Future of foster care: consultation analysis – updated final report

4. Independent Fostering Agencies

The consultation paper sets out that Independent Fostering Agencies (IFAs) provide around 31% of foster placements in Scotland, with local authorities providing the rest. IFAs must register with the Care Inspectorate and there are currently 25 registered IFAs.

Evidence cited in the consultation paper suggests some placements could be provided more cheaply than by purchasing them from IFAs, and that children do not always have access to the most appropriate placement to meet their needs or in appropriate locations. However, anecdotal evidence suggests some carers feel better supported by IFAs compared to local authorities. The Scottish Government, therefore, sought respondent views on the future role of IFAs in foster care provision.

Q6. What is the role of Independent Fostering Agencies (IFAs) in the future of fostering?

Almost all respondents commented at Q6. Although not directly answering the question, the most prevalent theme was comments on IFAs being more attractive for foster carers compared to local authorities. The next most prevalent themes, which highlighted opposing views, were that IFAs should have a limited or no role, that they are well placed to provide specialist support, and the role of IFAs in out-of-authority placements.

IFAs are more attractive for foster carers to work for

Many respondents, two thirds of whom were individuals, expressed a view that IFAs were more attractive for foster carers to work for than local authorities. Most commonly, it was suggested that IFAs provided enhanced remuneration and support for foster carers in comparison to local authorities. Other views included that IFAs also provided more or better support for children, that some carers are allowed to work alongside their caring role, that IFAs paid for qualifications for foster carers and that IFAs are more successful at recruitment. As a result, it was suggested that the issue of IFAs being more attractive than local authorities for foster carers would need to be addressed in order to reduce their use.

“I considered several agencies before I became a foster carer; I know other potential foster carers that went with the council and had several social workers through the assessment period, and thereafter, little consistency for supervision. I fostered through an IFA, the training was regular, professional and practical. Supervision and record-keeping was crucial and the fostering agency paid for my SVQ3 qualification. The IFA were recruiting and training whilst local authorities were not, hence their success.” - Individual

IFAs should have no role or a limited role

Several respondents felt IFAs should have no role or a limited role in the future of fostering. Views included that IFAs should be phased out, less relied upon, or used for specific purposes only such as those noted below. Reasons for taking this view included the belief that only local authorities should have a role in fostering, to make it easier to achieve consistency across Scotland and to better meet the needs of each child.

“They should be phased out and all the factors that make being an IFA foster carer appealing should be applied to being a local authority carer.” – Individual

To ensure sufficient provision of foster carers

The role of IFAs in providing additional capacity in foster carers was highlighted by several respondents. IFAs were seen by these respondents as being able to ‘top up’ local authority provision. This was felt to be particularly relevant given the national shortage of foster carers and that while this situation remained, there was a continuing role for IFAs. For example, Glasgow City Health and Social Care Partnership described its ongoing commitment to using IFAs, through investing almost £40 million in IFAs over a four-year period to support a range of fostering placements.

IFAs could provide specialist support

IFAs could continue to have a role in providing specialist support, according to several respondents. Provision for those with additional or the most complex needs was most commonly mentioned by respondents, though other placements IFAs could continue to support included children on the edge of care, older children or large sibling groups.

IFAs’ role in out of area placements

Several respondents felt the use of out of area placements should be minimised and that IFAs role in such placements should be limited. Suggestions for restricting use included using such placements only for permanent arrangements or to cater for specific needs that cannot be met locally, such as for safety reasons. It was also noted that out of area fostering can cause issues in how the Scottish Recommended Allowance (SRA) for foster care is calculated. The SRA was introduced in August 2023 by the Scottish Government, with a review currently underway.

“While IFAs are not required to pay SRA, it should be noted that the SRA came into effect when many contracts were already tied into existing frameworks. The SRA was calculated on the number of children across Scotland, not only with LA, therefore it is the children who are potentially experiencing inequality by nature of where they are placed as the funds are not passed on for their benefit.” - Care Visions Fostering

To replace or supplement local authority provision

A few respondents felt it important to retain IFAs to enable choice, such as a wider range of placements or for foster carers to determine whom they wished to work with and to allow independence from local authorities. For instance, Scottish Adoption and Fostering recognised that some foster carers may have previous negative experiences with large organisations and would, therefore, not feel comfortable working for a local authority.

