Across England, the system responsible for caring for children who cannot live safely at home is under severe pressure. Rising intervention rates, a shrinking foster care workforce, and heavy reliance on private residential provision have driven costs sharply upwards, leaving councils scrambling to secure placements at almost any price.
Since the 1980s, large institutions for children’s care have disappeared – replaced by a patchwork of private children’s homes that dominate provision, with local authorities commissioning and purchasing placements for children through private companies rather than running these services themselves. This market-led approach, it was argued, was better value. Competition would improve the quality, accountability and afforability of services.
But austerity has decimated councils’ budgets and the public services upon which children, young people, and their families, depend. Cuts to social security, and a rise in child poverty in the years that followed, had a huge impact, leading to over 10,000 additional children entering care in England, according to Health Equity North.
These struggles have been compounded by even greater reliance on private enterprises in the social care system. There has been a steady rise in children being moved far outside their local authority boundary. Questions have also been raised about whether adequate training and preparation for leaving care is being provided in an increasingly privatised, disjointed system.
Nowhere has the pressure been more evident, or felt more keenly, than in the north west. Of England’s nine regions, it now contains the highest number of children’s homes and places. Last year, according to Ofsted, there were 1,020 children’s homes providing 3,210 places. Provision increasingly follows the housing market rather than the needs of children. And while a quarter of all children’s homes are located in the north west, the region only accounts for 18 per cent of children in care nationwide.
For Labour, which holds significant council and parliamentary representation in the north west, the issue of injustice in private children’s homes presents both a challenge and an opportunity. The region offers the clearest real-world testing ground for national change, and further ambitions to reform pricing, expand public-interest care companies and devolve responsibility for services. The north west could become a pilot ground for national change.
Greater Manchester offers a potential forward. As home to one of only two pathfinder Regional Care Cooperatives (RCCs) in England, the new boards funded by the Department for Education (DfE) allow councils to pool their bargaining power, share data on placement needs, and commission new supply collectively rather than competing against each other.
This regional approach to planning and commissioning was a key recommendation in 2022’s Independent Review of Children’s Social Care in England, led by Josh MacAlister, which called for “an end to profiteering in the children’s social care market”.
“Individual local authorities just trying to chip away and manage the market isn’t going to cut it,” says Jacob Botham, who leads the RCC work at Greater Manchester Combined Authority (GMCA). “They don’t have the influence over the market. They don’t have the buying power. So, the premise of [Regional Care Cooperatives] is really about bringing local authorities together to tackle the problem.”
Launched in April 2025, work by the Greater Manchester RCC includes developing a “forecasting tool” to identify placement trends and gaps across the region. The data aims to tackle an issue the National Audit Office flagged last year: the DfE’s lack of access to provider financial data, limiting its ability to assess fair costs, identify excessive profits, or define a reasonable price for care – key if it was to set a profit cap.
“What the RCC has enabled us to do, is make sense of the challenge, which is the gap in the right sorts of placements,” said Botham.
Does this approach, if successful, mean there may be more radical devolution of commissioning power? “The question about taking on statutory responsibility is not on the table,” Botham answers. “It is a convening role, and it’s about how we can take collective action to address the issue. There is a process that takes place over the next 12 to 18 months and beyond, that starts to push the question around what Regional Care Cooperatives can and can’t do.”
Alongside this system-level reform, Greater Manchester is also piloting a more concrete intervention through Project Skyline, a programme to create new, publicly backed children’s homes across the region. The scheme involves the combined authority using capital funding to buy and refurbish properties, which are then leased to care providers to run, with councils underwriting the investment. Homes under this scheme began to operate last year, according to GMCA.
Ten new homes will be created across Greater Manchester to accommodate up to 24 children with complex mental health issues. Project Skyline’s ultimate aim is to return children to foster carers, reduce reliance on high-cost private placements, and keep more children closer to home.
“There is a cohort of young people who don’t necessarily need to be in residential care, but there isn’t a fostering offer. We’re focused on working with them to get them right for a family setting and where they feel that’s the right thing for them,” Chantel Brown, strategic lead manager for GMCA’s RCC, told Spotlight.
A shortage of foster carers, she continued, has left councils in a position akin to the NHS’s long-running problem with bed blocking: children remain in high-cost residential placements not because they require that level of care, but because there is nowhere else for them to go. “The consequences are worse outcomes in education, health, and more vulnerable to exploitation and abuse,” she said.
