The largest private suppliers of children's homes and foster care places in England, Wales and Scotland make excessive profits says a Competition and Markets Authority (CMA) report. Data on 15 large providers from 2016 to 2020 showed steady operating profit margins averaging 22.6%. The CMA says a well-functioning market should generate returns to investors of up to 6%, but the largest children's home providers make about double that.
The UK has "sleepwalked" into a system where some vulnerable children do not get good care. The CMA study into children's social care was launched a year ago. It found large private sector providers of fostering services and children's homes appeared to be making higher profits in England and Wales than would be expected in a well-functioning market. This suggests councils are paying more than they should, particularly for fostering. Hampshire County Council's assistant director of children's services Suzanne Smith, runs the team which finds foster care or children's home places for young people who can no longer remain with their families. The team struggles to find suitable placements, the costs keep growing and they feel there is more picking and choosing by independent providers about which child they will take. Hampshire County Council has eight of its own children's homes, which cost more than £3,000 a week per child.
But the council says independent providers can charge anywhere between £3,500 a week to more than £10,000 for each child, depending on the complexity of their needs. Unlike in council homes, children can sometimes be asked to leave private homes with only a few hours' notice.
"Unfortunately, it drives towards profit generation as opposed to the outcomes for the child," says Ms Smith. "What we'd really like to see is a diverse market where you've got providers who can make profit, but those profits are reasonable, and then shared accountability around the outcomes for the children."
Overall there is a shortage of appropriate places for looked-after children, leading to some not getting the care they need, being placed far from schools and friends or being separated from their siblings, says the CMA.
Forensic accountant Vivek Kotecha, of the Balanced Economy Project, has done similar research and says such excess profits would be better spent by councils on more services for children.
"It could have paid for better staff wages, or it could have just funded more children who need care, or at the borderline of potentially needing care or extra help. So I think it affects children, the ones in care, but it also affects the ones who could be in care or need to be in care, but aren't receiving it."
Kim Emenike, 24, who went into foster care at seven when her mum died of cancer, says she too often felt like a pay cheque rather than a human being.
"I'm just someone who needed someone to care, someone to love me and someone to just be my cheerleader. You've got to do it because you have the heart for it - not because you get paid for it."
It notes that Scotland and Wales are already moving away from the model of for-profit provision in children's social care.
Children's social care generates excessive profits - report - BBC News
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