Another organisation felt IFAs could work more seamlessly across local authority boundaries, which could help reduce administrative burden and allow for efficient use of foster carers in meeting the needs of children. It felt both local authorities and IFAs would benefit from sharing training, cross-local authority protocols and transparency of funding to work better together.

Other themes

Concerns around the marketisation of care were raised by several, such as the use of IFAs resulting in a more limited role for local authority fostering or profiting from fostering. Some also felt there should be more monitoring and regulation of IFAs, while some others felt IFAs should be non-profit making or providing general views on IFA provision. Some of these issues are expanded upon further in the next question.

Q7. Should we require all IFAs to have charitable status?

The Promise makes it clear that ‘Scotland must avoid the monetisation of the care of children and prevent the marketisation of care’. Section 59(3) of the Public Services Reform (Scotland) Act 2010 setting out that IFAs must be voluntary bodies, required to operate on a not-for-profit basis.

Of those answering Q7 (66% of all respondents), over four fifths (84%) agreed that all IFAs should be required to have charitable status, with 16% opposed. A majority of both individuals and organisations were in favour, at 80% and 89% respectively.

Seven in ten respondents left an open comment at Q7. The most prevalent view was that fostering should not be profit-making. Other themes included that charitable status should be required to ensure decisions were made in children’s best interests, that any profits should be used to advance the IFAs' mission, and that being a charity meant improved regulation and scrutiny of IFAs.

Yes, because fostering services should not make a profit

By far the most prevalent theme, raised by many respondents and across various engagement events, was that IFAs should have charitable status as this would mean they would not be profit-making, which was viewed unfavourably. For instance, respondents felt that requiring IFAs to have charitable status was appropriate because organisations should not profit from children being in foster care and that it could prevent the privatisation of care or a drain on public resources. Some respondents highlighted that this would align with the recommendation of the Promise to avoid the monetisation of care.

“It is acknowledged that there is a requirement for IFAs to operate under the “not for profit” principle. However, it is unclear whether this is met. Moving to a charitable status could be seen as more palatable and perceived as giving back to society.” - Dumfries & Galloway Council

Yes, to meet the interests of children

Some felt that charitable status was needed to ensure that IFAs 'put people over profit’ and make decisions in the best interests of children rather than for financial reasons.

“There is a risk that companies aiming for profit do not fully work in support of family reunification as the loss of a child in a placement is a financial loss for their business.” - Who Cares? Scotland

Yes, to redivert surplus funding to advance its mission

Being a charity would mean any surplus revenue is used to advance the mission of an IFA, according to some. It was felt this could lead to more investment in the service so children would directly benefit, rather than funds going to shareholders or senior managers, for instance. One respondent expressed the view that some IFAs were “highly secretive” and could be based outside Scotland, meaning surplus revenue would not impact Scottish communities as much as if it were re-invested in charities based in Scotland.

Yes, to enhance scrutiny and regulation

Some respondents felt IFAs should have charitable status to ensure regulation by OSCR, the Scottish charity regulator. Reasons included that financial information would be audited, that organisational outcomes would need to be evidenced and that greater transparency would be required, for instance, due to the requirement to publish accounts. Greater transparency of what is covered in payments to IFAs was also sought by attendees at an engagement event.

“This would at least check their financial position and give service users the ability to check the finances of individual organisations.” - Grandparents Apart UK

No, for various reasons

Some respondents felt that charitable status should not be required for IFAs. Two felt this could reduce the number of fostering placements, while singular reasons included that IFAs should not be used, that a mix of both local authority and charity provision was preferred, or that IFAs should be free to invest their revenue where they chose.

Other views

Several respondents were unsure how to answer or requested more information to be able to answer this question, such as an awareness of the advantages or disadvantages of IFAs having charitable status, or more information about the demand for foster care and the potential role for independent providers. A few felt there should be parity between local authorities and IFAs, for instance, to ensure fees are fairly applied and to create more transparency. Three respondents felt the organisational type was not relevant, all of whom cited a 2022 Competition and Markets Authority market study into children’s social care that reported that provider type did not determine the quality of care.

Q8. Should we limit how much local authorities can pay to IFAs?

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 elements are not broken down. Placements can be purchased by local authorities via the Scotland Excel Foster Framework and also by the local authorities’ own contracts or occasionally on a spot purchased basis.

Of those answering Q8 (70% of all respondents), over three quarters (78%) supported limiting how much local authorities can pay to IFAs, while 22% were opposed. Over three quarters of individuals (77%) and organisations (79%) supported the proposal.

