Diversification of children’s social care market - Preliminary Market Engagement (PME) Notice

Please note: This PME does not signify the commencement of any procurement process and does not constitute any commitment by the Department for Education (DfE). If DfE decides to commence any procurement process subject to the Procurement Act 2023 as contemplated by this notice, a separate notice(s) will be published at the relevant time. This Notice has also been advertised on Find a Grant.

The DfE is keen to maximise opportunities to participate in procurement for Small to Medium-sized Enterprises (SMEs) and Voluntary, Community and Social Enterprises (VCSEs). Consideration will also be given to consortia and collaborative bids from all forms of organisations subject to confirmation of a competitive tender process.

The Purpose

A Preliminary Market Engagement event is being undertaken to refine DfE's requirements and better understand the capacity and capability of potential partners to deliver a Social Investment Vehicle (SIV) to facilitate the entry of new providers into the children's social care placements market. We refer to any future potential partner as a "Social Investment Facilitator" (SIF). The SIV would blend public and social finance to enable capital investment in new or re-entering regulated providers, with a focus on Ofsted-registered children's homes.

During the event we will talk through the requirements in more detail and our journey thus far in developing our SIF option.

Background

Children's homes provide care for some of the most vulnerable children in our society. However, we know that the current children's social care placements market, of which children's homes are a key part, has been described as 'dysfunctional'. There is a significant regional imbalance in the availability of children's homes, resulting in many children being placed outside their local area. This not only negatively impacts the children but also leads to high costs for Local Authorities (LAs).

The DfE is exploring options as to how it can make best use of public funding to:

(a) improve children's outcomes and meet the needs of LAs and looked after children by increasing capacity where it is most needed;

(b) provide LAs greater choice over where to place the children in their care; and

(c) boost market sustainability.

A route DfE is considering is a proposed new model of investment which would enable us to work alongside social investors. This would enable us to diversify the market by investing in new local authority, charity or other third sector provision where it is most needed, allowing government investment to leverage a greater overall budget.

Funding model options and eligibility

Organisations interested in acting as SIF should note that the DfE is still exploring options for the contractual funding model (whether under a grant or public contract), should the DfE decide to proceed with the project. It is therefore not yet clear whether this pre-market engagement will require further notices on the central digital platform or not but PME is voluntarily being conducted in accordance with the Procurement Act 2023 in the event that it should later be deemed to apply.

Within the last year, DfE has undertaken a range of desk-based research into potential funding models which would help us achieve our goals, as well as engaging with the DfE's Market Interventions Advisory Group. As a result of a range of informal conversations with several operators in the social investment sector, the Department is considering a model involving the creation of a Children's Social Care Social Investment Vehicle (CSC SIV) and would like to share the considerations to date with a wider market.

Under this model, DfE would engage a SIF to administer the CSC SIV which would then contribute funding on their own account and secure additional funding from social investors. It is intended that by working with social investors, we will be able to increase the funding available by a multiplier of 2-4.

Eligible organisations, which may include charities and local authorities, could then bid for funding from the CSC SIV. We intend for this model to operate on a regional basis, targeting areas where there are placement shortages. The SIF would be responsible for management of the CSC SIV and the disbursement of funding to eligible organisations.