Care companies are demanding unnecessary and expensive support packages from vulnerable children to boost profits, council leaders have claimed.
Barry Lewis, Conservative leader of Derbyshire County Council, said the former family-run business, which was bought by a private equity group, was trying to extract “as much cash as possible” from the local authority.
“They demand wraparound care even when they don’t need it,” he says. “If they don’t take advantage of that package, they end up going to another municipality. It’s become an extractive market.”
Councils have a legal duty to respond to the increasing number of children requiring residential care. Mr Lewis said councils were having to accept excessive care packages for children due to a national shortage of places in children’s homes. “At the moment we have about 20 children in each placement,” he said. “It’s a seller’s market.”
A care company billed a council £652 a week for in-house education after a child transferred to university. On another occasion, the council was billed £192 a week by a care company for extra activities that were never carried out. Another private provider added £1,000 to his weekly bill without providing any evidence as to why.
Mr Lewis called for a cap on the fees that care chains can charge. He said Congress was being blackmailed by some companies. “We are being treated as a diamond mine. This is an exploitative process to extract as much cash as possible from local governments.”
In East Midlands authorities, including Chesterfield and Matlock, spending on private residential care for children will rise from £14m in 2018 to £34m in 2023. This figure is expected to rise to nearly £47m this year.
These rising costs have forced Derbyshire to cut back on other services. The city needs to save £39m over 2024-25. The single biggest factor is the rising cost of providing social care for children.
“It’s very difficult to control because we have statutory obligations.” [to look after children who cannot be cared for by their parents] That’s because the market is distorted,” Lewis said. “They are profiteering off the backs of young people.”
Derbyshire is considering cutting £3.9m from children’s centers and early support services for families. “In the future, young people will fall into difficult times and end up in our care,” Lewis said. “It’s a perversion of having to pay.” [these increasing care costs]”
He added that private placements often have poor outcomes for the children in their care. “We have placements gone wrong and education in question. They step into the adult world with few prospects. That’s not what we want for our young people.”
the government announced £500m extra funding for social care in England in January. But Lewis said that’s not enough. “This is a very small band-aid on a very large wound,” he said. “The amount we got was between £3 million and £4 million.”
Over the past 30 years, children’s residential care has been taken over almost entirely by the private sector, as local authorities have been encouraged to outsource services.
More than 80% of care homes in the UK are now run for profit, with smaller companies increasingly being bought out by large, debt-ridden chains owned by private equity investors. Unlike the Welsh and Scottish governments, UK ministers have not sought to rule out profiteering from the care of children in the UK. Instead, the government’s reforms focus on rebalancing the market by strengthening ordering powers and providing capital funding to councils to build more homes.
The Children’s Home Association, which represents many private providers, said it recognized the challenges facing local authorities.
The association’s chief executive Mark Kerr said: “Residential childcare is the most complex area of children’s social care and we caution against oversimplifying high-level cost data. is extremely important.”
A Department for Education spokesperson said: “Profiteering in the children’s home market is completely unacceptable. We are working with Ofsted and the sector to develop a new financial oversight regime to increase financial transparency across the sector. , we are investing £259m to help local authorities place more children into high-quality, safe homes.”