Over seven in ten respondents left an open comment at Q8. Views were wide-ranging and largely split between how payments to IFAs could be achieved and reasons why such payments should be limited. To structure this section for ease of reading, reasons for agreeing with a limit are given first, as these were most prevalent. These are followed by views against setting a limit, and then other issues that were raised.

Reasons for setting a limit

The most prevalent view was that fees should be capped or a limit set on what IFAs can charge, which was supported by several respondents. Suggested ways to achieve this included using a similar method to the interagency payments for adoption, i.e., a transparent set amount, ensuring the cap reflects accurate costs of providing a high-quality service, and placing a cap on management fees. Factors to take into account included how flexibility can be maintained for different types of placements and the need for clarity over amounts set for different allowances, fees, and payments.

“Any limit would require to be with a range, dependent on the needs of the child, their care plan and how this is being met by the IFA.” - North Ayrshire Health and Social Care Partnership

Several respondents expressed a desire for parity between local authority fostering services and IFAs, and felt a limit on payments to IFAs was a way to achieve this. Views included that fees should be standardised across local authorities and IFAs so that foster carers receive the same rate regardless of the provider they work for. This aligned with views expressed by attendees at one engagement event.

“They should all be required to be on a framework, and all be paid the same. The cost of IFA care arrangements is significantly impacting on local authority resource. It is more than double the cost to pay for an IFA care arrangement in comparison to a local authority foster carer and often enhanced fees are requested.” – West Lothian Council

Several respondents reiterated that limits on payments to IFAs could help ensure that meeting children’s needs remains their focus, such as enabling them to stay in their area and providing better support to their carers.

Some respondents felt that limiting fees paid to IFAs would help ensure that public finances are used effectively and efficiently. These respondents expressed a view that too much was being paid for some residential or IFA placements and that setting a limit could prevent too much from being paid for future placements.

Reasons for not setting a limit

Comments on not limiting payments to IFAs were made by some respondents. Reasons included that this could result in reduced quality, reduced support for IFAs foster carers, risk providers leaving the sector or result in payments which do not cover the costs of care.

Other issues

Some respondents suggested further research was required to limit payments to IFAs effectively. Suggested areas for review included:

• Consideration of various business models operating in the field, across small to large providers, and whether a limit would stifle investment.
• Identifying the amount required for various components of placement costs – allowance, fee and management elements.
• Determination of the mechanisms and timing of any uplift in fees.
• Exploration of differences in spending between local authorities and IFAs, for instance, resulting from increased specialist placements.
• Work to define the minimum fee and create a framework that accounts for the diversity of fostering experiences.

The need for a national approach or national guidance was mentioned by some. Suggestions included the need for framework agreements with maximum amounts to be paid agreed between local authorities and IFAs, a national allowance with levels of progression, the use of a central register of foster carers, and greater regulation to enhance transparency and guidance. One respondent suggested prohibiting IFAs from asking for retainer fees and one local authority requested flexibility:

“We would also ask for the ability to negotiate additional costs rather than being instructed to pay.” – Perth and Kinross Council

Q9. Should IFAs be required to pay their foster carers the Scottish Recommended Allowance (SRA)?

Unlike local authorities, IFAs are currently not required to pay foster carers the SRA for providing foster care. The consultation sought views on whether IFAs should be required to pay their foster carers the SRA. See Q6 for more information on the SRA.

Of those answering Q7 (71% of all respondents), 90% agreed that IFAs be required to pay their foster carers the Scottish Recommended Allowance. Although 10% opposed this proposal, all were individuals. All organisations who answered supported this proposal.

Two thirds of respondents left a comment at Q9. In line with the quantitative results, most comments supported the proposal. The most prevalent themes were that this would be more equitable and fairer for foster carers, general positive comments, that it could create consistency across Scotland and that it would create a level playing field between local authorities and IFAs.

Yes, IFAs should pay their foster carers the SRA

Several respondents felt that it would be more equitable if IFAs paid their foster carers the Scottish Recommended Allowance. Comments included that it would mean all carers being treated the same, that it would reduce disparity in payments between carers, that the rate was required to cover caring costs, and that it is the fairest approach.

“Foster carers should be subject to a national approach to allowances in addition to assessment, preparation and support expectations. This can promote an equitable approach to recruitment, retention and agency standards.” - Adoption UK Scotland

General support was given by some respondents, two thirds of which were organisations. It was recognised that IFAs paying their carers the SRA would ensure the costs of caring are paid to carers. However, it was also felt that the agreed SRA should be the minimum amount payable to carers, with the potential to pay more.

