Profit and child social care DO NOT mix – and nor will Labour’s latest ‘reforms’

The Labour Party government has announced plans to reform child social care through introducing new powers for Ofsted and curbing “excessive profits”. But, while this is welcome, the government should go further and remove profit from child social care altogether. That’s because research shows that over the past decade for-profit children’s homes perform worse than those run for public good.

Also, councils in England and Wales have paid over £1m per year to house a single child in private care homes. Overall, councils spent £7bn in 2022/23 on housing children with the 15 largest private providers making an average of 23% profits.

The government said it would introduce a ‘backstop’ so that if private providers do not voluntarily curb profits, the law will force them to.

The thing is, Labour hasn’t specified what level of profit that it finds acceptable. That is surely key to their plans here.

Child social care: profiteering off “very vulnerable children”

Speaking on Sky News, education secretary Bridget Phillipson said:

We have some private providers who are securing 20-30% profits. And this is off the backs of very vulnerable children who’ve been through often the most traumatic experiences you can imagine, who’ve experienced real problems within their families that have got them to that point… Now if providers don’t respond, if they don’t bring down those costs then we will act to cap their profits. And I serve notice on them today that we will not hesitate to take the necessary action to make sure that we are getting much better outcomes for children in our country.

Asked whether the state should provide care, Phillipson responded:

We have private providers in the system so there is a balance to strike

In reality, there isn’t even a balance here at all. The for-profit private sector runs 80% of children’s homes.

And, from 2014-2023, 91% (48 out of 53) of children’s homes that Ofsted closed in England were profit driven. Charities or local authorities ran just five. On top of that, public provision of child social care services consistently outperforms the private sector. Generally, the for-profit sector hires fewer staff than local authorities and, like private firms within the NHS, cherry pick the profitable cases.

Another issue is the location of services. A further study found that 17,001 children were sent away from their local area from 2011-2022 in England because of outsourced, for-profit care.

90% of social workers, those with frontline experience of the services, support a ban on for-profit child home care in principle. Although, 35% of those are also worried that such a ban could worsen placement shortages. That’s why the government should mandate a different, non-profit model.

Featured image via WikiCommons and Dr. Caleb Cheung – YouTube