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Rethinking children’s services: MPs hear case for mission-led providers
To reduce the severe pressure facing children’s services, the government must find alternatives to private equity profiteering, reform procurement for public benefit, and support partnerships between local authorities and social enterprises and cooperatives, MPs were told last week.
Speaking at the first roundtable of the Social, Cooperative and Community Economy All-Party Parliamentary Group (APPG) on public service provision, parliamentarians, local authority commissioners, and social enterprise providers explored the systemic barriers hampering effective care for society’s most vulnerable children and heard how mission-led providers could be better supported to deliver it.
Challenges facing children’s residential services
Provision for children needing an alternative to remaining within their immediate family is stretched across local authorities due to rising demand, funding cuts, procurement and commissioning limitations. Not enough children stay with extended family, foster care supply is limited – in part due to issues around access to appropriate properties. And residential care provision is too often in the hands of expensive, out-of-area, profiteering providers who don’t provide holistic and joined-up care.
Local authorities are struggling. The roundtable heard that 46% of councils are overspending their budgets by 20% or more, with many citing children’s services as the primary cause.
The dominance of private equity was repeatedly identified as a structural issue. In Greater Manchester alone, 50% of children’s care providers are controlled by private equity firms, many of which are offshoring profits. “Private equity extracting profit and offshoring needs to stop” said one attendee.
Barriers to positive children’s social care provision
Social enterprise, co-op and charity provision offers cost-effective solutions – cost-effective not only because they aren’t off-shoring high profits, but because provision is child-centred, trauma-informed, locally-based and – increasingly – co-designed with local authorities around need and capacity.
What is stopping this being the norm everywhere?
Funding and finance
Accessing suitable finance remains one of the greatest barriers to expanding mission-driven businesses’ children’s residential care provision. The upfront cost of setting up residential care – from property to compliance – was highlighted by attendees as prohibitive. One provider described “£100,000 runway costs” before a home can begin accepting children. Sourcing the right type of finance takes time, finance can be expensive, and grant funding is often too short-term or restrictive.
A social investor told the roundtable: “We need more patient, impact-aligned capital and government funding can act as a catalyst for social investment.”
Commissioning and regulatory constraints
The procurement framework within local authorities, designed originally for large-scale goods provision, isn’t fit for the purpose of securing quality services at a local level – and as such often biases towards provision by profiteering firms.
Variations in planning regulations between local authorities mean mission-led providers face very different commissioning and regulatory issues depending on geography. Differences in commissioning culture, for example, mean that some councils are seen as risk-averse and less likely to facilitate mission-led provision. Similarly, in some areas, residential homes can be set up with minimal bureaucracy but elsewhere regulatory loopholes around approval of buildings and scale of provision can be prohibitive.
Workforce challenges and high churn
The absence of a professionalised workforce, including a lack of recognised qualifications or progression pathways, was cited as a major issue for provision. Low pay, lack of professional development, and poor status in the sector all contribute to workforce churn. One attendee described this as “entirely inappropriate,” given the responsibility care workers hold.
Turnover of managers is particularly disruptive, as care homes must be reinspected by Ofsted even if managers move between sites within the same organisation. The lack of a “passport” system for staff was flagged as a fixable bottleneck.
Social enterprise solutions: building local, trauma-informed care
Despite these barriers, social enterprises, cooperatives, and other diverse mission-led businesses identified how they can provide more stable, child-focused, and community-rooted models of care.
Finance and investment
The UK’s social investment market now stands at £10 billion, creating new opportunities for blended finance. Social AdVentures, a Salford-based social enterprise, was held up as an example of how social investment and combined authority support can enable new models though convening multiple actors remains a complex task.
Mission-led alternatives to private equity
Social enterprises reinvest surpluses into services, enabling them to focus on long-term, trauma-informed care. They are well placed to support children with complex needs and prioritise relationships and wellbeing over short-term profit.
Mandating open-book accounting and capping profits – currently up to 40% for some private equity firms – were floated as policy options to level the playing field.
Localised, values-led commissioning
Reserving contracts for public benefit organisations is already happening in parts of the UK, and speakers suggested this approach could inform wider policy. Ministers were urged to embed social value more directly into commissioning decisions.
Roundtable attendees highlighted examples of small-scale provisions to address the acute needs of children with complex care requirements, as well as the value of long-term partnerships between providers and local authorities to ensure sustainable care solutions.
Regional Care Cooperatives (RCCs), being developed through the Department for Education with the intention they will allow local authorities to partner with providers in a more integrated way, were discussed as a promising structure, potentially offering a single point of contact and shared vision for care.
Professionalising and empowering the workforce
Several solutions focused on improving staff conditions and morale. Social enterprises were praised for involving staff in business planning, providing training, and minimising reliance on agency staff – which can be a runaway cost in children’s services provision. Attendees called for structured training programmes and better career pathways, noting that 22% of children’s homes currently have no registered manager. Professionalising care roles and offering qualifications would improve retention, stability, and ultimately, outcomes for children.
Asks and ambitions for reform
As the government launches consultations into procurement reform, parliamentarians present, including Georgia Gould MP (the Cabinet Office Minister responsible for public sector reform) and Josh MacAlister MP, heard clear evidence that social enterprises are already delivering, but need the right support to sustain and scale.
The current system is not built with social enterprises in mind; new legislation and guidance must explicitly create space for mission-led providers to flourish, providing cost-effective solutions with quality service outcomes.
Attendees stressed that this will require bravery among commissioners, and for local authorities to be supported in taking creative, child-centred risks.
Speakers also called for a fundamental shake-up of the care model, moving away from crisis-driven residential placements toward more flexible and therapeutic alternatives.
Attendees called for the NHS to take a more direct role, one noting that “health sits on a lot of money and they are responsible for these children.” Greater alignment between social care and Children and Adolescent Mental Health Services (CAHMS) was seen as essential to building joined-up, trauma-informed support.
Ultimately, the ambition of roundtable participants was clear: to build a children’s care system that starts with the child, not the contract. That will require longer-term funding, shared purpose, and a willingness to put public value above private gain.
