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Private firms accused of “obscene profiteering” as cash-strapped councils charged £1m to look after single child in care
24 July 2024, 11:38
Private firms have been accused of “obscene profiteering” after charging councils £1m for a year-long residential place for a single child in care.
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An investigation by LBC has found there’s been a 132% increase in the amount spent on private residential placements for looked after children by councils in England and Wales since 2018, which amounts to more than £800m.
In the last financial year, nearly £1.5bn was spent on private provision.
A Department for Education spokesperson said the government wants to strengthen regulation as some private providers are making excessive profits, which is unacceptable.
The Local Government Association's Cllr Louise Gittins said councils were being charged £1m a year to look after some youngsters.
She added: "To be clear, some children really do need an awful lot of support, so we hear of children that are needing, four or five people looking after them 24 hours a day, the levels of the complexity when you hear about some of the cases is absolutely heart-breaking."
She went on to say: “It's wrong that people are making money from our most vulnerable children in society. And I think it's because we don't have a choice about where we can send children because of that lack of local provision."
Cllr Gittins also warned that unless something was done more and more councils would find themselves in very challenging financial circumstances.
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According to data from freedom of information requests, the average yearly cost to a council for a child requiring residential care has gone from almost £77,000 in the 2018/19 financial year to £116,000 in 2022/23.
The closure of councils’ large-scale children’s homes and the increase in the number of teenagers with complex needs requiring residential care have also been blamed for the increase.
However, local authorities say the amount being charged by the private sector amounts to profiteering and costs are rising at a higher rate than the number of children needing residential care.
At Leeds Council spending has more than tripled on private-sector residential placements since 2018.
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The local authority's children and families lead Cllr Helen Hayden said: “We have obscene profiteering in the children's social care – I hate to use the word market but it is – because I don't think there should be a market when it comes to looking after children.
“But private providers can charge what they like. And when you've got a situation where you need that child to be looked after, then you just end up paying the price that they're asking.”
Cllr Hayden wants to see a cap introduced on how much the private sector can charge councils for residential care.
"Despite our research," Children’s Homes Association chief executive Dr Mark Kerr said, "the number of children requiring high-needs specialist residential care has significantly increased and many local authorities were turning to the private sector rather than developing their own provision."
But average costs were consistently lower with independent providers rather than public - and high fees came from the unregulated sector who do not operate registered children’s homes, according to Dr Kerr.
He added his organisation has not received any evidence its members are profiteering and recently excluded firms owned or funded by tax havens.
A Department for Education spokesperson said: “We recognise that local authorities are facing rising costs to place children in care, with some private providers making excessive profits.
“This is unacceptable. We want to strengthen regulation and work with local government to make sure every child has a safe, loving home whilst also delivering value for money for the taxpayer.
“We’ve already announced the Children’s Wellbeing Bill, which will put children and their wellbeing at the centre of the education and children’s social care systems, and make changes so they are safe, healthy, happy and treated fairly.”
