of children’s social care recommended a regional approach to planning and commissioning children’s care places. My Department will support local authorities to increase the number of regional care co-operatives over time. As Members will have noted, the clause refers to those as “regional co-operation arrangements”. As a last resort, the legislation will give the Secretary of State the power to direct local authorities to establish regional co-operation arrangements.

Where a direction is in place, regions will be required to analyse future accommodation needs for children, publish sufficiency strategies, commission care places for children, recruit and support foster parents, and develop or facilitate the development of new provision to accommodate children. We expect regional care co-operatives to gain economies of scale and to harness the collective buying power of individual local authorities. I hope that the Committee will agree that this clause should stand part of the Bill.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

Regional co-operation is something that the previous Government were extremely enthusiastic about and worked to build up, so the Minister will not be surprised to hear that we support the clause. The previous Government’s “Stable Homes, Built on Love” policy paper said that the Government would work with local authorities to test the use of regional care co-operatives—regional groupings of authorities to plan, commission and deliver care places—in two areas. Those two pathfinders would trial an approach within the legal framework, with a view to rolling it out nationally following evaluation as soon as parliamentary time allowed. Were we in office, I suspect that we would be very much considering the same clause. This Government have announced that those two pathfinders are going ahead, in Greater Manchester and the south-east, from this summer.

When we consulted about the idea—it is a good idea —there was a lot of support, but there were also a lot of concerns and questions about the size of the groups, the risk that they would be too removed from the child, and the loss of relationships with small providers in particular. As the Minister said, this is a recommendation from previous work, including from the independent review of children’s social care, which we commissioned. Obviously, we hope that such groups will be useful in providing local authorities with greater purchasing power and more options when they are securing accommodation for children in care, but we think it is important to be clear about the objectives to avoid any unintended consequences. I have come to think that, often, it is when we all agree that we are doing a good thing that we should ask ourselves the difficult questions to ensure that we are not making a mistake.

The key issue in the “children’s home market”—I put that in scare quotes, because I hesitate to use the phrase in the current context—is a lack of supply, which leads to children being placed far away from their roots and support networks in accommodation that does not always match their care plan. We then see children going missing and having repeated placement moves. I wonder whether the Minister will put on record in Committee the aims for the regional care co-operatives, other than purchasing power, and how they will address the other issues.

Will the Minister respond to some specific issues raised in our consultation? One issue is that it is harder for smaller providers and specialist charities, which are obviously part of the offer for children in care at the moment, to engage with regional care co-operatives. What does he think about that risk and what does he plan to do about it?

Does the Minister share the concern raised by Barnardo’s that the measure could inadvertently lead to greater fragmentation in the system by separating decisions about the commissioning of placements from decisions about the commissioning of family support? That is a thoughtful question. What is he doing to avoid that being a problem? We are all positive about regional care co-operatives, but I wonder whether there were any lessons from the build-up to the two pilots that we were proposing, whether he has seized on any issues and whether he is planning to address them, even as we do what we all agree is a good thing.

Munira Wilson (Liberal Democrat, Twickenham)

It is a pleasure to serve under your chairmanship, Mr Stringer. I will ask the Minister a couple of questions about clause 9 that I hope he will address when he responds. We support its intent, but I want to understand what safeguards or guidance will be put in place to ensure that children in care in areas where these regional co-operatives are active do not inadvertently end up far away from their families.

We already know that about a fifth of children in care are placed over 20 miles away from their families and almost half are living outside their local authority area. In some cases, it is important that a child is moved reasonably far away for safeguarding reasons, but often that is not the case. I know from having spoken to care-experienced young people and to the Become Charity, which has done quite a lot of research into the impact of children being moved far away from home, that that can affect their mental health, that they can feel isolated and lonely having moved away from family and friends, and that it can cause stigma in the school or college environment. I want to understand how the Minister intends to ensure that young people are not moved further away than they need to be when these regional co-operatives are in place.

Damian Hinds (Conservative, East Hampshire)

Again, as hon. Members have said, we support this approach and it is the approach that we were taking. It is also true that when everybody agrees on something, it is usually the point of most danger for making bad law. It is important to have these Committee proceedings and proper scrutiny.

I was personally never keen on the name of regional co-operatives, although I do not think the word “co-operative” actually appears in the Bill. We can, of course, have co-operation without having a co-operative. This legislation is actually about regional co-operation arrangements.

There are three different types of potential co-operation arrangement: first, for strategic accommodation functions to be carried out jointly between two different local authorities; secondly, for one to carry out the duties on behalf of all; and thirdly, for a corporate body, effectively a separate organisation, to be created to do that. I imagine that Government Members will have different views depending on which of those three forms the arrangements take. Will the Minister say which of those he expects to be most common? As well as the pilots, there have no doubt already been formal and informal conversations with local authority leaders in children’s services in many different areas.

I am keen to know how this arrangement is different from some arrangements that may already take place. For example, the tri-borough children’s services arrangement in London—I will try and get this right—between Westminster, Kensington and Chelsea, and Hammersmith and Fulham. Presumably, some of those functions are administered in common there, so how will this be different?

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I probably should have asked the Minister about scale. In the two pilots, we have Greater Manchester, which is just under 3 million people, and the south-east, which is roughly 3 million people. I do not know what the Government’s expectations about scale are and whether they would continue to support something like the tri-borough arrangement, which is obviously much smaller.

Damian Hinds (Conservative, East Hampshire)

My hon. Friend, as ever, makes a very apt point. Where we end up on that continuum of scale depends on what we are going after most. Of course, we want all those things. For purchasing power, a bigger scale is better, but for close and easy working relationships, a smaller scale is sometimes better. When we are talking about children, and the placement of vulnerable children, that may well push us towards the smaller end of the scale.

Perhaps it is possible to perform different functions at different levels, with some functions still being performed by the individual local authority. Even then, as my hon. Friend often rightly says, there is an enormous difference in scale between London local authorities, which are actually quite small even though they are in our largest city, and Birmingham, which is one enormous authority. It might be argued that doing some things at a sub-local authority level makes sense in a very large local authority area, but as I say, it might be possible to do some things as the single local authority, some things at a larger level, and some things—presumably principally in terms of purchasing leverage—on a wider scale again.

If regional co-operation arrangements are not materially different in practice from something that already exists in co-operation between local authorities, even if that is on a smaller scale than what is envisaged, is legislation actually necessary? If it is not, we probably should not legislate. I would like to understand a bit more about the legislative basis that is currently missing.

Finally, the Bill sets out that the Secretary of State may add to the definition of the strategic accommodation functions that we have listed in proposed new section 22J(3) of Children Act 1989. What type of additional functions does the Minister have in mind?

Tom Hayes (Labour, Bournemouth East)

I rise to speak in favour of regional co-operation arrangements, primarily because of what we have seen in two important reviews or evaluations. The recent independent review of children’s social care that I referred to highlighted a system at breaking point, as we also heard from the Minister. The insight from that report was that how we find, match, build, and run foster homes and residential care for children in care radically needs to change. When the Competition and Markets Authority looked at this area, it also identified major problems, such as profiteering, weak oversight and poor planning by councils—the verdict on the system is damning.

The independent review recommended that a co-operative model should sit at the centre of bringing about change. The values of our movement could provide the loving homes that children in care need. I particularly support this clause because this feels like a very Labour Government Bill—one that has at its heart the co-operative model that is obviously such a big part of our labour movement.

My hope is that regional care co-operatives could gain economies of scale and harness the collective buying power of independent local authorities to improve services for looked-after children. There are obvious benefits to using a co-operative model to solve those problems—the values of self-help, self-responsibility, democracy, equality, equity and solidarity apply directly to how these regional care co-operatives would be run. In a social care market that has been described as broken by the Minister and by those reports, it is critical to bring the co-operative model more into what we provide.

Stephen Morgan (Labour, Portsmouth South)

I thank hon. Members for their thoughtful comments, suggestions and questions. On the point that the hon. Member for Harborough, Oadby and Wigston made about learning from the pathfinders, the Department has consulted widely with the sector on the proposals for regional care co-operatives. Learning from the pathfinders has shaped the proposed legislation and the definition of the strategic accommodation functions. We will develop expertise in areas such as data analysis and forecasting, as well as targeted marketing, training and support for foster carers. Working collectively with improved specialist capabilities should allow for greater innovation so that local areas are better able to deliver services for children in care.

I turn to the points made by the hon. Member for Richmond—

Munira Wilson (Liberal Democrat, Twickenham)

Twickenham. We are in Richmond borough.

Stephen Morgan (Labour, Portsmouth South)

My apologies. I did know that, but I was trying to be impressive by remembering the hon. Lady’s constituency and I got it badly wrong.

On the hon. Lady’s point about where placements should be, local authorities will continue to have the same statutory duties to find the most appropriate place for looked-after children, including that they should live near home, so far as is reasonably applicable. Regional care co-operatives will assist local authorities with these duties. Placement shortage is a key driver of children being placed in homes far from where they live; regional care co-operatives should improve that by increasing local and regional sufficiency, making more places available locally for children who need them.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

Will the Minister confirm that—as I think is the case—the Government would use their powers under the clause to impose regional co-operation agreements only as a last resort, and that we would not push this on everybody who does not want it?

Stephen Morgan (Labour, Portsmouth South)

The shadow Minister is absolutely correct. We want to work collaboratively with local authorities in rolling this out. We will not force local authorities to do so. I thank him for enabling me to make that clear.

Damian Hinds (Conservative, East Hampshire)

Forgive me, Mr Stringer; I know that the Minister has finished, but may I speak again, with leave?

Graham Stringer (Labour, Blackley and Middleton South)

I have put the Question. I am sorry, but you have missed the opportunity.

Clause 10 - Use of accommodation for deprivation of liberty

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I beg to move amendment 24, in clause 10, page 16, line 39, at end insert —

“(8A) After subsection (9) insert —

‘(10) Where a child is kept in secure accommodation under this section, the relevant local authority has a duty to provide therapeutic treatment for the child.’”

This amendment would place a duty on local authorities to provide treatment for children in secure accommodation.

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clause stand part.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

We have come to a particularly serious clause—not that the other clauses are not serious, but the use of deprivation of liberty orders for children is always deeply troubling, as is the rise in the number of children who are subject to them. I share the wish of the Children’s Commissioner to see an end to this practice and an end to the use of unregistered provision.

We have seen an increase in the number of young children—including two aged seven last year and 200 under 13—given deprivation of liberty orders. There is nothing in the Bill to differentiate by the child’s age or stage. What consideration has the Minister given to that point? There is something about the use of the orders on very young children that is particularly striking.

When a young child goes into secure accommodation, the Secretary of State has to sign it off, but no sign-off is required from the Secretary of State on deprivation of liberty orders. Why not? The Government are keen on consistency elsewhere in the Bill. Will they bring the same consistency to this clause?

More broadly, do we not need greater clarity on the mechanism for restricting children’s liberty outside a secure institution? I am sure that Members of the other place will be very interested in that question. As the Children’s Commissioner has written, some of the children concerned have physical and learning disabilities, and many are at risk of criminal or sexual exploitation or both. Will the Minister act on the Children’s Commissioner’s recommendation and introduce a proper legal framework and guidance? We believe that much more clarity is needed in the Bill on therapeutic care for those who are under a deprivation of liberty order. Historically, there has been a lot of focus on containment. This amendment is, I suppose, our legislative prod to take the opportunity to think about what therapeutic help a child needs and how to deliver it.

I want to put to the Minister some very important points that Jacky Tiotto of CAFCASS made to us last Tuesday. She welcomed a lot of the provisions but said that at present the Bill is

“a missed opportunity to deal with the arrangements around deprivation…some better, stronger regulations could be made for those children—who, let us face it, are actually being secured, or deprived of their liberty.”

She raised several specific points that I will put to the Minister. She said:

“Our data shows that 20% of those children are aged 13 or under. Currently, if a local authority applies for a place in a secure unit for a child aged 13 or under, the Secretary of State for Education has to approve that application. I think an assumption is made in the Bill that that strength would remain in the amendment. We need to make it clear that, for all applications for 13-and-unders into places where they will be deprived, the Secretary of State should still approve. That has been unnecessary because the courts have been using their jurisdiction to deprive children. This clause will remove that, and make the accommodation usable legally, but we need to ensure that for young children it comes back”—

by “it”, I think she meant Secretary of State sign-off. Will Ministers amend that provision? They do not necessarily need to answer one way or another today, but I will be grateful if they write to me on the point. At some point in the Bill’s passage through Parliament, I hope that they will reply to the specific point about Secretary of State sign-off.

The head of CAFCASS also said that

“for those young children, the review of their deprivation should be stipulated in terms of how regularly that deprivation is reviewed. For a 10-year-old deprived of their liberty, a week is a long time.”

That is a good point. She continued:

“The children who we work with tell us that they do not know what they have to do to not be deprived of their liberty, and very young children will be confused. So the frequency of review, I think, becomes more regular if you are younger.”

That is a specific and on-point suggestion from someone who really knows their stuff. Might Ministers take up that suggestion from CAFCASS and start to specify frequency of review? Might they take up her point about making reviews more frequent and clearer for young and very confused children?

Jacky Tiotto made another specific point—so specific that it is worth my reading it out. She said that

“the Department for Education should definitely consider what has happened to the child before the deprivation application is made. From our data, only 7% of those children were the subject of child protection plans, and it is hard to imagine going from not being protected by a statutory child protection plan to being in a court where they might deprive you. The relationship between child protection and deprivation needs strengthening.”––[Official Report, Children’s Wellbeing and Schools Public Bill Committee, 21 January 2025; c. 32-33, Q72.]

To that end, she suggested:

“As soon as that child becomes the subject of a concern, such that you might be making an application to deprive, you hold a child protection conference and you have a plan in place to protect that child beyond the deprivation”––[Official Report, Children’s Wellbeing and Schools Public Bill Committee, 21 January 2025; c. 33, Q73.]

Is that something that Ministers would be happy to specify? What do they think of that argument?

The Bill leaves a lot to be specified in regulations. In the Department for Education’s explanatory notes to the Bill, we are told:

“Any specific requirements for the new accommodation will be included in regulations that will be informed by learnings from the pilots specifically testing the sort of accommodation and the cohorts of children that local authorities are looking to place in this alternative accommodation using these new powers.”

