Commissioning, Contracts and Local Authority Relationships for Children's Homes

What this resource covers

This resource focuses on the relationship between the provider of a children's home and the local authority or other body that places a child there. It covers placement enquiries, information gathering, fee and contract discussions, ongoing communication, reviews, and managing disagreement. It does not duplicate the care planning and matching guidance in the Regulation 14 resource, which covers the clinical and care-planning side of referrals in more depth.

If you are looking for guidance on how to assess whether a child is a good match for your home, see the Regulation 14 care planning resource. If you are looking for guidance on the notification duties that apply when a child is admitted or discharged, see the Regulation 41 resource.

The provider and commissioner relationship

A children's home provider and a placing authority have different but overlapping interests. The placing authority is responsible for the child's care plan, the legal order under which the child is accommodated, and the oversight of the placement. The provider is responsible for the day-to-day care, the Statement of Purpose, the staffing, and the environment. The placing authority's duty is to arrange and supervise the placement under the Children Act 1989. The registered person's duty is to provide care that meets the child's needs and complies with the Children's Homes Regulations 2015. A placement is suitable only when both sides discharge their own statutory responsibilities.

The relationship works best when both sides are transparent about what they can and cannot provide, what they expect from each other, and how they will communicate. A provider that overstates what the home can offer to secure a placement, or a commissioner that withholds information to secure a bed, creates risk for the child and for the placement.

Responding to placement enquiries

Placement enquiries can come from local authority placement teams, independent fostering agencies, or other providers. They may range from a planned enquiry weeks in advance to an emergency referral on a Friday evening. Having a clear process for responding helps you make consistent, suitability-based decisions rather than reactive ones.

A structured enquiry process should include: confirming the child's legal status and care plan, understanding the child's needs and risks, checking against your Statement of Purpose, considering the impact on children already living in the home, and making a documented decision. The decision should be recorded even if the answer is no.

Information gathering before accepting a placement

Before accepting a placement, the provider needs specific information to assess suitability. The Regulation 14 care planning resource covers the care-planning side of this in detail. From a commissioning perspective, the key information includes the child's legal status, the authority placing the child, the care plan and any risk assessment, the child's education arrangements, any health needs, known triggers and behaviours, and the expected duration of the placement.

If the placing authority cannot provide this information, or provides incomplete information, that is itself relevant to the suitability decision. A provider may need to ask for more detail, or may decide that the placement cannot be safely assessed on the information available.

Child-centred question

If you were the child being placed, would you want the home to know your history, your triggers, and what helps you feel safe before you arrived?

Matching and suitability

Matching is the process of assessing whether a particular child is a good fit for a particular home. This includes the child's needs, the needs of children already living there, the home's model of care, staffing levels, and the physical environment. The Regulation 14 resource covers matching in depth.

From a commissioning perspective, the key point is that the provider should be honest about what the home can and cannot offer. If a home is not set up to support a child with specific needs, saying so protects the child and the placement. A provider that accepts a child it cannot properly support risks a placement breakdown, a safeguarding incident, and an Ofsted concern.

Fee arrangements and transparency

Fee arrangements vary widely. Some local authorities have framework agreements with set rates. Others negotiate fees on a placement-by-placement basis. Some placements are spot-purchased, others are contracted. Providers should be clear about what their fee covers and what it does not cover.

A fee that covers only basic care and staffing will not cover additional therapeutic support, extra staffing for a child with higher needs, or specialist education input. If a child needs more than the standard fee covers, the provider should raise this with the placing authority before accepting the placement, not after.

Placement agreements and contracts

A placement plan is a statutory document, but its source depends on the child's legal status. For a looked-after child, Regulation 17 requires the registered person to cooperate with the placing authority in agreeing and signing the child's placement plan, which is governed by the relevant Care Planning and Placement Regulations. For a child who is not looked-after, Regulation 18 applies: the registered person prepares the placement plan before admission or, if not reasonably practicable, as soon as possible afterwards. A commercial placement agreement or contract is a separate document that governs the commercial relationship between the provider and the placing authority. The placement plan is a regulatory requirement; the commercial agreement is a contractual practice. Both should be clear, written, and agreed before the placement starts where possible.

