Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss clause 12 stand part.

Clauses 11 and 12 will strengthen Ofsted’s regulatory powers to allow it to act at pace and scale when that is in the best interests of children. Specifically, clause 11 strengthens Ofsted’s powers to hold provider groups—parent undertakings, in legislation—to account for the quality of the settings that they own and control. This ensures that Ofsted can take the quickest and most effective action to safeguard vulnerable children, without adding duplication within the existing regime. It will allow Ofsted to look across provider group settings as a whole and take action at provider group level, rather than being limited to doing so setting by setting as it is now. It will also ensure that a provider group is accountable for the quality of the settings that it owns.

Where Ofsted reasonably suspects that requirements are not being met in two or more settings owned by the same provider group, it will be able to require senior people in the provider group to ensure improvements in multiple settings. The requirement applies both to settings operated by a single provider and to multiple providers owned by the same group. Ofsted will be able to request that the provider group develops and implements an implementation and improvement plan to ensure that quality improves. The plan will need to address the issues identified by Ofsted and be approved by Ofsted if it is satisfied that the plan will be effective in addressing the issues.

The clause gives the Secretary of State the power to make regulations to provide that non-compliance by the provider group means that the providers that it owns are not fit and proper persons to carry on a setting. That will prevent a person from being registered in relation to new settings if their owner has failed to comply with the relevant requirements under these provisions. That should act as a deterrent and ensure compliance with the requirements.

Clause 12 gives Ofsted the power to issue monetary penalties to providers that have committed breaches of requirements, set out in or under the Care Standards Act 2000, that could also be prosecuted as criminal offences, including operating a children’s home without registering with Ofsted. Ofsted will also be able to issue a provider group with a fine for non-compliance with the requirements set out in clause 11. The fine will be at Ofsted’s discretion and is unlimited in legislation. That will act as a significant deterrent, so that provider groups comply with these requirements. Clause 12 ensures that Ofsted has an alternative to prosecution where that is currently the only enforcement option against those seeking to run a children’s home without registration. Ofsted will not be able to impose a monetary penalty on a person for the same conduct where criminal proceedings have been brought against them in relation to that conduct.

To act as a deterrent and to ensure transparency for the public, the clause gives the Secretary of State the power, by regulations, to require Ofsted to publish details about the monetary penalties that it has issued. Ofsted must also notify local authorities when a monetary penalty has been issued, as it is currently required to in relation to other enforcement actions that it takes. Finally, the clause provides that the issue of a monetary penalty could be used as grounds for cancellation of registration.

We are entering a whole new section of the Bill. I will make a number of points now that we could come back to when we debate future clauses, but I hope we will not have to. I hope that we can have discussions about the principle and philosophy now and we might be able to move faster later, but we can come back to them if necessary.

As we turn to the clauses dealing with children’s homes, I want to start by checking that the Minister has the same basic understanding of the situation, and the same philosophical take on what we are trying to do, as I do. First and most importantly, there is a question about the underlying structural problems that have driven high costs for local authorities in the provision of residential care for children and young people, and there is a second question about the best approach to tackling that, both legislatively and non-legislatively.

On the first, does the Minister agree with me, at least in principle, that the main issue driving the high costs is a shortage of foster care, which is driving local authorities to send children into expensive children’s homes at best, or into unregistered provision at worst? Research by Ofsted in 2022 suggested that residential care was part of the care plan for just over half of the children whose cases it reviewed. To put that the other way round, almost half of children who ended up in residential care should ideally not have been there. Crucially, the research shows that the original plan was for over one third of children to go into foster care.

Although the Bill makes changes to the provision of information about kinship care, which is good, there is nothing that will produce the step change that we need to increase the number of foster carers, which is the thing that would really take down the demand and the high costs. That point is common to the discussions that we will have about cost-capping social workers, cost-capping individual care homes and reviewing whole entities. I do not think that those measures are bad; I just do not think that they are ultimately the underlying solution. That is a point that the Committee will hear me make several times today.

In his independent report commissioned by the previous Government, Josh MacAlister highlighted that in the year ending March 2021,

“160,635 families came forward to express an interest in becoming a foster carer, and yet just 2,165 were approved”.

That is just 1.3% making it through. It might be that some of those were just initial approaches and not all of those people were deadly serious, but that is still a very small share. He continued:

“Local authorities perform a wide range of roles and appear to be struggling to provide specialist and skilled marketing, recruitment, training and support for such an important group of carers. In 2020/21 recruitment and retention among independent fostering agency services led to a net increase in capacity of 525 additional households and 765 additional foster care places. In contrast, there has been a decrease in capacity of 35 households and 325 places in local authorities over the same period”.

By definition it is quicker, and in quite a lot of cases better, to provide foster care than to build a new children’s home. I want to press the Minister on what he thinks is the explanation for that 99% gap between those expressing an interest in fostering and final approvals. What is he doing to close that gap? He will be aware that there is a perception that it is almost impossible to become approved as a foster carer. We looked at this in my family some years ago. We started in on it through my work as a constituency MP; I have met many constituents who are foster carers. They are incredible people and I pay tribute to them. A woman I know well has fostered 70 children as well as adopting. I honestly think these people are amazing.

