To ask His Majesty’s Government what plans they have to reform the system of children’s care homes.

My Lords, we want all looked-after children to live in stable, loving homes where they are safe and cared for. We are taking forward the commitments already made to improve the quality and consistency of safeguards across residential settings through new standards of care; to develop a new financial oversight regime for the market; to increase provision; and to take steps to ensure a stable and skilled children’s home workforce.

My Lords, I thank the Minister for her Answer. What is obvious, I am afraid, is how desperately unambitious the Government have been in reforming a broken system. In spite of the commitment of all who work in this area, it is a system that adversely affects the life chances of the most vulnerable children in our society. Is the Minister aware, as reported in the Observer on 8 October, that the 20 largest private operators of children’s homes, 10 of which have private equity or sovereign fund ownership, made a £300 million profit—I repeat: £300 million—last year, at the same time as local authority spending was being squeezed? Does the Minister agree that this is just plain wrong? What urgent steps will the Government take to stop so obvious an outrage happening again this year?

I do not accept the noble Lord’s assertion that the Government’s plans are unambitious, but I do recognise some of the concerns he raises about profiteering, which, as he knows, we would distinguish from being profitable. We are particularly concerned about those larger providers which have complex and sometimes very opaque ownership structures. That is why we want to bring much greater transparency to the market.

My Lords, will my noble friend look very favourably on the work done by local authorities for looked-after children? Will she ensure that in the Autumn Statement sufficient resources are available for the excellent work they do? Have the Government ever looked at the possibility of extending looked-after care beyond 18?

The noble Baroness will be aware that in some cases there is a duty of care up to age 25 for children who have certain special educational needs and disabilities. I share my noble friend’s gratitude for local authorities and the work they do in this area.

My Lords, the Minister understands that many local authorities rushed into outsourcing these services. They then quickly discovered that not only were they facing increased demands, but the new providers could set their fees wherever they wanted and could select whichever young people they wanted. One of the terrible results of this is that young people are being placed in hugely distant parts of the United Kingdom and are losing contact with their extended family, their schools and their friends. Would the Minister consider setting up a review of the current situation in residential childcare so that we can do better for the most vulnerable young people?

I absolutely accept that far too many children who are in children’s homes—around two-thirds last year—were placed outside their local authority area. Obviously, I enormously respect the noble Lord’s expertise in this area. I hope he would agree with me that we have done a lot of reviewing. We are doing a lot of consulting, and we are very focused on growing the response from foster carers and increasing that part of the market, particularly in relation to kinship care, which I think the House believes may be the best solution for many of these children.

My Lords, in understanding that certain of these firms that are running children’s homes are making an excessive profit, would it not be a good idea if we addressed one of the accepted problems with the childcare system: the transition to adult life? If services were required to give active support to these individuals, we might have fewer problems carrying on, and we would make sure that this transition to being an independent person is easier. There is the money there because there is an excessive profit. Surely it should be used for this.

To be fair, we need to be careful not to generalise too much. We have had some egregious examples, of which the most notable recently was the Hesley Group, with terrible abuses happening in children’s homes. We also have some very high-quality providers which are focused on many things, including the transition to which the noble Lord refers.

Local authority budgets are absolutely squeezed; profiteering is eye-watering; there are reports of horrendous abuse; and vulnerable children are being sent half way across the UK. What will the Government do to end the profiteering and ensure that children in care receive the best the system can offer?

I have already talked about the change to the financial oversight that we want to bring in the children’s social care market. The noble Baroness will also be aware that we are introducing a regional model for providing homes for children and we are working with partners both within the sector and in health and justice to co-design this. We will be piloting two regional care co-operatives, which we hope will rebalance that power dynamic between the providers and the local authorities.

For those who were fortunate enough to grow up in a Sheffield City Council children’s home at a time when councils had children’s departments, the input of private equity into this sector is totally wrong. It sends all the wrong messages, and it also prevents integrated care between a local authority and the homes that are provided. All of this about loving care is, frankly, nonsense. What are needed are decent homes, and the realisation that some children actually like living in a children’s home, as I did, because it provided security and a good environment. Can we look at chasing private equity out of the system?

I thank my noble friend and have great respect for him sharing his own experience from Sheffield. The reality of our situation today is that just over 80% of children’s home places are provided by the private sector, so we need to make sure that the sector is resilient. We are working on this in a number of ways, including increasing funding and provision, and reform, before we chase people out in a way that could destabilise provision.

My Lords, would the Minister accept thanks for having mentioned kinship care, which is a very important part of dealing with this problem? Could she also tell us when the Government’s kinship care strategy, which has been trailed umpteen times, is actually going to see the light of day?

We are going to publish the long-awaited kinship care strategy by the end of this year, which will set out our national direction. Over the next two years, we will establish a new kinship carer training offer, with an investment of over £45 million to begin implementing practical and financial support packages, so that children can stay safely within a kinship group.

My Lords, for many years, I served on a fostering panel in my local authority. Research shows that, for various reasons, children in care homes have a higher rate of mental health problems. We always put that down to the shortage of funds in local authorities; does the Minister agree? For the last 10 years or so, local authorities have experienced something like 50% cuts to their funding.

I do not agree with that. While I agree that children in care homes potentially have more severe mental health issues, I think that, typically, children who go into a care home have also experienced severe neglect and abuse, and have more complex needs than those who are fostered.

My Lords, what efforts are the Government making to support a lot more foster carers?

The Government are making a great deal of effort in this area. We are investing over £27 million, in this spending review period, in a foster care recruitment and retention programme. That will start in the north-east, with £3 million for a pathfinder hub; the additional £24 million will be for a wider rollout.