Under Regulation 18(5), where that provision applies, the placement plan must set out in particular: how the child will be cared for day-to-day and how their welfare will be safeguarded and promoted; arrangements for the child's care, education and health; and arrangements for contact with parents, relatives and friends. For looked-after children, the contents of the placement plan are governed by the relevant Care Planning and Placement Regulations rather than by Regulation 18(5). CHH practical care-planning considerations may also include staffing arrangements, incident and notification protocols, review schedules and processes for ending placements, but these are not the literal universal statutory contents of Regulations 17 and 18. A commercial contract should cover: the fee and what it includes, payment terms, liability arrangements, insurance position, notice period, and dispute resolution. The statutory placement plan and the commercial contract are distinct documents.

Providers should not rely on verbal agreements. If the placing authority does not provide a written agreement, the provider should document what was agreed and confirm it in writing.

Ongoing communication with the placing authority

Communication with the placing authority does not stop when the child is placed. Regular communication helps both sides monitor the placement, address issues early, and plan for the child's future. The frequency and format of communication should be agreed at the start of the placement.

Key communication points include: statutory reviews, incidents and notifications, changes in the child's needs or circumstances, staffing changes that affect the child, and any concerns about the placement. The placing authority should also inform the provider of any changes in the child's legal status, care plan, or contact arrangements.

Reviews and changes

Statutory reviews are the primary mechanism for reviewing a child's placement. The Regulation 14 resource covers the review process in detail. From a commissioning perspective, reviews are also the point at which the placement agreement, fee, and service offer are reviewed.

If the child's needs change, the fee and service offer may need to change too. A child who arrived with moderate needs may develop higher needs over time. The provider should raise this with the placing authority as early as possible, with evidence of the changed needs and the additional support required.

Managing disagreement professionally

Disagreement between providers and placing authorities is normal. It may arise over the suitability of a placement, the fee level, the service offer, the response to incidents, or the care plan. Disagreement does not mean the relationship is failing. It means both sides are doing their job.

The key to managing disagreement is to keep the child's needs at the centre. If the disagreement is about the child's care, the question is what the child needs, not who is right. If the disagreement is about the fee or contract, the question is what the child's care actually costs and what the provider can reasonably provide.

Most disagreements can be resolved through direct communication between the Registered Manager and the placing social worker or their manager. If that does not resolve the issue, escalation should follow a clear path: from the social worker to their manager, from the manager to the head of service, and if necessary to the Director of Children's Services. The provider's RI or registered provider should be involved at the escalation stage.

Commercial pressure and suitability boundaries

Children's homes are businesses as well as care services. Providers need occupancy to remain viable. But occupancy pressure must not drive placement decisions. A child placed in a home that cannot meet their needs is a child let down, and a home that accepts unsuitable placements is storing up risk for itself and for the children already living there.

The boundary between commercial pressure and suitability is not always clear. A provider may feel pressure to accept a placement because the home is running at a loss, or because the local authority has indicated that future referrals depend on accepting this one. These pressures are real, but they do not change the child's needs or the home's ability to meet them.

When to decline a placement

Declining a placement is a legitimate and sometimes necessary decision. A provider should decline a placement when: the child's needs do not match the home's Statement of Purpose, the home does not have the staffing or skills to meet the child's needs, the information provided is insufficient to assess suitability, the placement would be detrimental to children already living in the home, or the home is at capacity.

When declining, the provider should explain the reason clearly and professionally. This helps the placing authority find a more suitable placement and maintains the relationship for future referrals. A provider that declines placements for good reasons is more likely to be trusted with future referrals than one that accepts everything and then struggles.

What Ofsted may explore

Ofsted inspectors may look at how the home manages referrals and placements. They may ask: how does the home decide whether a child is suitable? What information is requested? How are placement decisions recorded? How does the home manage the impact on children already living there? How does the home communicate with placing authorities?

Inspectors may also look at whether the home has accepted placements that are not consistent with its Statement of Purpose, or whether commercial pressure appears to have driven placement decisions. The SCCIF is clear that the suitability of placements is a key inspection focus.

Child-centred question

If a child you care about was being placed in a home, would you want the home to have assessed whether it could actually meet their needs, or would you want them to have said yes because they had a spare bed?

Tools and related guidance