The Government really need to use the Bill—this rare legislative slot, as one of the Ministers said—to increase the number of foster and kinship carers. Publishing information is good, but it will not change much unless it is accompanied by a radical attitude to approvals by local authority social work teams. When the alternative—which we are getting to in this clause—is children being sent miles from home, placements breaking down, children going missing and high costs to local authorities, there is obviously a burning platform for change.

If I were the Minister—he is free to take this suggestion or not—I would commission a month-long desktop review to look at the pipeline and all the decisions to reject applications to be foster carers that got fairly far down the track, and understand what can be learned from them. That could shape amendments either here or in the other place and be a huge benefit to him. I can think of a senior official in a Government Department—someone the Government trust to run a major public service—who has two kids, provides a loving home and wanted to foster but was turned down. There are many such cases. Everyone knows the phrase “too many books in the house”, but I strongly encourage Ministers to dig into the underlying question of why we lose so many opportunities to get the foster carers that would take off the pressure that we are trying to take off with these clauses.

A key recommendation of the independent review of children’s social care led by the hon. Member for Whitehaven and Workington was to introduce mixed models combining residential and foster care, particularly for older children, who are the fastest growing part of this cohort. That was part of our brief for the initial pathfinder sites for the regional care co-operatives, which I mentioned in the debate on a previous clause. What assessment has the Minister made of that approach? What impact does he think its adoption might have? Is there any interesting early data from the pilots in Greater Manchester and the south-east?

Speaking of mixed models, I encourage the Minister to look at the incredible work of the Royal National Children’s SpringBoard Foundation, which, as he knows, does amazing work looking after care-experienced and edge-of-care children in a network of state and independent schools. It has been working with the DFE since 2020—something I am very proud that we brought in—and has provided incredible, transformative opportunities for disadvantaged young people. I encourage the Minister to build on that and go further.

On the specifics of clause 11, after the terrible abuse of children supposedly in the care of the Hesley Group, it is absolutely right that the Government are trying to identify systemic safeguarding problems in organisations that manage multiple children’s homes, independent fostering agencies and residential special schools. Our only concern, which is quite serious, is that we should allow for rapid action, not something that drags on and becomes a time and resource-consuming process.

I heard what the Minister said in introducing the clause about providing an alternative to prosecution, but I do not want to lose sight of the importance of prosecution. My noble Friend Baroness Barran told me that when she was a Minister in the Department for Education, she was already able to request inspections of every home in a group where one was judged to be failing, and did so on at least one occasion. Ultimately, we need experienced people to go into a home quickly and see what is actually happening. I think this is within the spirit of what the Minister said, but I hope he would agree that there is often no better alternative to actual inspection and actual prosecutions.

To use an example from a very similar area, the Department can also request an “improvement plan”, which is the main vehicle proposed in these clauses, in the case of independent schools, but that does not always work well in practice. The reasons for that are instructive for the kinds of issues that I hope Ministers will think about here. What ends up happening is that plans are sent in varying degrees of adequacy, and time—in some cases literally years—can be wasted with a lot of letter writing back and forth. I urge the Minister to think about the action he wants in those kinds of cases. Imagine being in the middle of a drawn-out improvement plan process in another case like the Hesley Group case—and that is before the inevitable appeals, which the clauses provide for, kick in.

We have not tabled an amendment to do this—I wonder, though, about the other place—but we think that the Minister needs to confine the improvement plan idea to more minor administrative cases or lower-level concerns. That is where it might be more appropriate. We worry that we might get similar processes to those that we have seen in independent schools, where we have a resource-intensive, rather bureaucratic and slow process that goes on for a long time with a lot of back and forth and appeals. Ultimately, we sometimes just need to get to the point. That is our broad concern.

Will the Minister address the following specific points on clause 11? First, what is the definition of “reasonably suspects” in proposed new section 23A(2)(b) and (3)(b)? The policy summary mentions Ofsted reasonably suspecting,

“based on intelligence they receive or via inspection, that required standards are not being met in two or more settings owned by the same provider group”.

What sort of intelligence would meet the bar for intervention? On the point about “two or more settings”, I do not necessarily think that we would want to rule out the use of an improvement plan in minor cases, even involving just one setting.

Secondly, there does not seem to be a hierarchy when it comes to failure to meet the required standards. The clause lists lots of different things, and they could be minor or quite major transgressions of the standards. In the case of a major transgression, an improvement plan feels quite bureaucratic. On the point of prosecution versus an improvement plan, could we be clearer about what sort of problem leads to what sort of action?

Thirdly, proposed new section 23A(4) does not appear to set a timescale by which Ofsted must submit an improvement plan notice. As the Minister will gather from my remarks, our concern here is about pace and timeliness. We are concerned about cases where there are potentially quite serious concerns, yet there is a delay in sending the notice. In fact, I am more concerned that Ofsted should do an emergency inspection when serious concerns are expressed, and I worry about the improvement plan process resulting, totally inadvertently, in fewer of those inspections taking place because the cases go into the process set out in the clause instead.