May I ask the Minister what learning and experience have been gained from those pilots? What has been shared with the Department so far? When does he expect the Department to be in a position to develop more detailed requirements for the regulations? Are we likely to see them this year, assuming Royal Assent, or are they a bit further away?

Last but not least, there is a connection between the issues raised by clause 10 and those that we will come on to when we debate clauses 11 to 13. In written evidence to the Committee, the Children’s Commissioner noted that

“in the Children’s Commissioner’s report ‘Illegal Children’s Homes’, the office found that of 775 children living in unregistered placements on 1 September 2024, almost a third (31%) were subject to a court-ordered DoL. The placement of these highly vulnerable children in wholly illegal settings is deeply concerning.”

I wonder whether the Minister will address that point, either by amending clause 10 or by amending later clauses.

Let me recap for the Minister’s benefit. There is the suggestion that the requirement for the Secretary of State to give approval for children aged 13 or under be made clear; there is the suggestion from CAFCASS that we specify in the Bill that review be more frequent for younger children; there is the question about automatically having a child protection plan in place for when the child leaves the deprivation; and then, from the Children’s Commissioner, there is a call for action on the large proportion of children on deprivation of liberty orders who are currently being placed into illegal settings. Effectively, those are the four questions that the expert community is putting to us.

Damian Hinds (Conservative, East Hampshire)

Clause 10 will amend the Children Act 1989 such that local authorities can authorise deprivation of liberty of children other than only in a secure children’s home, and will change the term “restricting liberty” to “depriving of liberty”.

In the secure children’s home sector, a distinction is often made between what are called justice beds and welfare beds. There are also children detained under the Mental Health Act 1983 on secure mental health wards and in psychiatric intensive care units, or on non-secure wards. I am assuming that we are talking today only about what are known as welfare beds—I say “beds”, but normally the entire facility is either one or the other.

To speak on justice beds briefly, there has been a big fall in this country since 2010 in the number of children who are locked up in the criminal justice system: the numbers are down from about 2,000 in 2010 to only around 500 now. That has partly been because of a fall in crime, and in the particular types of crime for which young people used to be locked up, but it is also because of the good work of youth offending teams. Most of those children are older and would typically be in a young offenders institution when aged 15 to 17, or indeed, 18 to 21. The very small group of children who are in the secure children’s home sector are a very difficult and troubled cohort of youngsters with complex pasts. I take a moment to pay tribute to the staff; it is an extraordinary career decision to go into that line of work, and they do it with amazing dedication.

The welfare bed part of the secure children’s home sector is where somebody has had their liberty restricted not because of something they have done, but because of something they might do—because of the danger or threat they pose either to themselves or others. It is an enormous decision to take to deprive anybody of liberty on those grounds, but particularly a child. As with those children who are in the criminal justice part of the secure children’s home sector, these are typically extremely troubled children.

On the change in clause 10 to allow local authorities to house those children somewhere other than a secure children’s home, the obvious question to the Minister is “Why that, rather than ensuring that a secure children’s home is properly catering to the needs of that cohort of children?” I am not saying that it is the wrong decision, by the way, but I am interested to know, and it is good to have it on record, why it is a better decision to say, “Let’s take some or all of these children and house them in a different type of facility.” What have the Minister and the Secretary of State in mind for the alternative accommodation that would be set out in regulations? For the benefit of the Committee, and again for the record, it might also be helpful to define what is different. The Minister might clarify the definition of a secure children’s home and explain what it is that we need to deviate from.

My other question is about the change in phraseology. We are talking about moving from the restricting of liberty to the depriving of liberty. I understand from the explanatory notes that this tries to reflect the reality, but it is a legitimate question whether it is a strictly necessary change to make and what the reasoning is. Even when we do deprive people of liberty, we do not deprive them of all their liberty. There are degrees of restriction. We have this as a feature in the criminal justice system, and though this is a different cohort of children, some of the same principles may apply. We may be able to get a lot of the benefit we are looking for from restricting someone’s liberty rather than entirely depriving them of it. I wonder if the Minister might say a word about that distinction and about whether the Government have received representations on the change in wording.

Ian Sollom (Liberal Democrat, St Neots and Mid Cambridgeshire)

My understanding is that this change follows a trend of children being deprived of their liberty outside the statutory route by being housed in unsuitable accommodation not registered with Ofsted, often far from home and family. That has been partly addressed in the questions from the hon. Member for Harborough, Oadby and Wigston.

The success of this provision will depend on the regulations. What actually makes a setting capable of being used for the deprivation of liberty? Will there be a requirement with respect to education in that setting? Will they need to be registered with Ofsted? It is not entirely clear. When will regulations relating to this provision be brought forward? Is it the intention that they will mirror the scheme for the secure accommodation?

The law around the deprivation of liberty is incredibly complex. Without proper legal advice and representation, it is very hard for families to understand what is going on and what options they have. It is not clear yet what legal aid will be available to families or the child themselves when an application is made under the new route. Can the Minister clarify what will be available with respect to legal aid, or put a timetable on when we will get that clarification?

Stephen Morgan (Labour, Portsmouth South)

Amendment 24 seeks to place a legal duty on local authorities to provide therapeutic treatment for children placed in secure accommodation—that is, a secure children’s home. The Government’s view is that the amendment is not necessary as there are a number of existing legal duties on local authorities to ensure that wherever children are placed, including in secure accommodation, their needs are met, including the needs for therapeutic treatment. This is part of the duty on local authorities, under primary legislation, to safeguard and promote the welfare of any child that they look after.

Any placement decision for a looked-after child must be informed by the care plan, which a local authority is required to prepare for all looked-after children. The local authority must understand fully the services offered and how the provider intends to care for the child, which should be based on robust evidence that supports the appropriateness and effectiveness of any therapeutic approach or model of care that the provider intends to use. This will apply equally to a placement in a secure children’s home as it will to other residential placements, including relevant accommodation outlined in the clause.

The care plan must be shared with the secure children’s home’s registered manager and be kept under regular review. The care plan must contain arrangements made by the local authority to meet the child’s needs, including in relation to health, which must be included in the health plan—that forms part of the care plan—and in relation to the child’s emotional and behavioural development.

The Government recognise that as part of ensuring that children have access to the most appropriate therapeutic support in secure accommodation, children should be provided with appropriate healthcare services. As such, in addition to the duty on local authorities to take reasonable steps to ensure that the child is provided with access to appropriate healthcare services, NHS England has statutory responsibility for the direct commissioning of health services or facilities for children in secure accommodation.

In addition, NHS England retains a duty around any health provision that is specified in a child’s education, health and care plan. The duty means that any health services specified must be provided, where possible, within the bounds of what is already commissioned. For the reasons that I have outlined, I ask the shadow Minister to withdraw the amendment.

I turn to clause 10, which, through amendments to section 25 of the Children Act 1989, allows for children to be deprived of liberty in provision other than a secure children’s home under a statutory framework, with the associated benefits that this brings, including access to regular review points and easier access to legal aid. This provision will create a statutory basis for a court-authorised deprivation of liberty in accommodation best suited to meeting the needs of some of the most vulnerable children, where care and treatment are provided, and where restrictions that amount to deprivation of liberty in connection with the provision of that care and treatment, if required to keep children safe, can also be imposed.

As Members will know, due to a lack of sufficient suitable placement options available to local authorities, many children are currently being placed in unregistered provision or in open children’s homes, where they are deprived of their liberty under authorisation of the High Court under its inherent jurisdiction, rather than under a statutory framework. Inherent jurisdiction is intended only as a step of last resort, typically to keep a child safe when no other legal route or statutory mechanism is available. Its routine use is therefore problematic and reflective of a lack of provision designed to meet all the needs of a small but growing cohort of children looked after by local authorities.

This change to legislation is being made in conjunction with a range of practical steps that we are taking as a Government to support the growth of new types of community-based provision needed for this vulnerable cohort of children. A Department for Education and NHS England-led programme of work is supporting local authorities and health partners with investment and resources to improve their assessment of need, improve commissioning practices, and develop a whole pathway as well as individual placements that better suit these children’s needs.

Clause 10 will allow for children to be placed in such new types of placements that provide suitable care and treatment and that are also capable of imposing varying restrictions on children’s liberty linked to their fluctuating needs. That could include the ability to place greater restriction on a child’s liberty that amounts to deprivation, where necessary, in connection with the care and treatment being provided at that accommodation, while also being able to reduce the restrictions, where appropriate, without the child needing to be moved out of the accommodation, which is currently the case for children who are placed in secure children’s homes. Children can therefore maintain community links, practitioners can develop long-term and appropriate pathways and children will benefit from access to a skilled, multidisciplinary workforce that can provide for them for the long term.

We anticipate that this measure will reduce the use of deprivation of liberty orders applied for under the High Court’s inherent jurisdiction and ensure that children benefit from the protections afforded by a statutory scheme, with a framework of clear safeguards and mandatory review points, to ensure that no child is deprived of their liberty longer than necessary. Additionally, this change will signal to local authorities, other key sector partners and providers of children’s residential provision Parliament’s endorsement of and commitment to these placement options, supporting them to grow and reducing dependency on poor-quality, expensive, unregistered placements. This will ensure that some of the most vulnerable children are kept safe and given the support to get on well in life, improving their lived experience by ensuring that there is appropriate support, including community links, health access and so on, to assist them to develop to their full potential.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I am grateful to the Minister for his informative speech, but can I press him to respond to the specific points made by CAFCASS and the Children’s Commissioner? The Minister is alluding to some of them as he goes along. The first is about requiring explicit Secretary of State approval beforehand. The second is about specifying the frequency of review, particularly for younger children. The third is about having an automatic requirement for children’s protection plans as the child comes out. The fourth, which the Minister has alluded to, is about them being put into illegal settings, and whether something legislative should be done at this point to stop that from happening at all.

Stephen Morgan (Labour, Portsmouth South)

I am coming to the end of my speech and hope to answer the points that the Opposition spokesperson made. I will certainly take away the issues that he raised.

I thank all Members for their contributions and questions on this very important matter. On consistency, the views of the Children’s Commissioner and age, I know that this point was raised in the other place only yesterday by a former Minister, and I am grateful for that. It is worth saying here, too, that the child rights impact assessment is informing our work on the Bill. I give the shadow Minister the assurance today that I will take on board these comments.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

Is the child rights impact assessment for the Bill published so that we can see it?

Stephen Morgan (Labour, Portsmouth South)

There is no legal obligation for England to publish that assessment, but we are certainly using it to inform our work on the Bill.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I think Ministers have said in previous sittings that it will be published during the process of scrutiny, along with the impact assessment. Is that still the case?

Stephen Morgan (Labour, Portsmouth South)

I am referring to the conducted children’s rights impact assessment, where children are directly impacted by the policies and/or particular groups of children and young people are more likely to be affected by others. As I mentioned, there is no requirement to publish these documents in England. However, the documents are currently under review and we will advise on our next steps shortly. More broadly, with regards to the impact assessments, these will be published in due course.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I thought I had heard Ministers say previously that they were planning to publish this for our benefit—that we would get both the impact assessment and the children’s rights assessment. Perhaps it is me who is sowing confusion and the Minister may still intend to publish this document. I cannot see any reason why the Government would not publish it, so can I get an assurance that that is going to be published?

Stephen Morgan (Labour, Portsmouth South)

To state this clearly, the impact assessment has not yet been published but is obviously informing our work. Obviously, various different assessments are undertaken and I will certainly get back to the hon. Member on those points.

Munira Wilson (Liberal Democrat, Twickenham)

The Minister has said a number of times that, by law, the child rights impact assessment does not have to be published. In the interests of transparency and for all of us to do the right thing by children, does he not agree that even if he does not have to publish it, he really ought to do so?

Stephen Morgan (Labour, Portsmouth South)

To be clear, we will be publishing the regulatory impact assessments. We will certainly be using the evidence from the children’s rights impact assessments to inform our work.

I turn to the points raised by the Opposition spokesperson on placements of children under the age of 13. Depriving a child of their liberty must always be a last resort, but it is sometimes necessary to keep that child and others safe. These children are some of the most vulnerable in our society. We must do all that we can to keep them safe and help them get on well in life. When a child under the age of 13 is deprived of their liberty and placed in a secure children’s home, the local authority must obtain approval from the Secretary of State before applying to the court. That requirement is set out in regulations that reflect the added seriousness of depriving children so young of their liberty.

The Opposition spokesperson and the right hon. Member for East Hampshire (Damian Hinds) also made a number of broader points about child protection plans and deprivation of liberty. Local authorities’ care-planning duties are clear that when there are looked-after children, they must have a long-term plan for a child’s upbringing, including arrangements to support their health, education, emotional and behavioural development, and their self-care skills.

The statutory guidance “Working together to safeguard children 2023” is clear about the actions that local authorities and their partners should take, under section 47 of the Children’s Act 1989, if a child is suffering or likely to suffer significant harm, as well as the support that should be provided under section 17. If there is a concern about a child’s suffering, or if a child is likely to suffer significant harm, the local authority has a duty to make an inquiry under that Act. “Working together to safeguard children” sets out the actions that the local authority and their partners must take when there are child protection concerns. That includes putting in place child protection plans when concerns are submitted. I hope that the Committee agrees that the clause should stand part.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I hope that we can clear up the confusion about whether we will see the children’s rights assessment. I cannot see any good reason why we would not be able to see that perfectly routine assessment. None of these things is the end of the world, but not having the impact assessment of the thing that we are quite deep into line-by-line scrutiny of seems to further compound this problem. Obviously, no one can defend that; it is not good practice.

I slightly pre-empted what the Minister said—he had scribbled some last remarks—but I was glad that he came to some of the points raised by CAFCASS and the Children’s Commissioner. I raised them partly because I know that their lordships will be extremely interested in these specific questions. There probably is scope for improvement of this clause to do some of those other good things, because this is such a serious issue for those very young children.

We will not vote against clause stand part, but I will press our amendment to a vote. I heard what the Minister said, but I just make the point that there is scope for improvement in the clause, and I suspect that their lordships will provide it.

Clause 11 - Powers of CIECSS in relation to parent undertakings

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clause 12 stand part.

