My Lords, I welcome the regulations in so far as they will allow, as the Minister has intimated, the potential for local authorities to innovate and to improve services for young people. I also welcome the change to the draft regulations that the Government made in response to the consultation. I am not opposed in principle to the enabling power in the regulations. As the noble Lord, Lord True, has illustrated, used in the context of the right values, these possibilities can open up new ways of delivering better services and, more importantly, better outcomes for children and young people.
However, I have some concerns, not about the principle but about the lack of clarity in the regulations on some important issues. Some of these issues were touched on in the consultation; the responses were not concerned exclusively with the principle of privatisation. I want to raise three issues: accountability, inspection and the not-for-profit status of new providers that the Minister has alluded to. If the Minister could flesh out the Government’s thinking on these issues, it would be really helpful, not least to the Commons when they come to consider the regulations, as they will be looking for answers on some of these issues.
The Government have said that, if children’s services are outsourced either in large part or in whole, the local authority will retain overall accountability for those services. However, we need to understand what that means in practice. Does overall accountability mean that the local authority alone will be responsible for individual children’s outcomes, or will the service provider have any accountability? When I was Minister for Children, I knew a number of directors of children’s services who made a point every month of selecting at random six, seven, eight or 10 case files from their department and reading them to get a measure—a dipstick measure, but none the less a measure—of the quality of his or her social workers’ work. Will directors of children’s services similarly be able to collect a random sample of case files from the service provider and look at what is going on? What direct access will a director of children’s services have to the evidence of the work being done with individual children in an ongoing way, not just with outcomes at the end of the year? That question concerns how the local authority will be expected to put in place continuing quality assurance mechanisms so that it can see what is being done with individual children in a continuing, real-time way.
Given that parents and carers will have an indirect relationship with the local authority through this outsourcing, what will happen if a parent or carer
wanted to make a complaint relating to the outcomes for their children or to the way the service was being provided? To whom would that complaint be made and how would it be handled? Under the overarching statement I think that the local authority will remain accountable. There are a number of very detailed questions about how that accountability will be exercised, particularly on how quality assurance, which the local authority must surely seek, will be done on the way in which services are provided.
A related issue is inspection and what appears to be a lack of direct regulatory oversight, in the detail of the Government’s proposals, of the service provider to whom the responsibility for a service is outsourced. As I understand it—I hope the Minister will correct me if I am wrong—the Government propose that external providers of children’s services will not be inspected in their own right by Ofsted, nor registered as inspectable providers, like children’s homes and adoption societies currently are. As I understand it, the local authority will be inspected and a judgment will be made of it, but that is a very indirect look by Ofsted at what is going on. Surely to goodness the service providers have to be inspected. Would it not be important for that provider also to be given a public judgment by Ofsted?
This would be particularly important—unlike in the example of a community interest company conjured up for us by the noble Lord, Lord True—if we were talking about a rather big, profit-making company that set up a not-for-profit subsidiary, which was undertaking service provision for a number of different local authorities in some respect. Would it not be important to have an overview of what that company was doing across the board in different geographical areas, not just an atomised view of each individual local authority, indirect as that would be? Will Ofsted directly examine the case files that the service provider keeps and the quality of the social work and care provided by the agency? Will Ofsted speak directly to children and families? Why will the Government not allow Ofsted to rate the agency as well as the local authority? It is the agency that actually provides the services.
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Finally, I welcome what the Government have done on the issue of not-for-profit status, but I want to check whether it is as strong as the Minister maintains. He said that this rules out the possibility of profit-making, and the noble Lord, Lord True, said that the Minister had put the question beyond doubt. But has he? Again, we are not talking about the community interest example but the possibility of big companies such as Serco or Capita bidding for these services. In those situations, first, that company could set up a not-for-profit company to sit alongside its profit-making company but could still indirectly make a profit from its activities in providing children’s services in the same way that some of the big educational companies, when they set up a trust to deliver an academy, sell their educational services to those schools and make a profit from them. That is allowed, and I would imagine that the same thing could happen here.
Secondly, is there a potential for conflict of interest if, say, a profit-making company that is providing children’s homes set up a not-for-profit arm to deliver social care? When it comes to the decisions on whether residential care is the best solution for individual children, do we not want to put it beyond doubt whether profit was in anyone’s mind, given the relationship that exists between the company providing residential care for profit and its non-profit subsidiary that is delivering social care? Can the Minister put beyond doubt the possibility of profit-making and the possibility that there might be in certain, maybe limited or special, circumstances the potential for conflicts of interest that could influence the decision-making around individual children?
Those are my concerns. This is not about the principle but about making sure that we have just as robust an inspection and accountability regime for the outsourcing model as we have at the moment in relation to direct provision by local authorities.