Fourthly, will the Minister consider the role of regulation 44 visitors? They are another important set of independent eyes on the children in these homes. He will be aware of suggestions in the past that they are not always as independent as they should be in the cases of certain private groups. Is that not an important thing to consider here? We must ensure that the existing system works before we add new layers of process on top of it. There is no reference to those visitors in the policy summary, and they play a vital role in safeguarding the children in these homes.

Fifthly, I do not know what consideration was given to requiring the registration of parent groups. The policy summary rejects the routine inspection of provider groups, but we need some level of accountability that has real teeth in urgent situations. Why does the DFE think that full inspection of provider groups is unnecessary? The reason given is that most provision is rated good or outstanding, but about a fifth of providers are not rated as either.

We worry that clause 11 might not achieve what the Government want. It risks making us feel safer and giving us a process, but becoming a bureaucratic sink. We do not want workers to get sucked into a bureaucratic process rather than acting quickly to keep vulnerable children safer.

I look forward to the Minister’s reply. I know that we want the same outcomes on this issue. I understand why an alternative to prosecution is being proposed, but we need to be careful that, although we think we are doing a good thing, we do not inadvertently replicate some of the issues we have seen where that kind of process has been used in other fields, such as independent schools, and that we do not take away pace.

Clause 12 is obviously linked to clause 11, as we are debating them together. We heard from the Children’s Commissioner in her powerful evidence last week that there is a pressing need to address the plight of children in unregistered placements, which her report estimates is costing local authorities almost £440 million a year. The numbers were really quite incredible. Assuming that the number of children placed in those homes on 1 September 2024 was typical for a full year—she quoted 775 children and young people—that equates to more than half a million pounds per child, per year, in these settings.

Clause 12 provides for Ofsted to issue unlimited fines where it is

“satisfied beyond reasonable doubt that an act or omission of the person constitutes an offence under this Part” of the Care Standards Act 2000. The policy notes state:

“At present, Ofsted can prosecute those who do not register but operate or manage those services. However, this is a resource-intensive process and can take a long time. This legislation will give Ofsted further enforcement powers to tackle unregistered settings, as an alternative to prosecution.”

In one sense, that is totally understandable, but let us just step through what we are doing here. The Bill effectively suspends the criminal justice system for operators who break this part of the law, and replaces it with a system of fines from the regulator. I totally understand why—I understand the Minister’s arguments—but that is quite a big step to take when it relates to the protection of highly vulnerable children.

The question for the Minister is, how do we avoid the loss of everything else that comes with a successful prosecution, and how do we ensure that local authorities learn the lessons and are accountable? If local authorities are repeatedly using illegal, unregistered children’s homes, there is obviously a wider issue. How do we create a process that leads to change in the purchaser—the local authority—too? Indeed, that point has been made not just by me, but by the Children’s Commissioner. On page 8 of the report she submitted in written evidence, under the heading “Missing from the Bill”, she says:

“However, it is also crucial that local authorities and, where they exist, regional care co-operatives are accountable for the use of illegal homes in their area.”

Will the Minister amend the clause to bring about that element of symmetry? Obviously, we want to make it easier to hold those running unregistered homes to account, but we also want to bring about change in the authorities that are commissioning and using them.

I also wonder how much the Department thinks might be raised from these fines. Does it have any expectation about that? The clause covers monetary penalties for registered providers who do not comply with an improvement plan notice. The Minister will have gathered, given that we are a bit sceptical about the improvement plan approach for more serious cases, that we worry that those fines will not change enough either. In proposed new section 30ZC(1) of the 2000 Act, the Bill talks about penalties where

“the CIECSS is satisfied on the balance of probabilities that the person has failed to comply with…an improvement plan notice”.

Both parts of that equation seem like things that are likely to end up in litigation.

I have a couple of specific questions about clause 12. What level of fines does the Minister expect Ofsted to use these powers to levy? The Bill leaves them potentially unlimited, so I want to get some sense of what he thinks they will look like in practice. On a small note about incentives, a wise man said, “If you show me the incentives, I’ll show you the behaviour.” At present, the DFE says that the fines moneys will go into the consolidated fund and help pay for public services generally, but incentives are quite important. I wonder whether Ministers might find they get a more powerful crackdown on these activities if they change the incentives by ringfencing fines for supporting looked-after children.

Last but not least, I have a question about proposed new section 30ZC(3). Is it the intention that fines may never be imposed where the person has any previous conviction for running an unregistered home, or does the subsection apply only on a case-by-case basis, so they cannot be fined for the same individual instance? The Minister used the expression “same conduct”, and I was not clear whether that means, “I can’t give you a regulatory fine if, in this individual instance, you’re being prosecuted,” or if it means, “If you or your group have ever been prosecuted before, then you cannot get a regulatory fine.” Could the Minister clear up that ambiguous phrase?

I will end where I started. I am totally sympathetic to Ministers’ intent here, but we worry that if we are not careful, there will be a lot of process and bureaucracy, which must not be allowed to get in the way of prosecuting those who are doing the wrong things, and must not be allowed to get in the way of keeping children safe.

I thank the shadow Minister for his contributions and questions. He made a number of practical points and asked a number of specific questions.

Order.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.