Stephen Morgan (Labour, Portsmouth South)

Clauses 11 and 12 will strengthen Ofsted’s regulatory powers to allow it to act at pace and scale when that is in the best interests of children. Specifically, clause 11 strengthens Ofsted’s powers to hold provider groups—parent undertakings, in legislation—to account for the quality of the settings that they own and control. This ensures that Ofsted can take the quickest and most effective action to safeguard vulnerable children, without adding duplication within the existing regime. It will allow Ofsted to look across provider group settings as a whole and take action at provider group level, rather than being limited to doing so setting by setting as it is now. It will also ensure that a provider group is accountable for the quality of the settings that it owns.

Where Ofsted reasonably suspects that requirements are not being met in two or more settings owned by the same provider group, it will be able to require senior people in the provider group to ensure improvements in multiple settings. The requirement applies both to settings operated by a single provider and to multiple providers owned by the same group. Ofsted will be able to request that the provider group develops and implements an implementation and improvement plan to ensure that quality improves. The plan will need to address the issues identified by Ofsted and be approved by Ofsted if it is satisfied that the plan will be effective in addressing the issues.

The clause gives the Secretary of State the power to make regulations to provide that non-compliance by the provider group means that the providers that it owns are not fit and proper persons to carry on a setting. That will prevent a person from being registered in relation to new settings if their owner has failed to comply with the relevant requirements under these provisions. That should act as a deterrent and ensure compliance with the requirements.

Clause 12 gives Ofsted the power to issue monetary penalties to providers that have committed breaches of requirements, set out in or under the Care Standards Act 2000, that could also be prosecuted as criminal offences, including operating a children’s home without registering with Ofsted. Ofsted will also be able to issue a provider group with a fine for non-compliance with the requirements set out in clause 11. The fine will be at Ofsted’s discretion and is unlimited in legislation. That will act as a significant deterrent, so that provider groups comply with these requirements. Clause 12 ensures that Ofsted has an alternative to prosecution where that is currently the only enforcement option against those seeking to run a children’s home without registration. Ofsted will not be able to impose a monetary penalty on a person for the same conduct where criminal proceedings have been brought against them in relation to that conduct.

To act as a deterrent and to ensure transparency for the public, the clause gives the Secretary of State the power, by regulations, to require Ofsted to publish details about the monetary penalties that it has issued. Ofsted must also notify local authorities when a monetary penalty has been issued, as it is currently required to in relation to other enforcement actions that it takes. Finally, the clause provides that the issue of a monetary penalty could be used as grounds for cancellation of registration.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

We are entering a whole new section of the Bill. I will make a number of points now that we could come back to when we debate future clauses, but I hope we will not have to. I hope that we can have discussions about the principle and philosophy now and we might be able to move faster later, but we can come back to them if necessary.

As we turn to the clauses dealing with children’s homes, I want to start by checking that the Minister has the same basic understanding of the situation, and the same philosophical take on what we are trying to do, as I do. First and most importantly, there is a question about the underlying structural problems that have driven high costs for local authorities in the provision of residential care for children and young people, and there is a second question about the best approach to tackling that, both legislatively and non-legislatively.

On the first, does the Minister agree with me, at least in principle, that the main issue driving the high costs is a shortage of foster care, which is driving local authorities to send children into expensive children’s homes at best, or into unregistered provision at worst? Research by Ofsted in 2022 suggested that residential care was part of the care plan for just over half of the children whose cases it reviewed. To put that the other way round, almost half of children who ended up in residential care should ideally not have been there. Crucially, the research shows that the original plan was for over one third of children to go into foster care.

Although the Bill makes changes to the provision of information about kinship care, which is good, there is nothing that will produce the step change that we need to increase the number of foster carers, which is the thing that would really take down the demand and the high costs. That point is common to the discussions that we will have about cost-capping social workers, cost-capping individual care homes and reviewing whole entities. I do not think that those measures are bad; I just do not think that they are ultimately the underlying solution. That is a point that the Committee will hear me make several times today.

In his independent report commissioned by the previous Government, the Member for Whitehaven and Workington (Josh MacAlister) highlighted that in the year ending March 2021,

“160,635 families came forward to express an interest in becoming a foster carer, and yet just 2,165 were approved”.

That is just 1.3% making it through. It might be that some of those were just initial approaches and not all of those people were deadly serious, but that is still a very small share. He continued:

“Local authorities perform a wide range of roles and appear to be struggling to provide specialist and skilled marketing, recruitment, training and support for such an important group of carers. In 2020/21 recruitment and retention among independent fostering agency services led to a net increase in capacity of 525 additional households and 765 additional foster care places. In contrast, there has been a decrease in capacity of 35 households and 325 places in local authorities over the same period”.

By definition it is quicker, and in quite a lot of cases better, to provide foster care than to build a new children’s home. I want to press the Minister on what he thinks is the explanation for that 99% gap between those expressing an interest in fostering and final approvals. What is he doing to close that gap? He will be aware that there is a perception that it is almost impossible to become approved as a foster carer. We looked at this in my family some years ago. We started in on it through my work as a constituency MP; I have met many constituents who are foster carers. They are incredible people and I pay tribute to them. A woman I know well has fostered 70 children as well as adopting. I honestly think these people are amazing.

The Government really need to use the Bill—this rare legislative slot, as one of the Ministers said—to increase the number of foster and kinship carers. Publishing information is good, but it will not change much unless it is accompanied by a radical attitude to approvals by local authority social work teams. When the alternative—which we are getting to in this clause—is children being sent miles from home, placements breaking down, children going missing and high costs to local authorities, there is obviously a burning platform for change.

If I were the Minister—he is free to take this suggestion or not—I would commission a month-long desktop review to look at the pipeline and all the decisions to reject applications to be foster carers that got fairly far down the track, and understand what can be learned from them. That could shape amendments either here or in the other place and be a huge benefit to him. I can think of a senior official in a Government Department—someone the Government trust to run a major public service—who has two kids, provides a loving home and wanted to foster but was turned down. There are many such cases. Everyone knows the phrase “too many books in the house”, but I strongly encourage Ministers to dig into the underlying question of why we lose so many opportunities to get the foster carers that would take off the pressure that we are trying to take off with these clauses.

A key recommendation of the independent review of children’s social care led by the hon. Member for Whitehaven and Workington was to introduce mixed models combining residential and foster care, particularly for older children, who are the fastest growing part of this cohort. That was part of our brief for the initial pathfinder sites for the regional care co-operatives, which I mentioned in the debate on a previous clause. What assessment has the Minister made of that approach? What impact does he think its adoption might have? Is there any interesting early data from the pilots in Greater Manchester and the south-east?

Speaking of mixed models, I encourage the Minister to look at the incredible work of the Royal National Children’s SpringBoard Foundation, which, as he knows, does amazing work looking after care-experienced and edge-of-care children in a network of state and independent schools. It has been working with the DFE since 2020—something I am very proud that we brought in—and has provided incredible, transformative opportunities for disadvantaged young people. I encourage the Minister to build on that and go further.

On the specifics of clause 11, after the terrible abuse of children supposedly in the care of the Hesley Group, it is absolutely right that the Government are trying to identify systemic safeguarding problems in organisations that manage multiple children’s homes, independent fostering agencies and residential special schools. Our only concern, which is quite serious, is that we should allow for rapid action, not something that drags on and becomes a time and resource-consuming process.

I heard what the Minister said in introducing the clause about providing an alternative to prosecution, but I do not want to lose sight of the importance of prosecution. My noble Friend Baroness Barran told me that when she was a Minister in the Department for Education, she was already able to request inspections of every home in a group where one was judged to be failing, and did so on at least one occasion. Ultimately, we need experienced people to go into a home quickly and see what is actually happening. I think this is within the spirit of what the Minister said, but I hope he would agree that there is often no better alternative to actual inspection and actual prosecutions.

To use an example from a very similar area, the Department can also request an “improvement plan”, which is the main vehicle proposed in these clauses, in the case of independent schools, but that does not always work well in practice. The reasons for that are instructive for the kinds of issues that I hope Ministers will think about here. What ends up happening is that plans are sent in varying degrees of adequacy, and time—in some cases literally years—can be wasted with a lot of letter writing back and forth. I urge the Minister to think about the action he wants in those kinds of cases. Imagine being in the middle of a drawn-out improvement plan process in another case like the Hesley Group case—and that is before the inevitable appeals, which the clauses provide for, kick in.

We have not tabled an amendment to do this—I wonder, though, about the other place—but we think that the Minister needs to confine the improvement plan idea to more minor administrative cases or lower-level concerns. That is where it might be more appropriate. We worry that we might get similar processes to those that we have seen in independent schools, where we have a resource-intensive, rather bureaucratic and slow process that goes on for a long time with a lot of back and forth and appeals. Ultimately, we sometimes just need to get to the point. That is our broad concern.

Will the Minister address the following specific points on clause 11? First, what is the definition of “reasonably suspects” in proposed new section 23A(2)(b) and (3)(b)? The policy summary mentions Ofsted reasonably suspecting,

“based on intelligence they receive or via inspection, that required standards are not being met in two or more settings owned by the same provider group”.

What sort of intelligence would meet the bar for intervention? On the point about “two or more settings”, I do not necessarily think that we would want to rule out the use of an improvement plan in minor cases, even involving just one setting.

Secondly, there does not seem to be a hierarchy when it comes to failure to meet the required standards. The clause lists lots of different things, and they could be minor or quite major transgressions of the standards. In the case of a major transgression, an improvement plan feels quite bureaucratic. On the point of prosecution versus an improvement plan, could we be clearer about what sort of problem leads to what sort of action?

Thirdly, proposed new section 23A(4) does not appear to set a timescale by which Ofsted must submit an improvement plan notice. As the Minister will gather from my remarks, our concern here is about pace and timeliness. We are concerned about cases where there are potentially quite serious concerns, yet there is a delay in sending the notice. In fact, I am more concerned that Ofsted should do an emergency inspection when serious concerns are expressed, and I worry about the improvement plan process resulting, totally inadvertently, in fewer of those inspections taking place because the cases go into the process set out in the clause instead.

Fourthly, will the Minister consider the role of regulation 44 visitors? They are another important set of independent eyes on the children in these homes. He will be aware of suggestions in the past that they are not always as independent as they should be in the cases of certain private groups. Is that not an important thing to consider here? We must ensure that the existing system works before we add new layers of process on top of it. There is no reference to those visitors in the policy summary, and they play a vital role in safeguarding the children in these homes.

Fifthly, I do not know what consideration was given to requiring the registration of parent groups. The policy summary rejects the routine inspection of provider groups, but we need some level of accountability that has real teeth in urgent situations. Why does the DFE think that full inspection of provider groups is unnecessary? The reason given is that most provision is rated good or outstanding, but about a fifth of providers are not rated as either.

We worry that clause 11 might not achieve what the Government want. It risks making us feel safer and giving us a process, but becoming a bureaucratic sink. We do not want workers to get sucked into a bureaucratic process rather than acting quickly to keep vulnerable children safer.

I look forward to the Minister’s reply. I know that we want the same outcomes on this issue. I understand why an alternative to prosecution is being proposed, but we need to be careful that, although we think we are doing a good thing, we do not inadvertently replicate some of the issues we have seen where that kind of process has been used in other fields, such as independent schools, and that we do not take away pace.

Clause 12 is obviously linked to clause 11, as we are debating them together. We heard from the Children’s Commissioner in her powerful evidence last week that there is a pressing need to address the plight of children in unregistered placements, which her report estimates is costing local authorities almost £440 million a year. The numbers were really quite incredible. Assuming that the number of children placed in those homes on 1 September 2024 was typical for a full year—she quoted 775 children and young people—that equates to more than half a million pounds per child, per year, in these settings.

Clause 12 provides for Ofsted to issue unlimited fines where it is

“satisfied beyond reasonable doubt that an act or omission of the person constitutes an offence under this Part”

of the Care Standards Act 2000. The policy notes state:

“At present, Ofsted can prosecute those who do not register but operate or manage those services. However, this is a resource-intensive process and can take a long time. This legislation will give Ofsted further enforcement powers to tackle unregistered settings, as an alternative to prosecution.”

In one sense, that is totally understandable, but let us just step through what we are doing here. The Bill effectively suspends the criminal justice system for operators who break this part of the law, and replaces it with a system of fines from the regulator. I totally understand why—I understand the Minister’s arguments—but that is quite a big step to take when it relates to the protection of highly vulnerable children.

The question for the Minister is, how do we avoid the loss of everything else that comes with a successful prosecution, and how do we ensure that local authorities learn the lessons and are accountable? If local authorities are repeatedly using illegal, unregistered children’s homes, there is obviously a wider issue. How do we create a process that leads to change in the purchaser—the local authority—too? Indeed, that point has been made not just by me, but by the Children’s Commissioner. On page 8 of the report she submitted in written evidence, under the heading “Missing from the Bill”, she says:

“However, it is also crucial that local authorities and, where they exist, regional care co-operatives are accountable for the use of illegal homes in their area.”

Will the Minister amend the clause to bring about that element of symmetry? Obviously, we want to make it easier to hold those running unregistered homes to account, but we also want to bring about change in the authorities that are commissioning and using them.

I also wonder how much the Department thinks might be raised from these fines. Does it have any expectation about that? The clause covers monetary penalties for registered providers who do not comply with an improvement plan notice. The Minister will have gathered, given that we are a bit sceptical about the improvement plan approach for more serious cases, that we worry that those fines will not change enough either. In proposed new section 30ZC(1) of the 2000 Act, the Bill talks about penalties where

“the CIECSS is satisfied on the balance of probabilities that the person has failed to comply with…an improvement plan notice”.

Both parts of that equation seem like things that are likely to end up in litigation.

I have a couple of specific questions about clause 12. What level of fines does the Minister expect Ofsted to use these powers to levy? The Bill leaves them potentially unlimited, so I want to get some sense of what he thinks they will look like in practice. On a small note about incentives, a wise man said, “If you show me the incentives, I’ll show you the behaviour.” At present, the DFE says that the fines moneys will go into the consolidated fund and help pay for public services generally, but incentives are quite important. I wonder whether Ministers might find they get a more powerful crackdown on these activities if they change the incentives by ringfencing fines for supporting looked-after children.

Last but not least, I have a question about proposed new section 30ZC(3). Is it the intention that fines may never be imposed where the person has any previous conviction for running an unregistered home, or does the subsection apply only on a case-by-case basis, so they cannot be fined for the same individual instance? The Minister used the expression “same conduct”, and I was not clear whether that means, “I can’t give you a regulatory fine if, in this individual instance, you’re being prosecuted,” or if it means, “If you or your group have ever been prosecuted before, then you cannot get a regulatory fine.” Could the Minister clear up that ambiguous phrase?

