Children's residential care - financial transparency and profit limitation: consultation

Part 1 - Financial transparency

The Children and Young People (Care and Services Planning) (Scotland) Bill proposes introducing measures to enhance financial transparency by requiring both private and not for profit residential childcare services to provide financial and other relevant information about the operation of their services to the Scottish Government.

This is crucial for the public sector in terms of ensuring agency for local authorities in managing their budgets and making decisions about residential care placements. While a very small number of stakeholders already collect snapshot data on the financial situation of a service, either at the point of seeking registration approval or in order to operate through Scotland Excel’s framework, there is no nationally consistent, detailed, method of understanding the fees charged for placements nor the final costs paid by local authorities.

Therefore, the Scottish Government’s policy intention is to collect information from all private and not-for-profit children’s residential care services operating in Scotland to understand the range of different types of care support offered, and to understand what “need” and “complex need” of children and young people looks like in more detail, in order for the sector to build clarity around how that translates into fees charged and subsequently determine whether or not excessive profit is being made.

The Scottish Government is proposing a form to be completed annually at the same time as financial year end returns at service, provider and parent/associated company level for all not-for-profit and private services. This – as far as practicable – should follow and then build upon information already collected by the Care Inspectorate and Scotland Excell. We wish to minimise business impact as far as is practicable.

Questions on financial transparency

Q4: Do you agree with the proposal to increase financial transparency?

Yes/No

Could you give you reasons for this response?

Q5: What implications will financial transparency have on the different types and sizes of residential children’s homes?

Q6: How could we minimise any negative impacts you have outlined above?

Q7: In order to cause the least impact to businesses, what format do you believe the financial transparency request should take? i.e. audited annual accounts or a more detailed version of the information captured in forms such as those provided to Scotland Excel or the Care Inspectorate.

Q8: What explanatory information would you want to provide alongside the financial information collected to demonstrate the ways in which the finances are structured? (i.e. additional funds being saved to open a new home)

Q9: Do you agree that the information should be provided at individual service level, provider level and at parent/associated company level^[2]?

Yes/No

Can you please explain your answer?

Q10: Is there any additional information that the Scottish Government should be collecting that is not included in the proposal above?

Q11: Would it be useful to use the financial information collected to watch for potential market failure? Yes/No

Can you give reasons for this?