Question proposed, That the clause stand part of the Bill.

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

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.

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.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Clause 16 ordered to stand part of the Bill.