Children’s social care profits soar, promoting calls for financial oversight

A recent report, commissioned by the Local Government Association (LGA), has exposed the staggering profits of the largest independent providers of children’s social care in England. In the 2021/22 fiscal year, these top 20 providers collectively amassed over £310 million in profit, yielding a remarkable 19% profit margin from their total income of £1.63 billion.

The LGA, which represents English councils, has expressed concern over the significant profits, asserting that such financial gains should be directed towards enhancing support for children in need. Furthermore, the report unveils a startling rise in council spending on privately-run children’s homes, which has more than doubled over the past six years, surging from £736.6 million in 2015/16 to an astonishing £1.5 billion in 2021/22.

In response to these revelations, the LGA is urging for greater financial oversight of these major service providers, contending that the current regulatory framework is “not fit for purpose.” The report also highlights a notable increase in mergers and acquisitions within the children’s social care sector, raising concerns about the potential repercussions on children in care.

The LGA is calling on the government to take more decisive action to ensure that children in care receive the best possible support, amid the backdrop of record-breaking profits in the sector.

Cllr Louise Gittins, chair of the LGA’s Children and Young People Board, said:

“What matters most for children who can’t live with their birth parents is that they feel safe, loved and supported, in homes that best suit their needs. While many providers work hard to make sure this is the case, it is wrong that some providers are making excessive profit from providing these homes when money should be spent on children.

As the report shows, spending on residential care placements for children has increased dramatically in recent years as councils have sought to find the best homes for record numbers of children in care, while mergers and acquisitions have seen some large independent providers grow significantly.

Yet while councils are having to divert more and more money away from early help services and into homes for children in care, the largest privately-run companies continue to bring in huge profits.”