“These allowances are designed to help foster carers cover the costs associated with looking after a child, and ensuring the recommended allowance is paid helps create a more stable and supportive environment. The SRA also allows for a stronger and uniformed approached to this component of the annual fee review process that is applied to the national framework.” - Scotland Excel

Achieving consistency across Scotland was another reason for some to agree with the proposal. However, comments tended to be brief with little explanation given. Some respondents, including attendees at one engagement event, also felt this approach would create a level playing field between local authorities and IFAs, help address recruitment issues in local authorities, or improve transparency. Similarly, some respondents also felt the proposal could help address the challenge of carers moving to IFAs that provided greater payments.

No, IFAs should be able to decide the level of allowance

Two themes highlighting disagreement with the proposal were each raised by a few respondents who were mostly individuals. A few explained why foster carers benefitted when IFAs could determine their allowance rate, such as an ability to receive bonuses or enhanced payments, or that it helped IFAs to recruit and retain carers. Two suggested children benefited from IFAs being able to set their own allowance rate, with one suggesting this allowed IFAs to provide a better quality service to children.

Q10. What more could be done nationally to support local authorities when paying for placements from IFAs (including forecasting, market shaping and procurement)?

Just under two thirds of all respondents commented at Q10. The most prevalent themes were comments on procurement, to reduce reliance on IFAs, the use of a centralised approach and for greater transparency.

Strengthen procurement arrangements

Several respondents suggested procurement improvements when paying for placements. These included using a centrally managed national procurement framework, specifying limits on how much IFAs can charge, making payments by bed space, not allowing exceptional uplift requests, mandating the use of Scottish Excel for procurement, reviewing Excel’s Individual Placement Agreements, and using penalties when contracts are not met.

“As of 2024, the national contract provided by Scotland Excel covers 68% of the IFAs in Scotland. A move away from multiple arrangements to a single universally used national framework would support consistency for IFAs, purchasers and foster carers. A single national contract would also support the consistent implementation of improvements identified through this consultation and beyond. It would permit national reporting covering all purchased provision in Scotland, facilitating greater understanding of the sector and potential market shaping. A more detailed knowledge of IFA financial structures would allow a more transparent approach to costings.” - Scotland Excel

A few respondents called for improved interactions between IFAs and local authorities and a few suggested improving processes or access to data.

“Both providers and purchasers would benefit from the publication of aggregated data through a single source, and this could be segmented along demographic and regional lines. This would aid budgeting activities undertaken by local authorities, as well as contract development by Scotland Excel and business planning by providers.” - Scotland Excel

Reduce the reliance on IFAs

Some respondents, two thirds of whom were individuals, felt that reducing reliance on IFAs was a way to support local authorities. Strengthening local authority provision was viewed as a key way to achieve this. Suggestions included focusing on recruitment of foster carers, ringfencing payments to carers, providing ‘top up’ payments to local authorities to cover the difference between IFAs and local authority fees, or Excel advocating more strongly for local authorities.

“The first step is to make local authorities less reliant on IFAs in the first place, by improving local authority recruitment and retention strategies.” - CAN

Use a centralised approach

Using a centralised approach, particularly a central register of available IFA placements or reducing the use of local arrangements, was recommended by some. These views included that there could be a Scotland-wide forum to consider consistency issues or to have a national register of foster carers. Two respondents used similar wording to note concern about having 32 different purchasers (i.e. local authorities) and felt regional purchasing consortia were not the way forward either, having heard of problems in England where this model had been implemented.

Greater transparency or scrutiny is needed

Greater transparency or regulatory scrutiny was recommended by some. The need for financial transparency of IFA income and expenditure to ensure children’s needs were being met was highlighted in particular. Price caps, improved regulation and ensuring consistency were suggested ways to achieve this.

“There is little to no difference in the level of care or support available to children in IFAs yet it is costing significantly more, so this needs to be publicly available to see. Transparency is key.” – Individual

Other themes

Some respondents felt meeting children’s needs should be a priority when placements are funded, with a few raising concerns around the use of IFAs, such as the high cost of placements or that placements were not in the best interests of children, for instance, due to a perception IFAs prioritised organisational growth. Greater effort to retain local authority foster carers was considered a way to reduce reliance on IFAs according to some respondents.