Future of foster care consultation

In discharging their duties, local authorities provide care and accommodation themselves, and they purchase the remainder from independent providers (known as IFAs) by virtue of arrangements made with registered fostering services under Part Xiii Of The Looked After Children (Scotland) Regulations 2009. The Promise made it clear that “Scotland must avoid the monetisation of the care of children and prevent the marketisation of care".

In Scotland, the majority of fostering placements are provided by local authority foster carers, with IFAs providing around 31% of foster placements. Currently there are 25 registered IFAs. They are required to register with the Care Inspectorate as providers of a fostering (care) service under Part 5, chapter 3 of The Public Services Reform (Scotland) Act 2010, (“the 2010 Act”). In particular, section 59(3) of the 2010 Act requires that a person who provides a fostering service must be a voluntary organisation. As defined in section 105(1) of the 2010 Act, a voluntary organisation means a body, other than a public or local authority, the activities of which are not carried on for profit. This means IFAs, as providers of fostering services, are required to operate for the purposes of their Care Inspectorate registration under the principle of ‘not for profit’.

Moreover, many IFAs are also registered charities under The Office of The Scottish Charity Regulator (Oscr). This requires them to meet the charity test which, among other things, means that they are carried out only for charitable purposes, providing public benefit and using their funds and property only for those purposes.

Whether or not an organisation is established on a not for “private” profit basis will depend on how it is constituted or set up. For example, a charity or voluntary organisation can make a profit, but those profits then go back into the organisation to advance its mission or aims, rather than going to shareholders or business owners.

IFAs are not required to pay their foster carer the Scottish Recommended Allowance (SRA) and, like local authorities, there is no obligation to publish their fostering allowance rates. All children placed with IFAs are placed by local authorities who pay the IFA the rate agreed with the IFA. This may be in the form of a fee, allowance and management fee, or a single payment where the elements are not broken down. The broader issue of transparency around allowances and fees is covered under ‘Financial Support’ in section 7.

Local authorities recruit and review foster carers and have a legal responsibility to place children in an alternative care setting if they are unable to stay at home. Local authorities are able to make arrangements with IFAs who are registered fostering services if they are unable to find a suitable local authority carer. Local authorities have to pay for this service. Placements can be purchased via the Scotland Excel Foster Framework and also by the local authorities' own contracts or occasionally on a spot purchased basis.

In line with The Promise, we want children who cannot stay at home to be able to stay in their local community, to maintain their friends and relationships and remain at the same school. Multiple moves, and moving out of local neighbourhoods, can be destabilising and further traumatise a child. However, often where an external IFA placement requires to be used, children are placed outside their local authority area, or another part of the country. This type of transition can be deeply impactful on children and young people, and especially when it is for short stays and not permanent.

There is indicative evidence that local authorities could provide some placements more cheaply than by purchasing them from IFAs. The Competition and Markets Authority Children’s social care market study  found that children are not always gaining access to placements that appropriately meet their needs, or in appropriate locations, and local authorities are sometimes paying too much for placements.  In addition, IFA placements in Scotland were higher than in England and Wales. On the other hand, we have been told anecdotally that some carers feel better supported in IFAs.

Any move away from the reliance on IFAs, if desired, will take time. It is likely that local authorities will continue to rely on commissioning places from independent providers, and that new placements to increase capacity will be needed, to reflect changing needs, and to replace lost capacity (e.g. through foster carers retiring).

In Scotland, the Care Inspectorate (CI) has no formal market oversight role or function in respect of care services (including fostering services), but it asks services to declare that they are ‘not for profit’ at the time of registration.