Committee publication · Correspondence · 8 January 2026
Letter from the Chief Executive Officer at the Children’s Homes Association relating to the Committee’s evidence session on 17 November 2025 on Financial sustainability of children’s care homes, 22 December 2025
Summary
Dr Mark Kerr, CEO of the Children's Homes Association, responds to an ADCS letter challenging his November 2025 PAC evidence on cost comparisons between local authority and independent children's homes. He defends his claim that independent providers have lower underlying costs on average, disputes ADCS's assertions as under-evidenced, and urges the Committee to demand rigorous methodology and data from all stakeholders making cost claims.
Key findings
- CHA maintains that independent sector's underlying cost base is historically lower on average due to structural factors, primarily workforce and pension costs in local authority employment
- ADCS claims about complex-needs provision costs are asserted without methodology or data allowing verification, conflating different cost concepts (full economic vs. marginal cost)
- Fee increases across the sector are driven by Ofsted registration delays, emergency spot purchasing, occupancy/void costs, and risk-sharing arrangements rather than simple unit cost rises
- Problematic public money 'leakage' is concentrated in large, leveraged provider models with significant debt service and group structures, not across the sector indiscriminately
- Companies House data on providers is insufficient for local authorities to assess group-level risk, leverage, and resilience; proposed financial oversight scheme remains essential
Tone
AdversarialTopics
Key actors
Dr Mark Kerr, Children's Homes Association, Association of Directors of Children's Services, Sir Geoffrey Clifton-Brown MP, Public Accounts Committee, Department for Education
Notable line
“… headline price points are not a clean proxy for underlying unit cost without understanding occupancy, risk-sharing, and the degree of emergency commissioning.”
Key Quotes
“… when comparing like-for-like service models, the independent sector's underlying cost base has historically been lower on average, for structural reasons.”
“Those points may well be true in some circumstances, but they are not evidenced in the letter with methodology or data that allows the Committee (or others) to test or replicate the claim.”
“The most problematic "leakage" of public money is concentrated in a subset of large, highly leveraged provider models, where debt service and group structures can extract significant value.”
“I would encourage the Committee to treat cost comparisons between local authority and independent provision as an evidence-and-methodology question, not an assertion.”
Source · parliament.uk record ↗