The largest independent providers of children’s social care made profits of more than £300 million last year, according to an LGA-commissioned report.
The report, by Revolution Consulting, revealed council spending on privately run children’s homes more than doubled in the past six years as demand has increased.
In 2021/22, local authorities in England spent £1.5 billion on independently run residential care for vulnerable children – an 11 per cent increase on the previous year – and up from £736.6 million in 2015/16, representing a 105 per cent increase overall.
At the same time, the aggregate fee income of the 20 largest independent children’s social care placement providers (excluding CareTech) was £1.63 billion last year, increasing by 6.5 per cent over the previous year.
Figures show 19 per cent of this was recorded as profit – amounting to £310 million overall.
The report also identifies a significant number of mergers and acquisitions taking place, which have led to concerns about the impact of such activity on children living in provision.
It says that despite the data obtained, visibility of financial information has made it difficult to give a clear picture of the care provider market. The LGA is calling for greater financial oversight of the largest providers.
Cllr Louise Gittins, Chair of the LGA’s Children and Young People Board, said: “What matters most for children who can’t live with their birth parents is that they feel safe, loved and supported, in homes that best suit their needs.
“While many providers work hard to make sure this is the case, it is wrong that some providers are making excessive profit from providing these homes when money should be spent on children.”