I will end where I started. I am totally sympathetic to Ministers’ intent here, but we worry that if we are not careful, there will be a lot of process and bureaucracy, which must not be allowed to get in the way of prosecuting those who are doing the wrong things, and must not be allowed to get in the way of keeping children safe.

Stephen Morgan (Labour, Portsmouth South)

I thank the shadow Minister for his contributions and questions. He made a number of practical points and asked a number of specific questions.

Graham Stringer (Labour, Blackley and Middleton South)

Order.

(Afternoon)

Clause 11 - Powers of CIECSS in relation to parent undertakings

Clive Betts (Labour, Sheffield South East)

With this, it will be convenient to consider clause 12 stand part.

Stephen Morgan (Labour, Portsmouth South)

As I said in the last sitting, I am grateful to the Opposition spokesperson, the hon. Member for Harborough, Oadby and Wigston, for his thoughtful contributions and specific questions. I will take those points away and I will try to address as many of them as I can in this debate.

As required, we have produced impact assessments for all measures in the Bill, and have followed the better regulation framework for measures that are in its scope. As outlined on gov.uk, the Regulatory Policy Committee, or RPC, is currently reviewing the Bill’s impact assessments and will produce an opinion when its scrutiny has been completed. We will publish those impact assessments shortly. We have also conducted child’s rights impact assessments, where children are directly impacted by the policies and/or there are particular groups of children and young people who are more likely to be affected than others, as I mentioned this morning. There is no requirement to publish these documents in relation to England, but the documents are currently under review, and we will also publish those shortly.

The shadow Minister made a number of points about the shortage of foster carers. Local authorities have a duty to place looked-after children in their care in registered children’s homes. We understand that sometimes authorities need to place a child quickly, including when there are no suitable registered places immediately available, but the Government are clear that all providers of accommodation for children should register with Ofsted. We are also helping local authorities to meet their sufficiency duty by investing more than £130 million in fostering hubs and kinship care and providing additional funding for children’s homes, including more than £36 million specifically on foster carer recruitment and retention.

In the light of the questions that the shadow Minister raised, I also wanted to respond on how we are working with Ofsted to embed the reforms in the Bill. As Sir Martyn set out in his evidence, Ofsted is a key partner in delivering reform of children’s social care, and we are working closely with Ofsted to ensure that each of the measures presented to the House can be implemented carefully, alongside the non-legislative asks that Ofsted also needs to respond to in parallel. The Department has provided funding for a children’s social care transformation team in previous years, which has built the capacity for Ofsted to respond effectively to all the changes we have asked of it to date and ensure that it can meet the demands placed on it by the Bill.

The shadow Minister asked about the term “reasonably suspects”. Ofsted will have the grounds to suspend registration, which could be based on minor or major non-compliance, and may consider that that is a problem in other settings owned by the same provider group. That would be a reasonable suspicion, and it will be a matter for Ofsted to apply those judgments.

On the question of whether the bar is too high for provider group-level intervention, Ofsted’s power to cancel registrations is broad and allows it to intervene when the regulatory requirements are not being met. If Ofsted reasonably suspects that two or more settings owned by a provider group are not meeting those requirements, it has the power to ensure that the provider group acts to make improvements in the settings. If an issue arises in a single setting, it is unlikely to be indicative of wider issues in the provider group, and Ofsted would use its existing powers in relation to registered providers at the individual setting level. It is right that the bar at which Ofsted should be able to require actions of a provider group is the same bar that would enable Ofsted to take action against individual settings, where that is already set out in legislation and guidance. That ensures that this further power is proportionate and that it can only be used where there are real issues of concern arising in settings.

These powers supplement the existing inspection regime. If Ofsted has serious safeguarding concerns, it has the power to close individual settings.

The shadow Minister also spoke of the need to speed up action by Ofsted. The Hesley Group case showed what can happen when a culture and environment in a provider group allows a culture of silence and allows abhorrent abuse to take place. These new powers will allow Ofsted to act quickly and go directly to the provider group to seek improvement if it reasonably suspects that requirements are not being met, which it could not do with any legal backing in the Hesley case. If the provider group does not improve its settings, Ofsted can take action. Where there are serious safeguarding risks, ultimately Ofsted has existing robust powers to cancel a registration and close the setting.

On why we are not introducing inspection of provider groups, Ofsted inspects settings at a minimum of once per year, using the social care common inspection framework. Inspection is not warranted at provider group level—the organisation that owns the providers who run the settings—given the existing robust regime for inspection of individual settings. Provider oversight will supplement inspections to ensure that Ofsted can take the quickest and most effective action for the benefit of children. In many situations, the provider oversight measures will not be necessary, as most provision is rated good or outstanding. Inspection of provider groups would, in many cases, simply duplicate what Ofsted is already doing. Ofsted is already able to cancel registrations in respect of settings if necessary. Provider oversight ensures that multiple cancellations of registrations are not necessary.

On the point about compliance with action and plans relating to litigation, it will be a straightforward question of whether a provider has implemented the improvement plan, which will have been agreed between the provider group and Ofsted. We do not foresee that it will lead to any lengthy litigation.

The shadow Minister spoke about local authorities who place in unregistered settings. Local authorities have a duty, of course, to place looked-after children in their care in registered children’s homes. We understand that sometimes authorities need to place a child quickly, including when there are no suitable registered places immediately available, but Government are really clear that all providers of accommodation for children should register with Ofsted. We are helping local authorities to meet their sufficiency duty by investing more than £130 million in fostering hubs and kinship care, and providing additional funding for children’s homes.

Finally, Ofsted will ask local authorities for information on their use of unregistered provision ahead of any inspections. If there are any concerns, Ofsted may focus on unregistered provision in the local authority’s next inspection. That could include the decision-making processes leading to use of this provision and the statutory duties to plan for sufficient places to meet the area’s needs.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I simply want to lodge a very specific question about proposed new section 30ZC(3)(a) of the Care Standards Act 2000 and the category of people who may not be given a regulatory fine but instead must be prosecuted. I raised the issue in this morning’s session about whether those people would not be able to get a regulatory fine because of the individual case being dealt with, or whether it was the case that anybody who had a previous history of being found guilty of any of these things could not have a regulatory fine applied to them. I would be grateful if the Minister can clear that up now, or if he will undertake to write to me about it. It is just to understand what the law is proposing in that respect.

Stephen Morgan (Labour, Portsmouth South)

I thank the shadow Minister for those comments. We will certainly take that away and get him a response.

Clause 13 - Financial oversight

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

It is actually quite difficult to talk to clause 13, as it looks as though pretty much all the important detail here is to be worked out in regulations. Of course, the Government should support local authorities to minimise the risk of disruption to children in homes or independent fostering placements from providers getting into financial difficulty, and financial oversight should indeed be part of their registration conditions. So far, so good.

However, proposed new section 30ZE(2) of the Care Standards Act 2000 states that a financial oversight condition

“is a condition specified in regulations made by the Secretary of State for the purposes of this section.”

Subsection (4) lists examples such as size, the number of children looked after, geographical concentration and so on. Though this area is being left to regulations, could the Minister say more about the sort of thresholds the Government are considering for these metrics—particularly as the Secretary of State will have so much power, including to alter all the criteria in regulations? Although this is broadly a sensible measure, it is quite an open-ended and new power.

The clause is already quite long, but the Opposition wondered about an improvement, perhaps as it goes through the other place, to fundamentally change the registration approach for any new market entrants, so that it is a condition of delivery that they provide financial transparency up to the parent company level, give a quarterly going concern update to the regulator and provide financial information as reasonably requested by the regulator. Has the Department considered similar requirements, so that all providers would have to give full financial transparency as a matter of course and further investigation would follow if concerns were raised?

We are completely sympathetic to proportionality in regulation, but in this case we could reasonably put the onus on providers to share the information systematically, rather than having to wait for a tip-off from a whistleblower or for a concern to become apparent. Sometimes it is the analysis of consistently reported data that provides the tip-off that there is a problem.

To use an example from a slightly different field, in my constituency I have been involved in cases where the integrated care board is regulating GP practices, and I have always thought there is a strong case for ICBs to get more data up front. Twice, when there has been a problem in my constituency and I have talked to the ICB afterwards, it seemed to me that if it had been getting financial data, the issue would have been obvious and there would have been signs long before whistleblowers ever went to the Care Quality Commission. I wonder whether consistent reporting analysis of data would allow us to see problems coming before we get to whistleblowers and other problems down the line. One issue is therefore whether we should have reporting on a more regular basis.

The Opposition have worries of the same kind about this clause as we did about clause 11, though in this case, instead of an improvement plan, it is called a recovery and resolution plan. Again, thinking about independent schools, there is a risk that time and resource get spent preparing the request for the plan, writing the plan, challenging the plan as needed, writing a better plan and going through iterations. In the case of these providers, do we have the financial expertise, either in Ofsted or the Department, to assess the plans? It looks as though there is a recognition that we do not, because proposed new section 30ZI includes the power to arrange for an independent business review. That makes sense, but for reasons best known to the Bill drafters that does not appear to include scrutinising the recovery and resolution plan. I am not sure why not. I do not know whether that is a slip of the draftsman’s pen, as they say, or whether it is deliberate.

My understanding is that Ofsted already has the power to inspect the financial position of schools, but there is a limit on what it does because of the need for a high level of expertise to pick through these cases. Looking at the accounts of a school or group of schools is simpler than analysing the complex debt and ownership structures that we see in some of the private equity-owned children’s homes.

In practice we know that the market is so tight for placements that the loss of even a smaller provider would be disruptive, and the timing of the issuing of the advanced warning notices set out in proposed new section 30ZJ will be terminal for the affected businesses. Page 47 of the policy summary states that the regulations may be extended in scope,

“so that they may provide that a person is not fit to carry on an establishment or agency if a parent undertaking has failed to comply with the financial oversight scheme.”

I am unclear where that provision is in the Bill. Perhaps the Minister could clarify that, because it is quite a complicated clause. Are there any other potential extensions of the Secretary of State’s power by regulations here? Could the Minister clarify the thinking behind allowing Ofsted to determine that someone applying for registration is not a fit and proper person to manage an organisation in this area?

I have some specific questions for the Minister. Can he clarify whether the clause only applies to for-profit businesses, or whether charitable providers in the sector will also be included, and how that would work for them as non-profits? What will the threshold be for children’s social care providers to be considered “difficult to replace” enough not to have to provide the information listed to the DFE? What proportion of providers are we talking about? Does the Minister have a sense of what the threshold will be and what proportion of the market will be outside it?

How often has there been a

“sudden or disorderly market exit”,

as the policy summary says,

of “‘difficult to replace’ providers” in the past? It would be good to have a sense of how often these considerations would have applied in the past. Can the Minister give any examples of how the powers in this clause would prevent that from happening? The maximum monetary penalty for non-compliance will be set out in regulations; does the Minister have any sense of what that might be, or why?

There are issues about pace that we have raised in relation to other clauses. Although I am sympathetic to what Ministers are trying to do, there is a nervousness that digging into the finances of these things will not necessarily be straightforward, and I would like reassurance that there is a plan to be able to do that. I also wonder whether there is scope to make this a prospective rather than a reactive process, so that we have the opportunity to mine that data and analyse it, to see whether it is telling us anything about problems that are coming down the line before they happen.

Amanda Martin (Labour, Portsmouth North)

We heard from the right hon. Member for East Hampshire about the involvement of larger and smaller-scale providers in children’s social care, and the Bill covers the other places that children and young people can make their home in. I think we all agree that there is a need for a wide range of options, so that we can determine what is best for individual children and young people when they are finding their home.

Clause 13, however, is particularly relevant to larger-scale providers because of the sheer number of children who would be affected should one of those providers experience unexpected or unreported financial difficulties. No young person should be faced with losing their house overnight, and this measure would help to secure provision for those children in a planned way, as opposed to a reactive situation where a number of places have to be found overnight.

The clause also follows the Competition and Markets Authority’s recommendation to emulate the equivalent schemes we find in adult social care. That is long overdue in child social care. It adds safeguards that allow for transparency and security, which we welcome when we are dealing with children’s social care and the homes that they will hopefully have for a long time.

Stephen Morgan (Labour, Portsmouth South)

We are aware that a provider of children’s social care places suddenly closing their provision as a result of financial failure could have a significant detrimental impact on the care and stability of children and young people where they live. Currently, local authorities have no way of knowing whether a private provider or its corporate owners are at risk of failing financially. If a large provider were to fail and suddenly exit the market without warning, it could be difficult for local authorities to find alternative placements for those children or places that appropriately meet their needs. That is why we are developing a new financial oversight scheme in children’s social care, as recommended by the Competition and Markets Authority, which will for the first time increase the financial and corporate transparency of difficult-to-replace children’s social care providers and allow accurate real-time assessment of financial risk.

The scheme will give local authorities advance warning of failure, so that they can take swift action and minimise disruption to the most vulnerable children. Those in the scheme will be required to submit a recovery and resolution plan containing information on risks to providers’ financial sustainability and plans to reduce those risks. The Secretary of State may also require providers or a corporate group member in the scheme of heightened financial risk to undergo an independent business review. We will provide details of the RRP and the IBR through guidance.

I thank the shadow Minister for his comments and questions and my good and hon. Friend the Member for Portsmouth North for her insightful contribution. The shadow Minister asked a number of questions about how the scheme will work in practice ahead of the regulations, and made a number of points about which providers will be in scope of the financial oversight scheme.

It is worth saying that the scheme will be proportionate and target only difficult-to-replace providers and their owners according to their size, market share and geographical concentration. The scheme will apply to private, voluntary and charity providers of children’s homes, including dual registered special schools and independent fostering agencies operating in England. We will also extend the measure to supported accommodation, and we in the future may look to extend it by regulation to residential family centres. Local authorities routinely manage placements of individual children in the event of closures of smaller services, so we do not think those need to be covered by the scheme.

To answer other questions raised by the shadow Minister, the Bill sets out the foundations of the financial oversight scheme, exercisable through the Secretary of State’s powers. We know that the children’s social care placement market is dynamic and we will use these measures and powers to set out the detail in regulations, which will enable my Department to review and update the details in line with future changes to the market. We will publish guidance alongside the regulations, setting out how the scheme will operate in practice and enabling providers to understand what the scheme requires of them.