Both the MacAlister Review and last year’s Casey Audit highlight the urgent need for foster carers. The latest figures published by Ofsted show at the end of March 2025, there were 33,435 fostering households – a 10 per cent decline since 2021.
“We already have a situation where demand is outstripping supply. Supply is not keeping up with demand,” said Haroon Chowdry, the chief executive at the Centre For Young Lives. He believes the government has “sleepwalked” into a crisis where more children require care than necessary, had proper investment in early intervention and family support been maintained.
Chowdry supports both mandatory regional commissioning and more radical devolution of commissioning powers, arguing that the current lack of central planning requirements allows private provision to concentrate in areas based purely on what benefits providers economically.
He believes the government should commission placements directly by region, as NHS England does for mental health beds. “Local authorities can’t do that; only the government,” Chowdry said. “It would ensure that provision is much closer to where the need is, and it would ensure that local authorities aren’t competing against their neighbours for the same beds.”
During his time at the Children’s Commissioner’s office, he witnessed private providers exploiting councils’ desperation by playing them off against each other: “I saw evidence of local authorities saying: ‘It’s four o’clock on a Friday. We’ve got a child that we absolutely have to find a place for. We know that if we don’t take this place, another local authority, the neighbouring local authority will.’” The providers’ message, he said, was blunt: “This is the price. You know, we know, you’re in a tricky situation. If you don’t take it, someone else will, so take it or leave it.
“What people find really objectionable about this is the idea of private companies making profits that disappear into the ether, [and] are not being spent on the wellbeing of children.”
Labour’s response includes the Children’s Wellbeing and Schools Bill, which contains powers to cap profits made by non-local authority children’s social care providers. Sarah Longlands, an expert in regional and local economic development at the Manchester-based Centre for Local Economic Strategies, argues that the Children’s Wellbeing and Schools Bill doesn’t properly interrogate the ownership structures and economic models of care providers.
“There are plenty of ways for companies to restructure their services in a way which can hide profits, siphon profits out, and get round caps on profit,” she said. “Even if the government were to go forward with their caps on profit, that may not necessarily change what’s happening, because companies and how they’re structured, and how their ownership models work, can easily get around that.
“Does the bill assume that the organisations running these services are ethical and have got the best interests of children at heart? Or is it based on the same old economic model that is currently delivering crap services and massive profits?”
But unlike Chowdry, Longlands cautions against an all-or-nothing approach to profit in children’s care. She points to Wales as a cautionary tale, where the Welsh Government mandated that there would be no profit-making within children’s services. “Whilst I think from an instinctive perspective that’s a really good thing to do, there were also unintended consequences of that, which meant that a lot of providers, including providers who were probably more ethical in their operation, simply left the market, and that’s left big gaps in terms of provision.”
“I think it’s tempting from a more left-of-centre perspective to say we just need no profit,” Longlands acknowledges. “On the other hand, I think a mixed model is probably the way forward, longer term. But ethics and making sure that it’s been delivered in the public interest is absolutely crucial.”
Former First Secretary of State Damian Green, now chair of the Social Care Foundation, also warns against “ideological absolutism” in either direction.
“I can absolutely see you don’t want people making excessive profits,” he said. “But if you make the regime too tough, then provision will either not come forward, or indeed, some existing places might close down, and you then have an even bigger crisis in provision.”
Green argues for a “mixed economy” approach, with properly regulated private providers operating alongside public sector provision. His concern is practical: without private capital, he believes the state will struggle to meet demand. “There are perfectly viable models for private provision,” he said, “as long as they meet the quality standards.”
On the question of whether Metro Mayors like Andy Burnham should take on statutory responsibility for children’s care, Green is supportive – but cautious. “The system, as it stands, is broken. So, experiments with finding new ways of doing it would be worthwhile, but they would want to know that they had the powers and the funding available to do a good job.”
Green’s optimism about large-scale reform is limited. “The chances of it happening on a large scale in the course of this Parliament are, frankly, unlikely,” he said. “All the signs suggest that the government wants to play this one long.”
Either way, the north west can potentially provide an early verdict on whether the state has the capacity to fix a broken children’s care system, or whether another generation of vulnerable children will be failed by a state charged with their protection.
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