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NCERCC Analysis Of Report And Response To CMA – Executive Summary

NCERCC analysis of report and response to CMA – Executive summary

With this report the CMA has completed the preliminary stage of the work gathering much of the available information is now in one place. It is evident there is more to still to be received and found by the CMA to further their understanding especially regarding commissioning. The CMA is urged to ensure they have the full evidence necessary for their work. This is one of the reasons NCERCC recommends the CMA work with an independent group of experts with sector specific knowledge and experience.

There is yet more for the CMA to have in their sight to appreciate the weight of the individual factors and the interwoven dynamics that go to make this a ‘wicked’ complicated issue. There are historical, cultural, political, factors. Perspectives are held intensity and it is an exhausting exercise contending with differing interpretation of data and experiences.

NCERCC offers the view that the ‘solution’ may not be resolved by reason alone.

The thinking about residential child care more recently has had a focus on reduction of costs and outcomes and has centred on the sector itself with no regard to its context, the role it performs in the system, the way it inherits issues from other parts of the care system. The appreciation of and intense of provision is lost in the focus on expense.

NCERCC proposes a reconsideration of ethics and our economics using the Common Pool Resourcing ideas of Elinor Ostrom. Ostrom shows that materialistic strategies for cooperation tend to do very poorly in the long run while altruistic strategies do better.

The report contains important cautions to any precipitative changes in regulatory or policy approach or sudden tightening of credit conditions as these may lead to unforeseen and substantial market exit, significantly increasing the difficulties local authorities face in finding places for children in their care, particularly in children’s homes. This caution is tied to another that ‘…without addressing the drivers of this under-supply, price and profit caps risk reducing incentives to bring new capacity to an already underserved market. This would be a poor outcome for children’.

These comments need to be understood in the context of what NCERCC considers to be the crux of the entire report, ‘If this market were functioning well, we would not expect to see under-supply and elevated prices and profits persisting over time. Instead, we would expect existing and new providers to create more places to meet the demand from local authorities, which would then drive down prices and profits. The fact that this does not appear to be happening suggests that there must be factors that are acting to deter new provision’.

NCERCC is of the view that the CMA could benefit from looking again at what have been taken as comparative sectors

The CMA seek to better match needs and reduce costs. However, and NCERCC agrees, that these might be divergent aims and it is meeting of needs that creates effectiveness of use of provision and thereby efficient use of funds. A focus on costs could be counter-productive in terms of quality and supply

The CMA return to this caution in diverse ways several times throughout and it is necessary for policy and practice designers and directors to take heed. It is especially important as reduction of cost was a major focus for the Care Review in its referral to the CMA.

The CMA makes recommendations regarding regional commissioning. This already exists and a critique of it as it is now has been made known for many years as ineffective, inefficient, and dysfunctional.

There is a welcome turn towards regional planning including the use of a needs analysis ‘to accurately forecast their future needs, understanding both the overall number of children they are likely to need to place and the mix of different types of provision they are likely to need to meet the particular needs of all the individual children within that group’.

This would ensure the most appropriate placement is able to be made and provide the data needed for a complementary multi-professional workforce development strategy.

The CMA presentation of the inability of LAs overly represents LA views. This is observable throughout the report and the CMA may need to seek out balancing information and experiences.

NCERCC offers the view of ‘As local as possible as specialist as necessary’ in the planning for high level complex needs to be specific and not subsumed into generalist needs. Not every need can be met locally, and no LA can meet all of its needs itself.

There is a need for a major overhaul of the current perspective being taken regarding regulation. It may prove dangerous to pursue reforms to regulations without forensic research. It may be the solutions exist outside of regulation and in funding for services. Reducing regulation does not necessarily lead to increased specialism.

There are useful explanations of risk and economic (surplus) profitability.

NCERCC would suggest there is some rethinking necessary regarding rate of return, asset valuation, property valuation, profit margin analysis, the use of EBITM, the weakness of local authorities.

The omissions NCERCC has noted are significant: recruitment, a focus on supply outwith an equal focus on demand; there is no consideration of the interplay between LA and other sector provision; no analysis as yet as to how frameworks influence and create a spot market; the smaller markets of some large providers, not all do everything; some small markets and differential revenues (or how price is calculated).

Download the report below:

NCERCC CMA report analysis and response to CMA final v3

 

 

NCERCC