After years of concerns over profit margins rising at the expense of vulnerable children, the UK government is launching substantial reforms aimed at curbing commercial profiteering within the children’s social care sector. Education Secretary Bridget Phillipson recently laid out her plans for what she termed the biggest overhaul of children’s social care “in a generation,” following alarming statistics and increasing criticisms from various sectors including local authorities and child protection advocates.
At the heart of this new strategy is the recognition of the immense financial burden the current system places on local councils, which has seen spending on child care dramatically soar. According to the Department for Education, local authorities' expenditure on looked-after children more than doubled from approximately £3.1 billion to £7 billion between 2009 and 2023. This troubling trend raises questions about the effectiveness of private providers who, instead of enhancing care quality, have garnered excessive profits.
Phillipson wasted no time addressing these issues, stating, "Children’s social care is struggling under an impossible weight. We have more children in care then ever before, and with the money following them, resources are being drained from preventative services, which only propels the vicious cycles of high costs and poorer outcomes.” Her comments were particularly pointed, drawing attention to the exploitation of vulnerable children transformed practically overnight from wards of the state to financial assets—often referred to as “cash cows” for private equity firms.
The alarm bells started ringing across the political spectrum as fears mounted over the potential neglect faced by children under the care of profit-focused agencies. The government’s response includes implementing laws to enforce profit caps on private providers, ensuring they no longer operate as profit-seeking entities at the expense of care quality. The Education Secretary has made it explicitly clear: "If the costs don’t come down, we will take action to cap profits directly from children’s social care placements. Should providers not respond appropriately, we will not hesitate to bring forward measures to cap their profits.”
To back up these bold promises, the government is also increasing the authority of Ofsted, the statutory regulatory body for children’s services and education. Ofsted will be granted new powers to tackle poor quality care, allowing it to issue civil fines against non-compliant institutions and conduct audits on multiple homes under the same operator as seen with the disturbing findings at the Hesley Group, which faced criticism over its handling of children.
Another significant aspect of the reform package includes requirements for private children’s homes and fostering agencies to share their financial reports with the government. The aim here is to promote transparency and allow local authorities to challenge profiteering practices more effectively. Under the proposed strategy, the government will also create policies assuring care leavers access to support services until the age of 21, including stable accommodation and important transition assistance.
Arguably, critics have cautioned against the efficacy of these proposed changes. Conservative shadow education secretary Laura Trott warned during debates, "The heart of the problem today is high-quality places available for looked-after children. Addressing capacity and quality is what we need to focus on first, otherwise, we may inadvertently escalate prices and worsen the existing shortage of placements.” She cautioned against the pitfalls of profit capping, stating the potential ease with which providers might shift income and expenses to maintain profit levels.
Despite differing opinions within the political arena, one thing remains clear: there is consensus on the urgent need for reform. Labour MP Jonathan Brash emphasized the plight of councils and the outrageous pricing schemes adopted by large private providers, pointing out the average charge of £12,000 per child per week, translating to £624,000 per year. Such figures raised eyebrows and inspired calls for transparent and fair pricing. Brash argued, "Only by capping the outrageous profiteering can we protect children and get value for tax-payers. ”
Simultaneously, early intervention and preventative measures are now coming to the forefront of the government’s agenda. Philipson articulated the pressing need: “We want to break the barriers to opportunity and end the cycles of crisis for children and families through ambitious reforms.” Emphasizing the importance of collective responsibility, she advocated for consistent connections between families and local authorities to prevent unnecessary admissions to care.
Equally pivotal within this impending overhaul is the broader systemic change proposed for the care system, targeted at promoting family stability. Every local authority will soon be mandated to establish multi-agency child safeguarding teams incorporating schools and health services, providing comprehensive support networks for families and children alike. Similarly, the introduction of consistent identifiers for children will enable seamless sharing of pertinent information among professionals to preemptively address potential issues.
The road to reform appears structured yet fraught with significant challenges. Experts such as Andy Smith, President of the Association of Directors of Children’s Services, have welcomed recognition of the excessive profits present in the children’s care sector, underscoring the necessity of official accountability for profit-making providers. Nonetheless, he warns: "While the outlined measures are promising, the limits of funding and adequate workforce management remain pressing issues, and we need to facilitate effective changes without risking resource allocations.”
This sentiment echoes sentiments shared by the Local Government Association, who noted the seriousness of the existing funding shortfalls threatening the viability of care services. Chair Arooj Shah expressed hope surrounding the government’s commitment to reform but reaffirmed the importance of sustained fiscal support to meet the challenges at hand.
The movement for change has taken on long-overdue significance as the number of children entering care continues to escalate relentlessly. It’s estimated over 1,500 children are now placed with providers charging exorbitant rates, reflecting rising concerns about prioritizing profits over care. Indeed, the average profit margin for the leading 15 private providers hovers at around 23%, raising eyebrows and prompting cries for accountability.
Phillipson’s measures signal the government’s serious commitment to disentangling financial exploitation from vulnerable children’s social care. By reinforcing regulatory control, enhancing transparency, and revamping local practices, the aim is clear: to restore dignity and quality care for some of the country’s most vulnerable children. At the very least, the announcement marks the government's effort to right past wrongs and implement meaningful, life-changing strategies for children who have felt neglected for too long, making it clear they deserve every ounce of care as society strives to provide them with brighter futures.
