Councils in England are spending millions of pounds on private children's homes, with private providers owning 84% of these institutions and charging an average of £318,400 per child per year. This has resulted in shareholders making hundreds of millions of pounds, but a new survey suggests that the public is dissatisfied with the current system. The survey, conducted by We Own It, found that three-quarters of respondents expressed a view on the issue, with half wanting the government to end profit-making provision in children's social care altogether.
The survey's findings have sparked calls for reform, with Cat Hobbs, director of We Own It, stating that it's "truly immoral" that private equity has been allowed to profit from the sector. Hobbs also noted that the current system is failing many children in care, with councils struggling to make ends meet due to the high costs of private care. The Welsh government has already begun implementing legislation to remove profit from children's care, and there are growing calls for similar action to be taken in England.
The current system is failing many children in care, with 49% of children in care in 2024 being placed more than 20 miles from their original home. Additionally, 1,280 children in care were held against their consent under deprivation of liberty orders. Ofsted has also found 680 instances of children being placed in unregistered homes in 2024-25, a figure described as "a national scandal" by the children's commissioner, Dame Rachel de Souza.
The high cost of residential care for vulnerable children in England has nearly doubled in five years, reaching £3.1 billion in 2023-24. The number of children in residential care has increased by just 10% over the same period, with a shortage of places, particularly for children with complex needs, leaving councils competing for limited spaces and providers charging higher fees.
The government has begun taking steps to improve oversight of private providers and increase the supply of available places. A House of Lords committee is currently conducting an inquiry into children's social care, with the aim of making the system "benefit the children and young people it is meant to serve." The committee's findings are expected to be published in the coming months.
Councils are legally required to provide care for children who cannot live with their families, either through fostering or residential homes. Around 84,000 children were in care in England in March 2024, with most being placed with foster carers. However, a shortage of suitable placements means that thousands of children need residential care, often due to complex needs.
The issue of private providers profiting from children's care has sparked a wider debate about the role of private companies in the sector. With the government pledged to "crack down on profiteering" in the sector, there are growing calls for an outright ban on profits. The Lords inquiry will examine the issue and look for ways to make the system work better for children and young people.
Key points
- Councils in England spend millions on private children's homes, with private providers owning 84% of these institutions.
- The current system is failing many children in care, with concerns raised about the quality of care provided.
- There are growing calls for an outright ban on profits in the children's care sector.
