Private Children’s Home Providers Charge Too Much For Counseling, Report Says | Local government
Private providers of children’s homes and foster families are making “large and persistent” profits by charging cash-strapped local authorities high prices for increasingly scarce placements, the Authority said. competition and markets (CMA).
The largest private providers of children’s homes now charge councils an average of Â£ 3,830 per week per child, with an average operating profit margin of 23%, according to CMA’s interim report on child welfare .
For placement agencies, the average weekly placement price was around Â£ 820 per week, with an average operating profit margin of 19%.
Josh MacAlister, who chairs the independent review of child welfare in England, said the report showed the market was broken and too many children were defaulting.
Six of the 10 providers with the most children’s homes in England and the two largest foster care providers are now owned by private equity firms.
Many of these companies are heavily in debt, which the AMC says could make them vulnerable to an unexpected exit from the market if credit conditions tighten. The CMA says the government should take this risk seriously if the houses suddenly closed, “with potentially serious negative impacts on children and the ability of local authorities to meet their legal obligations.”
The number of children in need of placement and the complexity of the needs of these children have increased dramatically in recent years, leading to a shortage of services nationwide. At the same time, municipal budgets have been slashed by the central government, prompting some local authorities to sell their own children’s homes to raise short-term funds.
Local authorities in England have a legal obligation to try, where possible, to secure safe and local accommodation to meet the needs of the children in their care. But too many children are being sent miles from home due to a shortage of placements.
In March 2020, in England, 44% of children in residential care and 17% of children in foster care were more than 20 miles from their home, according to the CMA report.
âChildren far from their region of origin may experience loneliness and isolation when separated from their support networks, have their schooling interrupted and may find it difficult to access social services,â the report said.
The offer is very variable across the country. North West England has 23% of all places in children’s homes and 19% of children in care, while London has just 6% of places in children’s homes and 12% of children supported.
“However, this does not necessarily translate into sufficient availability of appropriate places for children in areas of overproduction, such as the north-west, due to children from outside the area being placed there,” the CMA report.
Similar problems exist in Wales, but there were more limited concerns about the supply in Scotland, the CMA reported.
He concluded: âIf this market worked well, we would not expect to see insufficient supply and high prices and profits to persist over time. Instead, we would expect existing and new suppliers to create more places to meet demand from local authorities, which would then lead to lower prices and lower profits. A large and persistent economic profit is often an indication that a market may not be performing well.
Martin Barrow, a host family, noted: âNow is the time for local councils to show leadership (and humility) to admit that the way they are treating children in care is bad and that the system has failed. As a taxpayer, while you may not be moved by the impact on children in care, it’s time to realize that you are getting ripped off by big business.