The shadow Minister asked why Ofsted is not leading the financial oversight scheme. The forensic financial analysis required to fulfil the scheme’s aims extends beyond Ofsted’s remit as a largely quality-focused regulator. Given that Ofsted is not a financial regulator, we will build on my Department’s existing capabilities and market oversight functions to undertake the specialist work required to develop the scheme. A Department-led scheme means that we can play a stronger co-ordination role should a difficult-to-replace provider exit the market, enabling a quick multi-agency response.

Finally, how many providers will be covered and how many placements they represent, we want the financial oversight scheme to deliver an effective oversight function that is proportionate and not overly burdensome. We therefore want to introduce a scheme that covers difficult-to-replace providers only, as recommended by the Competition and Markets Authority. We will determine how many providers will be subject to the scheme as we develop the regulations. Providers who meet the conditions will include private, voluntary and charity providers; we may look to scale the number of providers in the scheme up or down in future ,according to market developments, to ensure that we continue to meet the aims of the scheme.

Clause 14 - Power to limit profits of relevant providers

Munira Wilson (Liberal Democrat, Twickenham)

I beg to move amendment 42, in clause 14, page 28, line 37, at end insert—

“(c) independent schools with caring responsibilities and offering SEND provision.”

This amendment would include independent special schools within the profit cap provision.

Clive Betts (Labour, Sheffield South East)

With this it will be convenient to discuss the following:

Amendment 25, in clause 14, page 29, line 25, at end insert—

“(10) Before making regulations under this section the Secretary of State must lay before Parliament a report containing —

(a) details of the number of available placements in relevant establishments or agencies;

(b) an analysis of the expected impact of this section on the number of available placements in relevant establishments or agencies.”

Clause stand part.

Munira Wilson (Liberal Democrat, Twickenham)

It is a pleasure to serve under your chairmanship, Mr Betts. Clause 14 grants the Secretary of State the power to limit the profits of certain social care providers, so I will say at the outset that I, as a Liberal, support a mixed economy in the provision of public services, but I believe that there must be limits to that. It is clear that we have a market that is not functioning, and there are providers who are shamelessly profiteering. I spoke to my director of children’s services about this last week, and he told me at the moment the average price of a placement in a children’s care home per week is £5,500. That is very much the average price; a number charge multiple times that amount per week. That local authority finances are being utterly crippled by some providers, which are clearly behaving inappropriately in the market because of the lack of supply, leaves me incredulous.

A number of hon. Members have made reference to the Competition and Markets Authority’s 2022 report. It said that the UK had sleepwalked into a dysfunctional market, and that

“the largest private providers…are…charging materially higher prices, than we would expect if this market were functioning effectively”.

The power in clause 14 is an important backstop if other measures are not successful, but the devil will be in the detail of how the power is implemented if it is triggered. We all know that many of those big companies have deep pockets from which to pay the best accountants and lawyers, and comprise multiple companies in complex structures all over the world; they can put money into all sorts of different places to avoid the intended scrutiny.

Amendment 41 would include independent special schools in the provision. I will say at the outset that there are many independent special schools run by private providers and voluntary sector providers that do an excellent job and are certainly not profiteering; none the less, some do not fall into that category. We are all acutely aware of the crisis in state special educational needs and disabilities provision and the lack of specialist places, which has led to a growth in private provision that is crippling local authority finances. In 2021-22, councils spent £1.3 billion on independent and non-maintained special schools—twice what they spent just six years previously. The average cost of one of those places was £56,710—twice the average cost of a state-run special school place.

It is clear from analysis done by the House of Commons Library for the Liberal Democrats that some of the companies running those schools are the same private equity companies that are running the children’s homes and fostering agencies that the power in clause 14 is designed to address, so I am at a loss as to why the Government have not included independent special schools in the provision. LaingBuisson, which undertakes reports on children’s services, looked at those providers on the profitability measure of earnings before interest, tax, depreciation and amortisation. It says that the profitability of 23 of the major providers, using the EBITDA measure, varied from 27.9%, in the case of the Witherslack Group, down to 4.7%, which is a much more acceptable level; over a third of the 23 major providers had a greater than 20% profitability margin. Typically, it was the private equity-owned providers that had that high level of profitability, not the other private sector providers. I urge the Government to look very seriously at amendment 42, which seeks to ensure that we also crack down on profiteering in special schools.

On amendment 25, tabled by the Conservatives, I actually think the first part of it, about detailing the number of placements available in relevant establishments or agencies, is a good idea. That information should not be published only when the power is triggered; frankly, we should have an annual assessment of the availability of care placements and details of what the Government are doing to boost their availability. It is clear that the lack of provision is what is driving the profiteering. A later clause allows local authorities and others to open new special schools where there is demand. We need a provision that gives local authorities the power and funding to fill a need for social care placements as well, so that we are not filling the coffers of private equity funds and sovereign wealth funds in the middle east, which pay their directors massive bonuses, huge amounts of money, drawn from the public purse, when many of our local authorities are on the brink of bankruptcy.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I rise to speak to amendment 25 and clause 14. I thank the hon. Member for Twickenham for what she said about our amendment. I completely agree that, ideally, we would have what we are asking for on a regular basis, but just to be clear, the requirement on the Secretary of State to report to Parliament details and analysis of available placements is in amendment 25 because we want to keep the focus firmly on supply and capacity, which I think we agree are the ultimate drivers of the problem we are addressing.

As we said in response to the oral statement to the House by the Secretary of State, we welcome the continuing focus on issues that we identified, and we set up the market intervention advisory group to look at that when we were in government. The heart of the problem, however, as I think we all recognise, is the lack of supply of high-quality places in residential, kinship and foster care for looked-after children. Demand for such places outstrips supply, and that is what is causing the high cost of placements.

It is striking that in its 2022 report, the Competition and Markets Authority did not recommend a profit cap because, in its words,

“The central problem facing the market…is the lack of sufficient capacity.”

The CMA concluded that taking measures to limit the profitability of providers would

“risk increasing the capacity shortfall.”

So if we do not take action to increase capacity first, ironically, we risk simply driving up prices and exacerbating the shortage of places.

Likewise, the review commissioned by the last Government and carried out by the hon. Member for Whitehaven and Workington (Josh MacAlister) found that profit caps would not work as it would be,

“relatively easy for providers to reallocate income and expenditure to maintain profit levels”,

a point already alluded to by the hon. Member for Twickenham. The capacity problem rests on the availability of places and the demand for those places. We spoke previously about the need to do much more to grow fostering to reduce demand. Our amendment is designed to ensure that that capacity issue remains at the front of everybody’s mind at both the national and the local levels, so that at neither level do we fall into thinking that we can fix this without primarily fixing supply.

I understand the argument that it cannot hurt to have the power in the clause, which is the reason why we will not vote against it, but it is unlikely to change things very much compared with increasing supply. In fairness, the Bill’s policy notes state that the profit cap power

“is intended only to be used as a last resort should other measures not have the expected impact”.

The hon. Member for Twickenham talked about it being a backstop. My only worry is we should not even rely on it as a backstop. As the previous independent review and the CMA highlight, it would not be easy to use. One reason is that it would inevitably have to be backward-looking. The Government’s policy notes state:

“We are aware that the administration of the profit cap will be a retrospective look back at whether or not the profit cap has been breached in a past period. It will therefore not necessarily prevent breaches in itself, but it will allow action to be taken retrospectively if such breaches have occurred and act as a disincentive for further breaches.”

We will be looking backwards at a sector where there are a lot of complicated financial arrangements, and because we are looking backwards, people will have time to do all kinds of things to make sure that they look like they are complying, for the reasons I have mentioned.

As Ministers take this measure through the other place and consider implementation, I strongly recommend that, if they regulate for fines, they set up an absolutely iron-clad mechanism to ensure that those fines are paid. I was very disturbed to learn from an answer to a parliamentary question the other day that the Home Office has no idea what proportion of the fines imposed for illegal working are actually paid. In that sector, people just move on—they set up a new company, or get their brother to start a new thing. They just move on, and they do not pay the fine. It is widely known that we do not even know how many people are paying those fines. Obviously, we need to prevent that from happening in this sector, where there is equal scope to move on, to set up new things and collapse the old, and so escape fines. I am sure Ministers are seized of that risk; I just wanted to emphasise what they need to do when regulations are made.

Another way out that Ministers might want to try to close off is that some in the sector adopt offshore models of provision. Might the Government want to use this rare legislative moment to discourage, either in primary legislation or by giving themselves the power to regulate, the commissioning of places with providers that are domiciled offshore? They might want to take that power now, but even if they fix it, there will continue to be so many opportunities to fudge and to manage profits with interest and debt.

I do not mean to labour this because, as I listen to some people in the debate, including Ministers, I hear that they understand the difficulties, but then I hear from some other people, and they think, “Oh, we can just control prices to get out of this, without addressing the underlying real problem about supply.” When I was at the Treasury, one reason we were really keen on the work we were leading on through the OECD on base erosion and profit shifting was that we were faced with the endless generation of new tax wheezes and profit-shifting arrangements. They all had these exotic names—the Dutch sandwich, the green jersey and the double Irish; people were constantly generating new ways of moving profits around.

I want to bring that to life a bit by asking some questions. How would profit be defined for the purposes of the cap? The policy summary talks about

“(on average) profits of 19.4% on fostering, 22.6% on children’s homes and 35.5% on supported accommodation.”

I went back to look at the 2022 CMA report from which those numbers are drawn, but it just talks about margins, so I was not clear on whether we were talking about pre-tax, post-tax, or earnings before interest, tax, depreciation and amortisation. I am keen to understand what measure of profit we are using.

What analysis have the Department done to think about the capital needs of the sector over the next five years? It will need large sums, which may make profit capping harder. Fundamentally, there is a big question about what level of profit the Department for Education deems to be acceptable. In in her articulate and thoughtful remarks, the hon. Member for Twickenham mentioned one provider that had a very high rate and another that she said was more acceptable. That is the heart of the issue: given the powers that are being taken, do Ministers at this stage have some rough barometer of what they would regard as unacceptable profits?

Alongside this debate, even as we as we speak, the consultation is running. Obviously, in an ideal world it would have been much better to have had the results of that consultation before the debate and before we moved to legislate. To say we are being asked to sign a blank cheque is an overstatement; I am less worried about it than that. Obviously, though, it would have been much better to have the results of the consultation. What is the timescale of the consultation and when will we have some results from it? Is the Minister already able to share any findings?

I am labouring the point slightly, but I want the Minister’s reaction to the issue, which I am trying to raise in different ways, of the difficulty of capping profits in this kind of industry with these kinds of players so that the concerns that caused the CMA and the hon. Member for Whitehaven and Workington not to recommend profit caps do not come to bear in practice.

A fundamental question is what the evidence is that, on a like-for-like basis, private sector providers are more expensive than either charities or local authority provision in this area. The numbers may exist, but I have not seen them. If the margins are so high, why are more providers not entering the market? It is a strange thing: there is not enough supply, but we think profits are too high. What is the barrier to entry? It may be that all those questions are addressed in the impact assessment, which is one reason that it is frustrating that we still do not have it.

The DFE says that it is trying to do other things to tackle excess profits. In its policy summary notes to the Bill, it said:

“Until these other measures have had time to be implemented and have effect, we will not know whether regulatory action in the form of a profit cap is necessary.”

That is totally sensible; I completely agree. What are the Minister’s thoughts on timing for making a decision on that? We have a consultation now. The Ministers are trying to do other things to tackle excess profits now; once implemented, they will take time to have an effect, if they are going to have an effect. In what year will we potentially make a decision on the profit cap? As I started to make the mental Gantt chart, I wondered whether this was a decision for the end of this Parliament or the next. I just want a sense of what Ministers think about the timing for making that decision.

Page 53 of the policy summary notes says:

“The level of any future profit cap would depend on a number of factors, including market conditions at the point that we make a decision that a cap is needed.”

That line is a bit mysterious. This may be obvious, but it is not obvious to me—what does that mean in practice? I could not work out which way round it was: would there be no profit capping if supply was too limited, as there would be no scope to do it, or would profit capping come in if supply was limited and prices higher than Ministers wanted? I was not sure in which direction the arrows ran between market conditions and the decision on having a profit cap.

We are not against the clause standing part of the Bill. We are obviously keen on our amendment, and indeed the improvement to it suggested by the hon. Member for Twickenham, but, as an amendment, it is what it is. But all of this is just an aim. We think there are massive limits to how usable this power will be in practice and we do not want it to become a distraction from fixing the main issue, which is supply. To use an example from housing policy, which is apt, given the Chair’s former Select Committee role, the places around the world that have tried to rely on rent controls to fix housing problems generally fail. The people who focus on supply generally do much better. That is the spirit behind our amendment and our questions to the Minister.

Damian Hinds (Conservative, East Hampshire)

It is good to see you in the Chair, Mr Betts. I rise briefly to echo some of the points made by my hon. Friend the Member for Harborough, Oadby and Wigston and to ask a couple of questions. I have total sympathy with what Ministers are trying to do here. Having spent a bit of time at the DFE, I know the pain of seeing the amounts of money going out from local authorities for some very expensive placements.

The thing I always found vexing, and still do to this day, is exactly the thing the shadow Minister mentioned. If there are fat margins to be had, ordinarily, in a Schumpeterian world, people come into that—again, I hesitate to use the word—market. The insurmountable barriers stopping that from happening were never clear to me. It was not just that additional supply was not coming in to bring down unit costs, but that, on occasion, there was no place to be found. It is very important that we understand the underlying economics of this, bearing in mind, as ever, that we are talking primarily about the care of children.

The profit made by an entity cannot be limited, ultimately, because that is the residual left at the end of the year between revenue and cost. All one can do is either to choose not to use an entity that makes a profit of more than a certain amount, or seek some form of clawback. I note from the Bill that it is the latter approach that Ministers wish to take, as in proposed new section 30ZM. Do they seek to use this power as a fine—a penalty—for having a profit above whatever is deemed the appropriate level, or in proportion to it? In other words, do they seek to claw back the entirety of the surplus—the profit made—in excess of what is deemed a fair return?

