Committee publication · Correspondence · 8 December 2025

Letter from the President of the Association of Directors of Children’s Services relating to the Committee’s evidence session on Financial sustainability of children’s care homes on 17 November 2025, 28 November 2025

Inquiry: Financial sustainability of children’s care homes

Summary

The Association of Directors of Children's Services (ADCS) President writes to clarify points raised during the Committee's 17 November evidence session on children's care home sustainability. ADCS disputes the assertion that private providers are cheaper than local authority-run homes, citing evidence of substantial price increases (up to 180% in three years) and arguing that the market dysfunction stems primarily from supply shortage, not geographical distribution.

Key findings

ADCS disputes the claim that private providers' children's homes are cheaper than local authority-run facilities, particularly at the complex needs end where in-house costs can be several thousand pounds per week less.
Private providers' costs have increased dramatically since the 2022 CMA report: mainstream residential placements rose from approximately £11,000 to £30,000 per week in some South East authorities (173% increase), and from £5,000 to £14,000 in Eastern Region authorities (180% increase) over three years.
ADCS argues market dysfunction is primarily driven by supply-demand imbalance and lack of residential home availability, not uneven geographical distribution, enabling private-equity-backed providers to achieve materially higher-than-expected profits in a 'sellers' market'.
Financial data on private providers is available via Companies House and has been analysed by the Local Government Association; forthcoming Children's Wellbeing and Schools Bill arrangements will strengthen transparency further.
ADCS contends the CMA report's conclusion that local authority costs equal private provider costs may only hold when including costs local authorities would bear regardless of home operation status.

Tone

Adversarial

Topics

children-social-carepublic-financemarket-regulationlocal-government

Key actors

Rachael Wardell OBE, Association of Directors of Children's Services (ADCS), Sir Geoffrey Clifton-Brown MP, Sarah Olney MP, Susan Acland-Hood, Department for Education, Competition and Markets Authority (CMA), Local Government Association

Notable line

“ADCS members would challenge the assertion that private providers of children's residential care tend to be less expensive than local authority run homes.”

Key Quotes

“ADCS members would challenge the assertion that private providers of children's residential care tend to be less expensive than local authority run homes.”
— Rachael Wardell OBE · Disputing the Committee Chair's summary of earlier evidence

“Ultimately, supply does not meet demand, there is a lack of availability of residential children's homes which drives up costs as local authorities compete for places.”
— Rachael Wardell OBE · Explaining the root cause of market dysfunction

“A large local authority in the South East region reported the highest cost for a 'mainstream' residential placement in 2022 was around c.£11,000 per week, whereas now this is closer to c.£30,000.”
— Rachael Wardell OBE · Demonstrating scale of price inflation since CMA report

“Certainly, at the complex needs end of provision, costs can be several thousand pounds a week less in in-house residential provision for each child.”
— Rachael Wardell OBE · Challenging CMA findings on comparative costs

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Source · parliament.uk record ↗