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13 October 2022

“Kids are not commodities”: For-profit children’s homes provide poorer care

Children’s care homes run by private money-making operators have lower Ofsted ratings than those run by councils.

By Harry Clarke-Ezzidio

Outsourcing children’s social care to private operators, which began in the Nineties and accelerated in the austerity years, was meant to improve standards in the sector. But children’s homes run by for-profit companies provide a poorer quality of care than those operated by local authorities, research from the University of Oxford reveals.

Children’s homes run by for-profit operators are on average less likely than council-run homes to receive an “outstanding” rating from Ofsted, which inspects homes across the country, and are more likely to be rated “requires improvement” and lower.

A record 80,500 children are in care across England. Of the all the children in homes (around 14 per cent of the 80,000 total), 80 per cent of them are housed in homes run by private, for-profit operators.

For-profit homes receive lower ratings across all inspection categories, are handed more recommendations and violate more care requirements than homes run by local authorities, the findings from Oxford’s Department for Social Policy and Intervention shows. The research, which analysed more than 13,000 Ofsted inspections of children’s homes run by private providers and local authorities between 2014-2021, shows that areas with a greater proportion of outsourcing of children’s care perform worse than those with fewer for-profit operators.

“Children’s care is a struggling sector,” Dr Anders Bach-Mortensen, lead author of the report, told Spotlight. “It’s well-known that huge profits are being made by companies running these homes, but the [political and market] response has typically been that the quality of the services justify the costs. Our research suggests quality is not the same in both [private and public] sectors and that should be of concern to commissioners.”

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Children’s care has been in a state of flux over the past decade. When the Conservative Party entered government in 2010 and began its programme of austerity, local authorities’ operating budgets shrunk and outsourcing of both child and adult social care homes to private operators appealed to them as a cost-saving measure. 

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“The political acumen at the time… was based on claims that outsourcing and an open market would cultivate competition and enable providers to innovate the way services are delivered,” said Bach-Mortensen. “And this was thought to combat inefficient public services.” While this “argument can be made quite well on paper”, he adds, it hasn’t worked in practice.

The Independent Review of Children’s Social Care, published earlier this year, concluded that the current system is “dysfunctional”. A market study of children’s social care, commissioned by the Competition and Markets Authority (CMA), said that the UK has “sleepwalked” into a situation where “large private sector providers of fostering services and children homes appear to be making higher profits in England and Wales than the CMA would expect in a well-functioning market”.

The present situation is a result of stretched council budgets, which makes it more difficult for local authorities to run their own homes, and a market with so few operators. This means that local authorities are “paying more for [outsourced] services than they need to”, the CMA report notes, and those costs are eventually borne by taxpayers.

A Department for Education spokesman said: “We are aware of reports that some independent providers of children’s homes are making excessive profits, and this was highlighted in recent reviews of the care system. We are carefully considering the recommendations made in these reviews and will soon be setting out our plan to improve children’s social care.

“In the meantime, we are giving local authorities £259m to boost provision, and decrease reliance on private sector accommodation.”

How does Britain’s warped children’s social care market affect its users, who are the most vulnerable young people in society?

“There have been some concerning examples of privately-run care homes not providing safe and nurturing care for children and young people, and not having sufficient staffing ratios,” Clare Bracey, director of policy campaigns and communications at the children’s charity Become, said. Staffing shortages “can reduce the quality of care”, she added.

“This can lead to many risks for children. It affects their relationships, education, health, well-being and safety. More could be done when children’s homes are being set up to ensure they have the right resources and approach to provide good quality care for children, including early inspections.”

Ofsted is in charge of visiting and assessing care provision across the sector, but its mandate as a regulator to adequately punish and sanction underperforming homes is limited. This is acknowledged in its own assessment of the sector: “Current regulations mean that no organisation has the power to oversee this provider ‘market’.”

Local authorities are responsible for child and adult social care arrangements. A lack of government engagement and oversight of children’s social care means that private providers are able to “take advantage of a lack of centralisation in commissioning processes” and run services however they like, said Bach-Mortensen. 

Does this model therefore put children at risk? “There are many examples of good care in the private sector,” said Bracey, “but there are also some concerning examples of homes which are poor quality and not providing the level of care children deserve.”

Bach-Mortensen added that “not all for-profit children’s homes are necessarily bad because of their ownership status”, but said the key question is “more about whether the current commissioning system is designed in a way that it can protect children against inverse incentives and bad actors”.

Private operators are embedded in children’s social care. Sector experts agree that a sudden blanket ban on them, particularly without massive boosts to council funding to accommodate the hordes of young people they serve, would have disastrous consequences.

Fundamental questions of political choice and its limits may have to be examined, however, said Bach-Mortensen. “I think it’s important to think critically about why the UK government allows and promotes for-profit provision in some sectors but not in others… For example, schools are not allowed to be operated on a for-profit basis. It’s not clear to me why it’s desirable for children in care to be accommodated by for-profit companies, when it’s not thought to be a good idea within education.”

Bracey said any reforms must create a system that allows local authorities to take over the provision of children’s residential homes, so that “over time we can reduce reliance on the private sector”. “Ultimately,” she concluded, “we should not treat children as commodities.”

[See also: Will Liz Truss really rip up the Boris Johnson policy playbook?]