Levels of private profit from children’s residential care are ‘indefensible’, MPs told

Some private providers charge local authorities £250,000 per year, of which £100,000 is profit, it was claimed

Levels of private profit from children’s residential care are ‘indefensible’, MPs told (Photo by Jeff J Mitchell/Getty Images)

The level of profit-making by private companies who provide residential children’s care is “indefensible”, MPs have been told.

Most children’s homes are owned and run by private companies which continue to increase their prices despite failing to improve standards across the board, the Education Select committee heard.

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Former Children’s commissioner for England Anne Longfield said that some providers which charge local authorities £250,000 annually for a place are making £100,000 in profit.

Longfield described the costs as “eye-watering” and said that local authorities should be empowered to in-source residential children’s care, to avoid escalating costs and poor outcomes.

She told MPs that she would like to see “local collaborations of providers for children’s homes and different forms of support and care”.

She added: “I do think that needs to be primed initially by a huge injection of capital funds from government.”

Josh MacAlister, who is leading the independent review into the children’s care system, said “we are at the mercy of the market” as around 80 per cent of residential children’s care is provided by the private sector.

Given the many poor outcomes in the sector, MacAlister said, this is “intolerable”.

He said: “The rate of increase in costs and corresponding increase in profits is indefensible when stacked up against the pressures on local authority budgets.

Difficulties for local authorities

Longfield described the difficulties faced by many local authorities in dealing with private residential care providers.

She said: “Local authorities call round then have to compromise, sometimes after hundreds of calls. It’s a system dominated by a few providers who are located in parts of the country where the cost of accommodation so often is lower.

“There’s also a sense that it’s an off the shelf package, if it suits the child fine, if it’s a specialist response it starts to get trickier.”

She added: “Sometimes providers withdraw at short notice, because someone else comes along and they’re often offered more from it.”

MPs on the committee highlighted a previous inquiry which found that many private residential care providers were located in areas with significant social issues in order to cut costs.

This places children in care, who are already particularly vulnerable, at greater risk.

Longfield and MacAlister were appearing at the Education Select committee alongside Lord Adonis, as part of an inquiry focussing on children’s homes.