The LGA has urged the Government’s review of children’s social care to consider the impact of increasing private equity and stock market involvement in the system, after publishing new research that shows the six largest independent providers of placements made £219 million in profit last year.
The LGA’s report indicates that some independent providers of children’s residential and fostering placements made profits of more than 20 per cent on their income, while four of the seven largest groups of independent providers had more debts and liabilities than tangible assets.
Nearly three in four children’s homes and two in five fostering households are now provided by independent organisations, which includes private and charitable companies.
Rising demand means that, despite increasing budgets, councils still overspent on children’s social care by more than £3 billion over the past five years. Four in five councils have reported rising costs for fostering and residential placements because of coronavirus pressures.
The LGA is calling for the children’s social care review to lead to greater national oversight of companies providing homes for children in care, similar to the role the Care Quality Commission holds for adult social care provision.
Cllr Judith Blake, Chair of the LGA’s Children and Young People Board, said: “The potential risks involved in independent providers’ considerable debt levels is an issue that the Government must consider, alongside greater financial support for children’s services.
“We cannot risk a Southern Cross or Four Seasons situation in children’s social care. Stability for children in care is paramount if we are to help them to thrive. An oversight scheme is needed to help catch providers before they fall and ensure company changes don’t risk the quality of provision.”