Residential childcare – another opportunity for someone to make a profit.

I was, I must admit, really quite surprised when I read this article by Zoe Williams in the Guardian. I never thought that the care of children in residential homes in the UK would have been outsourced to private companies – silly me.

What is truly amazing is the cost of such care – according to the article we currently spend 1 billion pounds a year on residential care for some 5000 children.

It appears that 89% of that Billion pounds goes to private companies with the other 11% going to charities.

Historically the cost of such care was much lower when outsourcing began but over the last 20 years the competition has been whittled down through a process of undercutting so that the remaining private care providers are now in a position where they can charge much higher prices with one, CastleCare, reported to have been charging £378,000 per place in 2009.

The main beneficiaries of this private care market are three private equity companies, two of whom GI Partners & Baird Capital are, I believe, US based and so they may not even pay much in the way of tax over here if the example of other non UK owned companies is anything to go by.

in some ways I think this is appropriate if the state is willing to abrogate its responsibilities to its most vulnerable citizens it seems only right that it should not derive any income from that decision.

I cannot comment on the level of care and it would appear according to this 2001 report that children prefer residential care to foster homes – however it seems immoral to me that companies can profit from the care of children who find themselves in these circumstances for whatever reason.

Not exactly an example of Government waste but a good example of the huge ongoing costs of a decision to outsource which I am sure at the time seemed to be a cost saving but in reality has turned into a huge ongoing and immoral expense.


2 thoughts on “Residential childcare – another opportunity for someone to make a profit.

  1. Patrick

    Whilst I support the reasons behind her article, Zoe Williams has her stats wrong. The average fee per week is nearer half the figure given by her in the article. And the number of outstanding homes is much higher than that which she reported. That said the thrust of her article, and the focus on residential care, was welcome.
    Private equity are not the only beneficiaries but they are the least accountable and the focus needs to be on their drive for profits, which will most likely take precedence over providing quality. GI are currently buying up a lot of the competition and reducing prices and winning a lot of business for it. Their reduction in fees is both a part of their effort to reduce competition and a reaction to local authorities who are looking to cut their expenditure. Quality is being overlooked in favour of costs. However, it is interesting to note that Blackpool did not renew the contract they had with GI because of concerns over the quality of the homes they offered.

    1. steveb1960 Post author

      Patrick, thanks for your comment. For me the issue is that I do not believe that profit should be made from the care of children. I cannot reconcile profit and care – if an organisation has to make a profit then the level of care provided will suffer if not in the initial stages then as the prices increase and their profits drop something has to give and it is at that point that the level of care may reduce to maintain profit. Although we cannot just throw money at a public service based provision the fact that some of the money is not going to profit means that the level of care should be easier to maintain.


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