Shaping futures together: Key insights to improve children's care placements

Ross Murray explores the challenges faced by local authorities in shaping the market for children's care placements. He delves into promising practices and builds on the findings from our Department for Education research.

The placements market for children’s social care is complex. Local authorities (LAs) are responsible for ensuring there is sufficient and suitable accommodation for looked-after children. This is within a market facing significant challenges like a shortage of appropriate placements, rising costs, and a greater reliance on private providers. In these circumstances, how can LAs effectively meet the needs of looked after children and work to improve outcomes?

Our recent research, commissioned by the Department for Education (DfE), sheds light on this crucial area and focuses on forecasting, commissioning, and market shaping in the fostering and residential placement market. The findings from the research offer valuable insights for LAs striving to diversify the placement market and empower commissioners.

Understanding the landscape: Challenges in market engagement

Market shaping can be defined as LAs working strategically with providers to communicate expectations, build relationships, and create a stable, effective care placement market. It includes activities that inform providers of local needs and incentivise them to ensure adequate and appropriate provision of placements. Market shaping is an essential activity to drive innovation, improve efficiency, and create sustainable outcomes, however, many LAs struggle to effectively engage with their market.

Multiple factors contribute to this:

1.      Data gaps undermine decision making

Through our research, we found that although commissioners have anecdotal awareness of where the gaps are – whether it’s a shortage of therapeutic foster carers or specialist residential placements – they lack the data to demonstrate the true extent and cost of these gaps to decision-makers. Overall, we found that LAs often lack the necessary data to accurately understand and forecast both current and future supply and demand trends. This makes it difficult to clearly communicate their needs to the market.

A lack of useful data leads to misaligned commissioning, overspending on emergency planning, and missed opportunities for early intervention. Without accurate demand forecasts, LAs risk making reactive rather than strategic decisions.

2.      Outdated sufficiency statements

LAs are legally required to publish sufficiency statements under the Children Act 1989, which outlines their capacity to meet the needs of looked-after children. However, many of these documents are outdated, focused on meeting budgets instead of local needs and fail to provide clear guidance on the types of placements required by an area—such as sibling placements or disability-supported homes.

When sufficiency statements lack detail and are not regularly updated, providers are left without the clarity they need to plan services effectively. This leads to a mismatch between supply and demand, often resulting in children being placed far from home or in unsuitable settings.

3.      Siloed working and competition between LAs

Rather than collaborating regionally, many LAs operate in isolation, which creates competition for the same limited placements. This approach drives up costs through bidding wars and prevents the development of more efficient solutions, such as regional block contracts for specialist provision.

Inconsistent engagement with providers further exacerbates the problem, eroding trust and discouraging long-term investment in the market. The consequence is a fragmented system where children are placed far from their communities due to local shortages.

4.      Lack of meaningful provider engagement

Many LAs still treat providers as transactional vendors rather than strategic partners. Market engagement is not always prioritised or consistently resourced by authorities, leading to sporadic and impersonal interactions with providers. Engagement is often infrequent and impersonal, with little opportunity for co-design or long-term planning. Without clear commissioning priorities, providers can become hesitant to invest in new services which can cause the market to stagnate.

This issue is compounded by the fact that many providers reported receiving data from LAs that is unreliable and doesn’t always include all the information they need to align their services with real demand.

Promising practices: Towards more effective engagement

Despite these challenges, our research identified several LAs that follow effective approaches to market engagement. These approaches offer valuable lessons and point to key principles that strengthen how LAs work with providers.

Creating data-driven market strategies and sharing them with providers

Where LAs are investing in robust data systems to track demand, supply, and costs, this has enabled them to understand their local market, including improved information on providers, their placement options, the needs they cater to, and financial structures. The ways authorities are doing this was discussed in one of our previous webinars, which you can watch here.

By investing in and maintaining these processes, LAs are able to develop a deep understanding of the market. With this information, they can establish a clear strategic plan that considers current and future needs and then be able to share this information with providers, enabling the market to respond. It is recommended LAs should develop a dynamic sufficiency statement that can evolve with changing needs. One LA, for example, used predictive analytics to identify a future surge in demand for placements for unaccompanied asylum-seeking children, allowing providers to prepare appropriate services well in advance.

LAs that produce and share market position statements alongside sufficiency statements with providers present a clearer sense of their strategic direction, helping to prime the market and align provider strategies with local needs. To work effectively these should outline current and projected demand, gaps in provision, and commissioning priorities. This transparency helps providers align their own growth plans with LA needs.

Developing relational partnerships with providers

Successful market engagement requires consistent, two-way communication. Our research showed LAs were most effective when they moved beyond traditional commissioning models to build genuine partnerships with providers through establishing regular, structured engagement via provider forums and one-to-one meetings. The most effective LAs had established clear channels for sharing information with providers – about both their immediate needs and longer-term strategic direction. This might include regular market updates and provider bulletins. For example, a regional partnership developed a shared data dashboard, giving providers real-time insights into placement availability and needs.

Equally as important is creating mechanisms for providers to share their perspectives to ensure commissioning strategies are informed by frontline expertise. Gathering and responding to provider feedback enables trust to develop and encourages providers to invest in developing the right types of placements.

From principles to practice

Transforming market engagement requires commitment. By focusing on the principles outlined above, LAs can move towards a more strategic and collaborative approach to market engagement. First, LAs must invest in data infrastructure and analytical capability to ensure that decisions are grounded in robust evidence rather than assumptions. Second, there needs to be a cultural shift towards relational commissioning, with providers treated as essential partners in meeting the needs of children.

By adopting these approaches, LAs can build a children's placement market that is more responsive, more sustainable, and better equipped to provide vulnerable children with the stable, nurturing placements they need to thrive.

What do you think? How is your local authority approaching these challenges? We’d love to hear from you. If you’d like to discuss the findings from our research in more detail, please get in touch with ross.murray@mutualventures.co.uk

The full research report is available to download here if you would like to read more.