This will come up in the secondary legislation, but I hope the Minister does not mind my asking about it now, because it is pretty fundamental. Defining profit is an extraordinarily difficult thing to do. To the person in the street, it is obvious, but any financial analyst would say that they can make the profit more or less whatever they would like it to be, depending on how they treat direct cost, how they absorb the fixed cost, how, in the case of a relatively small business, they treat the balance between remuneration of employees and reward to shareholders, and many other factors.

Even if we talk about gross profit or gross margin, that could be defined in different ways at different levels. The hon. Member for Twickenham suggested that perhaps EBITDA—earnings before interest, taxes, depreciation, and amortisation—would be the correct definition to use. It might be, but another argument says that taking the line above depreciation is not appropriate if a capital investment is involved. In any event, the overarching point is that it is a very complex issue. Private sector companies can be rather good at knowing how to best present their finances. Of course, that can be entirely legitimate. My question is, what monitoring does the Department for Education believe will be necessary, how much it will cost to put in place, and how effective does it think it will be?

My final question is: does this also apply to the voluntary sector? We are talking about profit, but a charity or voluntary organisation does not have distributed profit. They may, however, have a surplus, so does this also apply to surpluses made by entities in that sector?

Stephen Morgan (Labour, Portsmouth South)

Amendment 42, in the name of the hon. Member for Twickenham, seeks to extend the powers to cap profits of Ofsted-registered non-local authority providers of children’s homes and independent fostering services to also cover private schools with caring responsibilities and offering SEND provision.

As hon. Members will be aware, the Competition and Markets Authority found the children’s social care placements market to be dysfunctional, estimating that the largest private providers were making profit margins well above what would be expected in a well-functioning market. It is important to be clear that the study was restricted to looking at the state of the market for specific types of placements. It provides clear evidence of excess profit making by some providers of these placements, but its scope did not extend to looking at private schools.

We set out a wider package of measures in “Keeping children safe, helping families thrive”, which we expect will rein in profiteering among children’s social care providers, and the profit cap is intended as a last resort if they fail to do so. Children and young people with special educational needs are found throughout the private school sector, and it is not our intention to introduce a blanket cap on profits in private schools that offer special educational provision.

With regards to private special schools, they can play an important role in the special educational needs and disability system, particularly in meeting low-incidence needs. Many have important expertise, but we recognise that independent special schools have higher costs than maintained special schools and academies. The Government are very aware of the challenges in the SEND system, and we understand how urgently we need to address them. But these complex issues need a considered approach to deliver sustainable change. As part of that work, we are considering the role and place of independent special schools. It would not be appropriate to introduce a profit cap on a completely different sector without proper engagement with stakeholders and an assessment of its impact.

The hon. Member for Twickenham made a number of insightful and helpful comments when moving her amendment, and I hope that I addressed earlier her remarks about private special schools. As I mentioned, private special schools often have higher costs compared with their maintained equivalents. In some cases, that will be particularly because of higher specialist provision to support children and young people, particularly those with complex needs.

Some private schools, of course, operate for profit. We need to ensure that placements in private special schools are used appropriately. It is the Government’s intention that special schools should be reserved for those with the most complex needs. As I have mentioned, we will consider the role and place of private special schools and the potential for a cap on profits as part of our wider reforms to special educational needs.

Amendment 25, in the name of the hon. Member for Harborough, Oadby and Wigston, the shadow Minister, seeks to require the Secretary of State, before making regulations to implement a profit cap, to lay a report on the number of placements for looked-after children in relevant establishments or agencies and the expected impact of a profit cap on the number of places available. As I outlined earlier, we intend to use the powers in clause 14 only if profiteering is not brought under control through the wider package of measures set out in “Keeping children safe, helping families thrive”. Those measures include improving data transparency and boosting the supply and diversity of provision, helping to foster greater competition and to drive down prices and profits to more sustainable levels.

It is crucial that we allow time for those other measures to work before considering regulatory action. If it becomes necessary to use the powers—I hope that it does not—the clause already includes important safeguards through restrictions that ensure that the powers are used appropriately. Regulations may be made only if the Secretary of State is satisfied that that is necessary on value for money grounds. The Secretary of State must also have regard to the welfare of looked-after children and the interests of local authorities and providers, including the opportunity to make a profit.

Crucially, the clause also requires the Secretary of State to consult before making regulations. That will be particularly important to ensure that all interests are considered in determining issues such as how the cap will be calculated and the level at which it will be set. The consultation is particularly important: not only would it inform the details of the proposed cap itself, but it would require the Government to respond and publish that response. That would set out our rationale if a cap were introduced, including the matters in the amendment tabled by the hon. Member for Harborough, Oadby and Wigston.

In addition, the explanatory memorandum to the regulations would set out the policy rationale; in effect, that would already fulfil the amendment’s aim of having a report laid before Parliament. Of course, the regulations would be subject to affirmative resolution, so these matters would no doubt be covered in debate. I hope that the hon. Member is reassured that important safeguards are already in place to ensure that the power to cap profits is appropriately restricted. Existing mechanisms also ensure that Parliament has sight of the information that the amendment covers. For those reasons, I ask hon. Members not to press their amendments.

I turn to clause 14, which inserts new sections into the Care Standards Act 2000. It is a crucial element of our strategy to drive down profiteering in the children’s social care placements market. It will provide new powers for Government to take regulatory action to restrict provider profits if they are not brought under control through our wider package of measures set out in “Keeping children safe, helping families thrive”. While some private providers are doing brilliant work, we want to ensure that all providers are delivering high-quality placements at a sustainable cost. We know that that is not always happening. The Competition and Markets Authority found the placements market to be dysfunctional, establishing that the largest private children’s social care placement providers were making profit margins of 19% to 36%—well above what would be expected in a well-functioning market.

Let me be clear: making this level of profit from providing placements for some of our most vulnerable children is unacceptable and must end. The clause provides important backstop powers to ensure that the Government can take action if needed to end profiteering. The clause also sends a clear signal to providers that Government will not hesitate to take regulatory action to restrict this unacceptable behaviour if profit making is not reined in. If it becomes necessary to use these powers—I hope it does not—then the clause includes important safeguards and restrictions on the powers to ensure that they may only be exercised proportionately.

Regulations may be made only if a Secretary of State is satisfied that it is necessary on value-for-money grounds. The Secretary of State must also have regard to the welfare of looked-after children and the interests of local authorities and providers, including the opportunity to make a profit. Crucially, the clause also requires the Secretary of State to consult before regulations are made. That will be particularly important to ensure that all interests are considered in determining issues such as how the cap would be calculated and the level at which it would be set.

In addition, clause 14 provides for regulations to be made that set out important detail about the administration of any future cap by providing for annual returns from registered providers and the ability to request supplementary information. The detail of these returns, including their contents and format, will be determined after full consultation. We will want to ensure that we do what is possible to prevent profits from being disguised while ensuring that returns are not overtly onerous and burdensome.

I thank the shadow Minister, the hon. Member for Harborough, Oadby and Wigston, for his specific points. I also thank the right hon. Member for East Hampshire for his points on the importance of places and on the profit cap. On the question of why we cannot do an annual report on placement sufficiency, local authorities already have a duty to undertake an assessment of the availability of placements and sufficiency. As discussed earlier, the regional care co-operative will be able to take this forward at a regional level.

The shadow Minister also asked about the annual report on places. We are improving data transparency and boosting the supply and diversity of provision among other interventions, which will have swift, positive impacts. They will help to foster greater competition, which will naturally help to drive down prices and profits to more sustainable levels. The shadow Minister is right to raise the hiding of profits. We are aware that there are numerous ways in which registered providers may seek to avoid the cap or artificially reduce their profits for the purpose of the profit cap return, and legislation will seek to limit that. Should our analysis indicate that providers have attempted to hide profits, we will take that into our account in our determination as to whether the cap has been breached. That can also be considered to be an aggravating factor that could lead to more a severe monetary penalty for breach of the cap.

We are not introducing a profit cap immediately and we are not setting out the level of cap at this stage. The level of the profit cap will depend on a number of factors, including market conditions at the point it was introduced. Full consultation with local authorities and provider representatives, including on the appropriateness of the level of the cap, would need to take place before this power is used. We are clear that we are not seeking to eliminate profit making entirely; it will continue to play a role in the market.

The right hon. Member for East Hampshire asked a range of questions about how this will work in practice. I hope I have covered a number of them already, but the Secretary of State will assess returns, including ascertaining whether revenue not recorded as profit should have been. The process will look retrospectively at profits made in previous periods. Any breaches of the cap will be punishable by fine. The former Education Secretary also asked about how we will enforce the cap. Yes, the Secretary of State will be able to issue a civil monetary penalty if the cap has been breached, and the maximum level of the penalty for a breach may be prescribed in affirmative regulations and changed as needed in future with the approval of Parliament.

Finally, and more broadly, we are committed to taking a measured approach to implementing our reforms and are acutely aware of the importance of not destabilising the market and risking significant disruption to the care of our most vulnerable children and young people. We are confident that the package of reforms set out in the paper published on 18 November last year will address profiteering and ensure that the supportive and caring placements that children need are delivered at a sustainable cost to the taxpayer. However, we will keep the market under close review, and we will not hesitate to take action to cap providers’ profits if needed.

Munira Wilson (Liberal Democrat, Twickenham)

I thank the Minister for his kind remarks about my comments, but he is aware that the SEND system is in crisis—he and his fellow Ministers hear that every other week in the Chamber. He knows that local authority finances are on the brink because of SEND costs, and that those deficits are driven to a certain extent by the spending on private provision. I am curious as to why the Government are so hesitant to take action in this space, yet they are happy to slap VAT on parents wishing to send their children to independent schools. This amendment is about tackling specific providers that are clear outliers in the fees they are charging. It is a targeted intervention that could really help local authorities and, in turn, children who are desperate for more support that local authorities cannot provide.

The right hon. Member for East Hampshire talked about whether we can control profitability. I used to work in the pharmaceutical industry, in which the Government have for many years had a control on not only prices but profits and have clawed back profits. As a monopoly purchaser of services, the Government can act on behalf of NHS trusts around the country, and they could do something similar for local authorities where needed, whether it is with special schools or private social care providers. I would like to press amendment 42 to a vote.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I was quite reassured by the Minister’s thoughtful comments and his clear appreciation of the difficulty and extreme number of obstacles to making this power practicably usable. Kenneth Clark said that he did not know what civilisation was, but he knew it when he saw it, and I think quite a few Members of this House, including those on the Government Benches, have the same feeling about excess profits—we feel that they are too high, but we struggle to say what we think an acceptable level would be. That challenge will not get any easier over time.

As ever, my right hon. Friend the Member for East Hampshire is more articulate than I am, and he made the point well that this is not a profit cap but a retrospective clawback mechanism, which is another reason why it will be so hard to use in practice. Unless we are going to get into problems of retrospection and loads of legal action, we will be giving people advance warning, which will give them time to move money around and ensure that things look compliant.

I am keen to move amendment 25 to a vote. I promise that we will make great progress on subsequent clauses; I am not trying to be a dog in the manger. I understand and accept the Minister’s arguments about the things that the Secretary of State would do before commencing such a power—that was reassuring—but there should be a national assessment of the number of available placements. The Minister said that such things happen locally, and that someone could tot them up; I hope the Government will do that. It would be a powerful thing for the Minister to do and would give him huge clout in driving this agenda forward, so I hope he will do it even if the Committee votes against this amendment.

There should be a German word for a bit of data that we think should exist—we look on the internet and think we should be able to find it, but somehow it does not exist. This assessment of what is available out there is an example of that. I am keen to put our amendment to the vote, to make that point for our friends in the other place when they discuss the Bill, but I am reassured by the Minister’s comments.

Clause 15 - Power of Secretary of State to impose monetary penalties

Clive Betts (Labour, Sheffield South East)

With this it will be convenient to discuss clause 16 stand part.

Stephen Morgan (Labour, Portsmouth South)

My Department will introduce civil monetary penalties to compel children’s care providers to comply with the financial oversight scheme and—if implemented in the future—the profit cap. It is imperative that providers comply with the scheme in order to protect vulnerable children from the disruption to their homes and care that could result from a sudden market exit by the providers of their placements. If providers do not comply, we will tackle that effectively by introducing penalties. Penalties could apply up to the highest level of the organisational structure of a provider that has failed to comply with the scheme.

If a profit cap is introduced in future, clauses 15 and 16 provide for civil monetary penalties for breaches of any profit cap, to be issued at provider level. The Secretary of State will be able to issue monetary penalties for breaches of the cap, and for failure to comply with annual return requirements. Both are essential to allow for the proper administration of the cap—if we need to bring it in in the future.

Furthermore, if providers fail to comply, action may be taken against their registration. The Care Standards Act 2000 is amended to give Ofsted the power to suspend or cancel the registration of a person, in respect of a children’s home or fostering agency, if they have failed to comply with either measure.

Clause 16 sets out the process that both the Secretary of State and Ofsted must follow when issuing civil monetary penalties under provisions in the Bill. It will ensure that any penalties are issued fairly and consistently. It places a duty on the Secretary of State and Ofsted, when issuing a monetary penalty, to serve a notice of intention on the recipient. They must also take into account any representations from the recipient of the notice before a final decision to issue a penalty is made.

The clause sets out that the Secretary of State or Ofsted may issue a monetary penalty of any amount. The only exceptions to that are when the Secretary of State has prescribed in regulations a maximum penalty that may be imposed. Proposed new schedule 1A specifies the maximum amount and sets out the factors that must be considered when determining the amount of the monetary penalty to be issued, ensuring transparency.

To ensure that monetary penalties are paid on time, we will have the ability to charge interest on any unpaid penalty and to recover the unpaid amount, including any interest, as a civil debt. The interest will be charged at the standard rate, as specified in the Judgments Act 1838, but the total amount must not be more than the amount of the penalty. All penalty moneys are to go into the Consolidated Fund to help pay for vital public services. Finally, persons may appeal either the imposition of a penalty or the amount to the first-tier tribunal. I commend the clause to the Committee.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I will be much briefer, because this is essentially a consequential clause relating to clause 14, but I want to touch on a couple of things.

