News 27 Jun 2022
2022 ‘State of the Sector’ report

Please find the State of the Sector Report here

Published today, ICHA’s 2022 State of the Sector survey of children’s homes reveals the reality behind the headlines: A sector that has shown outstanding commitment to children and young people throughout the Covid pandemic. A sector that routinely places children’s needs ahead of ‘filling beds’ or maximising profits. But also, a sector significantly challenged by rising costs, diminished margins, unprecedented workforce challenges and uncertainty about the future – all contributing to a lack of resources and confidence to invest in new provision to meet rising demand, despite clear desire to do so. 

 

“ICHA’s 2022 ‘State of the Sector’ survey of children’s homes organisations – the 8th and largest ever survey since the series began in 2015 – provides critical intelligence that must inform and refocus the current narrative around sufficiency, workforce, fees and profit in residential child care as our sector strives to meet unprecedented demand.”, says Peter Sandiford, CEO of the Independent Children’s Homes Association.

 

“Amongst important insights into the challenges faced by providers and the sector-wide barriers to improving sufficiency, this survey also provides a clear reminder that overall, providers of residential child care place the needs of children and young people ahead of ‘filling beds’ or maximising profit. ”

 

Unlike the recent Competition and Markets Authority (CMA) report into children’s social care, and the recently published Independent Review of Children’s Social Care (IR), which focused only on the largest residential child care providers, ICHA’s State of the Sector survey included organisations of all sizes and business models, inclusive of private, public and charity sectors. 

 

Andrew Rome of Revolution Consulting, commissioned by ICHA to undertake the State of the Sector survey and report, said, “Due to the broad range and volume of ICHA members who responded in this year’s survey, spanning organisations of all sizes and business models, it is fair to say that 2022’s State of the Sector report provides a more plausible representation of this diverse sector than any available at this critical time.”

 

Survey responses demonstrate that residential child care providers have worked tirelessly to keep children’s homes open and avoid disruption for children and young people throughout the pandemic. They have also tried hard to respond to the demand for increased capacity and new homes, but experience significant barriers to such investment including staff challenges and rising operational costs alongside diminishing profits and financial reserves. Overall, investment in increased capacity has fallen by 10% since last year, and only 35% of small providers (less than 10 placements) have increased capacity.

 

The majority of providers report significantly lower profit levels than those highlighted in the case of the largest providers, with almost half of providers surveyed reporting both declining levels of profit and deterioration of financial reserves.  Multiple pressures are highlighted as heightening the need for fee increases.

 

Peter Sandiford said, “For providers to have confidence to invest in the required additional capacity, most need the funds generated by profitable operations to do so. Despite clear intention in the sector to increase capacity and invest in new provision to meet rising demand for placements, there are signs that over 40% of providers surveyed are unable to build the financial reserves necessary for such investment. Staffing of course remains a critical and incredibly costly challenge to existing provision, let alone to expansion and increasing capacity. It is clear that decreasing providers’ income, at a time of acute demand, is a strategy that would fail.”

 

Survey responses provide reassurance that, despite rising demand for placements, providers continue to place the needs of children and young people ahead of maximising occupancy and profit.  Increased demand for placements does not translate into high occupancy within children’s homes. Providers have a responsibility to match the needs of children and young people to those of others in their care, reported as a key reason for rejecting placement referrals.  Such professional matching practice is often incorrectly perceived as ‘cherry picking’, when in fact, providers must and do place the needs of children and young people over any financial motivation to ‘fill beds’.

 

Survey responses show that providers recognise and welcome the important role of Ofsted in holding the sector to account for matching practice and quality of care. They also recognise the challenges faced by commissioning local authorities.

 

Providers largely welcomed the CMA’s calls for better coordination of commissioning and the removal of barriers to increasing capacity.

 

Peter Sandiford said, “We would like to thank our members who shared extensive – sometimes commercially sensitive - information in their responses to this year’s survey. This year’s highest ever level of engagement in the survey demonstrates our members’ genuine commitment to sharing knowledge and working together towards exemplary residential child care.”


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