A further difficulty in enforcing this profit clawback, and understanding what excess profit is, is that even within a single market not all these institutions are doing the same thing. In a funny way, the remarks that the hon. Member for Twickenham made about clause 14 go to that point. We look at the very large unit costs—that is a horrible expression—or the costs per child of care in independent special schools, and we think, “Gosh, these unit costs are so high. Surely we have to do something about this.” The Government and the Opposition are seized of that point—we do not want to spend money that we do not need to spend—but we should sometimes look at the individual cases.

For example, a child in my constituency who has just been put into one of these brilliant institutions—Red Kite, over in Northamptonshire—literally needs constant help just to keep breathing, so we have to be clear about whether these things are really like for like. It is true that that independent special school is a lot more expensive than a mainstream school, but is it really like for like?

As we think about capping profits in this industry, a further complexity is that, depending on the caseload and the child, the profit and risk levels will be different. Within an individual institution, there could be some unbelievably hard-to-place, hard-to-look-after, very difficult and expensive children, alongside other children, so it will not be easy to work out an acceptable level of profit.

Proposed new schedule 1A(6), on the right of appeal against imposition of monetary penalty, further extends the opportunities for people to game the system. First, it is retrospective—it is about clawing money back from people after the fact, which gives them an opportunity to manage their profits so they look like they are compliant—and then there is a right of appeal. I understand why that is in the Bill, but to return to the metaphor about the lack of proper enforcement with regard to illegal working and the lack of information about the fines that are collected, by the time we have tried to claw money back retrospectively and given people the right of appeal, it would be easy for them to say, “This is in the name of my brother. We have collapsed the company. Sorry, we don’t have any money to pay this fine,” so we may not end up with anything at the end of it. Meanwhile, the people who are really behind the scheme have moved on and are doing the same thing down the road.

I want to highlight those points. This clause is consequential on clause 14. If we have clause 14, it makes sense to have clause 15, so we will not oppose it. I want to emphasise again, however, that there are even more dimensions to why it will be difficult to use this measure, so the focus should be on supply.

Clause 17 - Information sharing

Stephen Morgan (Labour, Portsmouth South)

Clause 17 enables information sharing between Ofsted and my Department to ensure the effective functioning of the financial oversight scheme and profit cap regime. Sharing relevant information also supports Ofsted’s functions under part 2 of the Care Standards Act 2000.

For the purposes of a financial oversight scheme, effective information and the sharing agreements that are in place between my Department and Ofsted are crucial, and they will enable us to bring together financial corporate performance and quality indicators about individual providers to inform decision making. This clause does not authorise the processing of data, which would contravene data protection legislation.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I have a brief question. I understand what the Minister is trying to do here; the Secretary of State is taking powers to require the Ofsted chief inspector to share information with them in connection with the functions under this part. Can the Minister explain how that differs from the current ability of His Majesty’s chief inspector to share information with the Secretary of State? As the Minister just said, proposed new section 30ZO(8) is clear that it cannot contravene the GDPR legislation anyway, so I am trying to understand what gap this clause is trying to fix.

Stephen Morgan (Labour, Portsmouth South)

I thank the shadow Minister for that. Data will be shared to other parties as part of the financial oversight scheme. It is worth saying that the Department will share with local authorities which providers meet the financial oversight conditions and are subject to the financial oversight scheme. That is to support their local sufficiency and contingency planning.

To ensure that commercially sensitive information is kept confidential, we will not share any provider information submitted as part of this scheme with local authorities or the sector. The Department will use this information to make an assessment of financial risk and issue an advance warning notice to local authorities where there is a real possibility that financial risk could lead a provider to cease operating.

Finally, where providers or their corporate owners, as I mentioned earlier, breach the requirements of this scheme, the Department will publish information on civil monetary penalties imposed. That is to be transparent about providers who fail to comply with the scheme.

Clause 18 - Use of agency workers for children’s social care work

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Clause 18, through the introduction of a regulation-making power, will allow the Government to take stronger action to alleviate the significant affordability and stability challenges that have arisen from the increase in the use and cost of agency workers in local authority children’s social care in England. This clause ensures that, while agency workers remain an important part of local authority children’s social care, they do not become a long-term replacement for a permanent, stable workforce.

The clause will allow the Secretary of State to introduce regulations on the use of agency workers in English local authority children’s social care services. It will strengthen the existing regulatory framework for the use of agency social workers in local authority children’s social care services, which is currently set out in statutory guidance. It will also extend the framework beyond the social workers to the wider local authority children’s social care workforce, such as agency workers delivering targeted early intervention or family help.

We remain committed to working in partnership with stakeholders across the children’s social care system, including agencies, to ensure that the proposals implemented are proportionate and effective. The clause provides a duty to consult ahead of introducing regulations.

Regulations will make it clear to local authorities, the recruitment sector and agency workers what they should expect from each other. The consistency that that brings to the market will benefit all parties. Reducing local authority spend on agency workers will allow local authorities to invest more in services supporting children and families and enhance the offer to permanent employees. I hope that the Committee agrees that the clause should stand part of the Bill.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

We have not tabled an amendment to clause 18, but I have a lot of questions similar to those we have been asking about attempts to introduce profit capping for children’s care homes.

The Government clearly have two quite different hopes for this measure. On the one hand, the explanatory notes on the Bill say that strengthening the regulatory framework for the use of agency workers within local authority children’s social care services will improve the stability and quality of the agency workforce. That is the first hope. However, the notes also say that reducing local authority spend on agency workers will allow local authorities to invest more in services supporting children and families and enhance the offer to permanent employees. Those are two quite different objectives in different clauses of the Bill.

The last Government were taking steps to increase the number of people in social work. Those steps included the “step up to social work” scheme and the creation of social work apprenticeships, as well as advertising some of the amazing things that people can do and be part of as social workers. I take this opportunity to pay tribute to our social workers. They are amazing people. Theirs is a tough job, but people feel an enormous sense of pride in what they do, and when they look back on their careers they can reflect that they have helped a lot of people. It is an amazing profession.

According to the most recent DFE statistics, there were over 33,000 full-time social workers in post in 2023. That is 4,600 more than in 2017, or a 16% increase. The caseload per full-time equivalent worker had dropped from 17.7 cases to 16, the lowest in the series. We can say that that number is still too high, but it has at least been going in the right direction during my time in Parliament. Just under one in five of the full-time equivalents is an agency worker, and the agency share has gone up, but sometimes people assume that it has gone up more than it has. In fact, from 2017 to now, it has gone up from about 19% to just under 22%. That is an increase, but we must keep these things in perspective. As with children’s homes, issues with agency workers are probably more likely to be resolved by addressing issues of supply and career progression, rather than attempting to freeze or cap prices without addressing supply. Crudely trying to cap prices runs the risk of increasing vacancies in social work teams, lengthening lead times for families or at-risk children to get help, and putting more pressure on all the other staff.

When we look at the map, we see that not all local authorities are in the same position, facing the same costs, market forces and challenges. There are huge variations in the share of agency staff, even within regions, and in some regions, such as London, the use of agency staff is consistently higher. Applying the same rules, caps or limits to places facing totally different situations would be risky. That is why the last Government were talking about encouraging authorities in an area to come together on a voluntary basis to agree things, but were not forcing the pace or applying a hard national cap on a one-size-fits-all basis. Sometimes when we look at the map, we can see what we think is the rationale—for example, Trafford is more expensive than Manchester. Trafford is quite expensive, but then we see other parts of the country where the issues are not connected to the costs. Why are Bradford and Leeds so different? Without understanding the story, it is pretty dangerous to move to a one-size-fits-all solution.

Instead of alleviating significant workforce affordability pressures, which the explanatory notes say is the aim in the clause, a one-size-fits-all regulation could make things worse. Interestingly, a poll found that only 16% of agency workers agreed with the idea of national rules, which suggests that many are choosing to work in this way. In other fields we sometimes want to regulate agency staff for the good of the staff, or because we are worried that they are being exploited. In this case, however, we should be clear that they are overwhelmingly not looking for new national rules—although it is worth saying that the same poll shows that local authority staff take a different view. We should be trying to understand why that is the case.

I imagine that both the flexibility and the wider conditions are among the reasons people want to work as agency staff, and they are far from alone in that. Across almost every public service, in each new generation there is a much higher level of demand for flexible working—being able to work at the times and in the places that people see fit. That is, in one sense, a good thing. The workforce is more female, for example. We can understand why people want it. On the other hand, it poses a challenge for public services to adapt and manage.

As I said, the clause has a dual goal, which the Government sets out in the notes. One part of it is potentially capping pay rates or numbers. The other part of it is to improve stability, so that there are better relationships and quality is higher. Proposed new section 32A(4), on page 35 of the Bill, lists the reasons why Government can act under the clause. Paragraphs (a) and (b) are about quality; they are about agency workers’ specified requirements, such as qualifications. Paragraph (b) is also about how they are managed, and it is very open ended. Paragraph (c) then says,

“including the amounts which may be paid under such arrangements”.

I see no limit—although the Minister may tell me that there is one—on what the Government can do under that paragraph. Might they be able to set individual limits for individual local authorities? I see no obstacle to them doing that; it is a very strong power. If Minister were so inclined—I am sure that none is—they could micromanage the whole situation and try to run it from the centre.

I am interested to hear the Ministers’ views on the Government’s intent. How plausible do they think using those powers is, and what do they think are the obstacles to fixing the problem by directly regulating against it, rather than by improving supply overall?

We are, in a sense, again being asked for a blank cheque in so far as everything is in regulations. We do not have the promised impact assessment, although of course there is a commitment to engage extensively with the sector before introducing secondary legislation. There will be public consultation, and the regulations will be subject to the affirmative procedure, but as the Minister knows, that means they cannot be amended, so we will have no steer over them. It is a very strong power to heavily manage almost every aspect of the use of agency workers. There is, more or less, nothing that the Government cannot do under subsection (4).

Rather than asking lots of specific questions, I want to get a general sense from Ministers of how they feel about that. A lot of people say, “There are too many agency staff.” It is not obvious to me that there has been a ballistic growth in their numbers, or that there is a “right level”, which we are not at. I said that the level is now about a fifth; should it be what it was in 2017? Was that the right level, or was it the level it was in 2010 or 1997? Quite often, we hear people say that it is terrible that there are so many agency staff, but what is the right proportion? It is probably not zero.

The power being given is big, sweeping and general, and I do not have a firm sense from Ministers of what they want to do with it or when they will know what they want to do with it. When I listen to some people in this debate—not necessarily Ministers—I am struck by the naiveté of Ministers riding in and saying, “Right, you’re banned from having any agency workers,” or, “You’re all capped at a maximum of x per day or x per hour,” and thinking that that will not cause problems. In a country like England, with all our divergences, the Government would quickly get into big trouble if they did those things. I do not think Ministers are so unwise.

I would like to get the Minister’s response to the concerns I have raised about the limits of action on pay. I am less worried about whether agency workers should all have qualifications; we should do everything we can to drive up continuous learning and professional development. That is all good stuff. I do not have a big problem with making agency workers more like local authority workers and making them part of the team. What I am more wary about is proposed new section 32A (4)(c), which seems to suggest that the Government intend to attack profiteering. I would be interested in the Minister’s response to those concerns.

Munira Wilson (Liberal Democrat, Twickenham)

I join the shadow Minister in paying tribute to our social care workforce. Social care is an incredibly tough job, and I take my hat off to anybody who goes into the profession.

I understand the Government’s motivation and objectives, which are similar to those behind the provisions on care providers and the costs involved. We should also think about the children’s experience. Whenever I have spoken to care-experienced children, they have told me that their biggest frustration is with the huge turnover of staff, which means that they have to share their stories and relive their trauma a number of times. Often, they have a new social worker every few months. It is therefore important to try to clamp down on the use of agency workers.

However, I share the shadow Minister’s concerns about what the measures will mean in terms of ensuring that we have an adequate workforce. They do not necessarily tackle some of the root problems that motivate social workers to opt for agency contracts. They do not tackle challenges around costs and pay and conditions in the context of the cost of living crisis, nor do they address the fact that workers may get flexibility through agency working that they do not get in a permanent role. We need also to look at supporting continuous professional development for qualified social workers, as we do with doctors, who receive 10 years-worth of funded training and development on the job. We do not do something similar for social workers.

I want to hear more from the Minister about whether the Government have a workforce strategy to address the root causes of more and more social workers opting for agency contracts, which is not good for taxpayers or for the child’s experience. How can we address the fundamental causes and get more people into the workforce?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank both hon. Members for their probing of the clause. No amendment has been tabled, and there seems to be general agreement that the principle is right. Over-reliance on agency workers contributes to workforce instability, which has implications for both the workforce and the children it is there to serve. It also puts pressure on local authority budgets. I thank both hon. Members for recognising the challenging but hugely valuable work of social workers, which is often unrecognised and un-thanked. It is good that we take the opportunity to put on record our collective gratitude to them for the difficult work that they do.

Many local authorities are already demonstrating success in transitioning agency workers into their permanent workforces. People who work in social care need the right environment so that they can thrive, personally and professionally. We recognise that regulation alone is not the answer, but the Government are supporting local authorities to attract and retain children’s social workers and provide positive working environments for all who work in children’s social care, because ultimately children will benefit.

Local authorities will still be able to use agency workers if doing so is the most appropriate resourcing option and in line with the regulatory framework, but it is important to reduce local authority spend on agency staff and to allow local authorities to reinvest in the permanent children’s social care workforce. Statutory guidance that has already been issued on this matter has allowed the Government to act quickly to introduce a new framework. The framework focuses on social workers, but other Government Departments are working on the same issue.

Guidance can be departed from in certain circumstances, so introducing regulations on the use of agency workers is appropriate and proportionate. It is important that we strengthen the regulatory framework on the use of agency workers in children’s social care to ensure that it is legally binding, so that we bring greater transparency and accountability to the use of agency workers, as the right hon. Member for East Hampshire suggested. We will continuously consider the evidence, ensuring that we take an informed approach to those regulations.

There is a statutory duty to consult before introducing regulations. We commit to working in partnership with stakeholders across children’s social care, ensuring that any proposals that we introduce are proportionate and effective. We are also working with local authorities and regions on developing price caps. We will look at the data later this year, before introducing those changes, and the raised regulations will be subject to consultation and the affirmative procedure. With those comments and queries responded to, I hope that Members feel that they can support the clause.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I think the Minister answered this question when she said that, in respect of caps, she was working on a regional basis, but does the provision give the Government the power to cap on any basis, including at a local authority level? The Government could say that the cap is x in Westminster and y in County Durham—is my understanding correct?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

As is becoming more evident as the Committee progresses, the hon. Member is very focused on the detail. Obviously, that is something that we will work through as part of our development of the statutory regulations. We will consider developing price caps on a regional basis, but we will look at the evidence and consult as well. That is important, because I think we all agree in principle on the provision, and we will work hard and consult to ensure that we get it right.

Clause 19 - Ill-treatment or wilful neglect: children aged 16 and 17

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Clause 19 amends sections 20, 21 and 25 of the Criminal Justice and Courts Act 2015. That Act protects over-18s in regulated social care settings and everyone provided with certain healthcare from ill treatment and wilful neglect, and the Children and Young Persons Act 1933 protects all under-16s from cruelty, so if someone is under 16 or over 18 there is protection in place to prosecute perpetrators of abuse. However, there is a gap that means that carers or care providers involved in the wilful neglect of 16 and 17-year-olds in regulated children’s social care settings or youth detention accommodation cannot be prosecuted. We are therefore expanding the 2015 Act so that the offence includes protections for 16 and 17-years-olds.

The change means that where there has been ill treatment or wilful neglect by those providing care or support in regulated establishments, the law will support the relevant authorities in prosecuting the individuals and providers involved. I am sure we all want the right legal protections to be in place for all children, and for the law to support action being taken against those involved in abuse or neglect. I hope the Committee agrees that the clause should stand part of the Bill.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

We support clause 19, which closes an important gap in the law regarding the ill treatment and neglect of 16 and 17-year-olds. I have some specific questions. Have the Government considered making the ill treatment or wilful neglect of a child aged 16 or 17 in a children’s home or other regulated setting, as set out in the Bill, an aggravating factor in the sentencing of those cases? The low level of the terms “ill treatment” and “wilful neglect” sits uncomfortably beside the context, reality and vulnerability of those children. Will the Government think about the criminal justice side of that?

My second question is about children who are held on remand in the youth estate. Members who have read my Substack will know that, both under the last Government and this one, I have complained a lot about the growth in the remand population in the adult and youth estates, and the court delays that drive that. A lot of children now in the youth estate are held on remand—about 40%—so can the Minister confirm that these provisions will apply to children who are held on remand in youth detention accommodation, and not just to those who have been sentenced? Those on remand are there temporarily, and as we fix one important hole in the law, I want to check whether we need to fix another one, or whether it is already covered. I am happy if the Minister wants to write to us on that point because it is quite detailed.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I thank the hon. Gentleman for his support for the clause. To answer his second question, the change will affect regulated establishments in children’s social care, including youth detention accommodation. It will therefore cover children’s homes, residential family centres, accommodation where holiday schemes for disabled children are provided, and supported accommodation settings. There are other measures already in place to protect all children, including 16 to 17-year-olds, against abuse and neglect within children’s social care settings and youth detention accommodation. This clause is specifically intended to address the current legal gap.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I think the most natural reading is that those children should be covered, because they are in the YOIs. I just wondered whether there was a potential issue because they are not permanently there; they are just on remand. I wonder whether the Minister could check with her officials to ensure that we are not missing an opportunity.

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I will double-check on the hon. Gentleman’s behalf, but my understanding is that they will be covered, given that they come within the remit of youth detention accommodation. I will certainly convey his point about wilful neglect being an aggravating factor within the criminal justice system as a query to the Ministry of Justice, as it may be worth considering with the change being brought through in this education legislation. With that, I commend the clause to the Committee.

Clause 20 - Employment of children in England

Catherine McKinnell (Labour, Newcastle upon Tyne North)

The clause seeks to amend the Children and Young Persons Act 1933. To help to develop this policy, we spoke to both children and employers. The changes in the clause are the ones that they told us they would like to see. The clause will require all children in England to have an employment permit in order to undertake suitable employment. The permit will make local authorities aware of the children working in their area. It will ensure that children are safeguarded as they undertake valuable employment, while still having access to their education.

The measure will give more flexibility to children and employers in relation to when children can work, which will give children more opportunities to take up suitable employment while still ensuring that their health, development and education outcomes are supported. Allowing children to work additional hours on a Sunday, and before and after school, will help them to benefit from additional suitable employment opportunities. Employment can contribute to a child’s development, introduce them to the world of work and develop key employability skills.

The clause will also replace a power for local authorities to make byelaws in relation to child employment with a power for the Secretary of State to make regulations in relation to the employment of children in England. Having a single set of regulations that apply to all children who work in England, rather than each local authority having its own byelaws, will ensure fairness in outcomes for all children in England.

Our changes will also make it easier for children and their parents to understand what roles they can undertake, and for employers to know on what basis they can employ a child. They also mean that as types of work change, we will be able to restrict new types of employment that are not suitable for children more quickly. Additionally, we will be able to make previously restricted employments available for children, should changes in the way that they are carried out make them suitable. That will ensure that the legislation stays current.

I hope the Committee agrees that the clause should stand part of the Bill.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

As the Minister says, the clause essentially centralises and harmonises differences in rules on children’s employment, which are currently set partly at the local level. As a localist, I start with a small degree of nervousness, in so far as we are taking away a local authority power. We have done that an awful lot over the last 40 years.

I do not have a great objection to this measure, because in general it is a liberalisation overall. The notes provided by the Library are quite good, in so far as they talk about the extensions in different ways that this will bring about in most local authorities. I do have one slight nervousness, though, from a practical rather than a philosophical point of view. When we replace a complicated patchwork quilt and a lot of variation with a single national rule, we must check that every place is clear about the impact. To pick a random example used in the Library briefing, the byelaws of Birmingham city council do not include the line allowing 13-year-olds to work on car washing by hand in a private residential setting that is present in Richmond upon Thames and in the model byelaws.

I do not know whether the Government have a spreadsheet or an assessment somewhere detailing the current differences between the laws in all the different places. I hope that they do, because although in general it sounds like we are harmonising all these things across the country in a way that is liberalising, by having more times when young people and children can work, in some cases there might be a restriction, and it would not be a small thing for anyone caught by that restriction to be found breaking the law on the employment of children.

Damian Hinds (Conservative, East Hampshire)

I am not at all opposed to the clause, but I am curious to know what prompted it. What outside world events made us rethink the regulations? I heard what the Minister said about consulting young people, but I am struggling slightly to picture that conversation, where the kid goes, “You know, what we really need is a change in the employer licensing regulations.” But fair enough.

The changes are in some ways liberalising by increasing the latest hour from 7 o’clock to 8 and allowing Sunday working, but in other ways they are restricting. I am interested in what is behind that. There are risks to guard against in the employment of children, but the employment of children is not in itself an ill to be mitigated. There are many benefits to the child in having that opportunity. In fact, the biggest gripe we hear from employers about young people—it happens again and again—is about what some call soft skills, or employability skills or workplace skills. Whatever we want to call it, those are skills that people develop at work. Many times over the years, whenever I have had a group of leaders and industry together, I have gone round the room and literally asked, “How old were you when you first did a day of paid work?” The most typical, most common answer is 14—some say 15, and for some it is younger. It is important that we learn from that.

In the last 25 years, there has been a sharp decline in the number of under-16s and under-18s doing paid work. That is partly because of the decline in certain job types—there are not many paper rounds or milk rounds any more—and partly because of social attitudes. When we had public exams in the lower sixth and upper sixth for most children, that probably had an impact for the slightly older age groups. One of the reasons that employers find it daunting to employ children is that they are often unclear about what the regulations are, but they have a sense that there are risks, including reputational risks and so on.

The explanatory notes state:

“The Secretary of State will have a power to make regulations in relation to child employment which will replace the power local authorities currently have to make bylaws. The regulations may prohibit the employment of a child in certain types of work, make provision in relation to child employment permits, authorise the employment of 13-year-old children and set out the number of hours children can work per day or week, their entitlement to breaks and leave and to specify other conditions of employment”.

It is quite a list.

Today, to be clear, children can work part time from the age of 14. In some council areas, the minimum is 13. Are the Government now saying that the minimum age will become 13 throughout the country? What limits do they envisage in ordinary times for additional regulation? There is rightly already plenty of regulation about the employment of anybody and further regulation about the employment of people who are below 18. What additional regulation do the Government envisage?

The Government will say that there will be secondary legislation under the affirmative procedure and that it will all be fine, but we know how secondary legislation works—often in this very room—under the affirmative procedure. Often people do not know about it very far in advance. A Committee of Members of Parliament comes here and debates the secondary legislation—I was going to say that the MPs vote on it, but often they do not—the legislation cannot be amended, and then it moves on. Given that we are talking about the primary legislation, it would be helpful to get on the record what the Government are thinking about doing in this area.

As my hon. Friend the shadow Minister rightly said, having a standardised system of permits nationally is okay in principle. Indeed, benefits may well come from that, but it goes somewhat against the direction of travel from a Government who are introducing devolution in local government and changing the levels at which responsibility is held. The danger with a national system for something like this is that we could lose some of that local knowledge and variability, for example, in rural areas of the country with heavy agricultural sectors. Employment can be different there. In seaside towns with more seasonal employment, that might affect the employment of children. Can the Minister give us some reassurance that there will not be scope creep, for example through the introduction of further regulations for the employment of children in the family business or activities such as babysitting? Can she also assure us that the minimum age exemptions with a performance licence for the creative industries—theatre, film and television—will not be lost?

Munira Wilson (Liberal Democrat, Twickenham)

I do not have a philosophical problem with this clause either. I was slightly surprised to find it when I was reading the Bill and to hear where it came from, but I understand what the Government are attempting to do.

Before press releases start going out suggesting that the Lib Dems want to promote child labour, I will preface my next question with some feedback from the National Network for Children in Employment and Entertainment. It has raised some concerns that the later hour set out in the legislation does not fully address the employment of young people in televised and live sporting events. That is particularly the case where we now have the benefit of floodlights and roofs—I think of the late matches on centre court at Wimbledon, when we have ball boys and ball girls from the local area working there. I understand that there is a different licensing regime if children are participating in sport, but this measure would apply to some of the children working at those sporting events. What consideration have Ministers given to those sorts of situations? Have they spoken to the National Network for Children in Employment and Entertainment?

For organisations with particular shift and working patterns—for example, those involving non-performance roles in theatres, including in lighting or backstage—the National Network for Children in Employment and Entertainment suggests allowing hours later than 8 pm on a Friday or Saturday for older teenagers, provided that the next day is not a school day. I am not necessarily suggesting that that is the right thing to do, but that is a suggestion made by that organisation given its needs. It would be good to get some clarification on when the current byelaws for child employment will cease and when regulations from the Secretary of State will replace them.

Importantly, what consideration has been given to safeguarding and DBS checks of employers where young people are working? The right hon. Member for East Hampshire touched on that. We have self-employed young people offering their services as tutors, babysitters and gardeners. I understand that some of them are offering their services through apps and things nowadays, and they are presumably not touched by these regulations, so what consideration have Ministers given to children in those sorts of services?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

Considering the level of agreement on this provision, there is a significant amount of interest and questions around it. It might help if I clarify that currently a child can work for a maximum of only two hours on a Sunday and up to 7 pm at night, which restricts employment opportunities. It may not make business sense to employ a child who is able to work only a very short shift. We spoke with children while developing this policy, and they were pretty universally of the view that they would like to have more flexibility in when they can work, not necessarily in the amount that they wish to work. Clause 20 will not change the overall number of hours that a child can work, but it will give children much greater flexibility to maximise the opportunities that hopefully will become available to them as this area becomes more clearly set out as part of the legislation.

Employers and sector bodies have set out the difficulties in being able to offer employment to a child either on a normal trading day or when they experience peak demand when the child has worked their requisite two hours. That often closes down opportunities that children could easily have had and would have enjoyed having. Businesses would appreciate having those children as part of their team, but the restrictions in the current arrangements often make that difficult to accommodate.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I have a question about babysitters, which are one of the hardest cases here. This question is as much about the existing law as it is about the proposed change in the cut-off from 7 pm to 8 pm. Are people who employ babysitters after 7 pm or 8 pm committing a criminal offence under the clause?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

I do not believe that people register with their local authority to ask someone under the age of 16 who they know to babysit in their home. My understanding, therefore, is that these regulations would not apply in those circumstances.

To explain another issue that these measures are intended to fix, the vast majority of local authorities simply follow the byelaw model, so they are already in place. However, some local authorities have additional restrictions in their rules for employing children. That has led to some local authorities, which may be geographically located directly next door to each other, having different restrictions. For example, one local authority might decide to add a role to the restricted employment list, but the other might not. That leaves children, parents and businesses, which do not always operate within local authority boundaries, somewhat confused. As the right hon. Member for East Hampshire pointed out, that can put employers off employing children, even where it might be to the benefit of both that these opportunities are available.

Replacing the power for local authorities to make byelaws with the power for the Secretary of State to make these regulations will ensure fair outcomes for all children right across England. That means that a child, their parent or a business can know what work can be undertaken, and when and by whom, wherever they live in England. National employers will also hopefully be encouraged to employ children who are looking for these opportunities, as they will not be put off by inconsistencies around the country that create bureaucratic obstacles to opportunities. That will provide much-needed employment for businesses across the country. I hope that I have responded to the majority of concerns about this largely—I certainly get the impression—uncontested clause.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

rose—

Catherine McKinnell (Labour, Newcastle upon Tyne North)

It would, however, appear that the shadow Minister has another query.

Neil O'Brien (Conservative, Harborough, Oadby and Wigston)

I thank the Minister for her patience. Will the Government undertake to have an authority-by-authority assessment of what the patchwork quilt looks like now? For everyone’s ease and benefit, what will the changes mean for those who are not just following the model byelaws, because they are maybe different in each different place? Is the Minister happy to at least go away and have a look at that?

Catherine McKinnell (Labour, Newcastle upon Tyne North)

As part of the work to create the draft legislation that we are debating, an assessment of local authorities was undertaken. That assessment has not changed the view that a more consistent approach across the country would be beneficial to children, employers and their families—indeed, it threw up the fact that the vast majority of local authorities do follow the current byelaw framework. This clause not only creates a nationally consistent approach; it creates a better and more flexible approach for children, which will hopefully unlock opportunity for them to take their first steps on the employment ladder.

Written evidence reported to the House