Illegal Children’s Homes and their costs

sionisais

Cost of children In unregistered care homes.
I read this with a mixture of disbelief and anger. How has this happened on anybody’s watch? I know from personal experience (through my grandchildren) that when things get difficult, social workers have to simply find the least bad option but surely it cannot cause such harm to vulnerable children and riches to the owners of some of these homes? A figure of £2 million a year per child is mentioned- go read it.
Further words fail me.

Baptist Trainfan

I agree, although I remember concerns being raised about unregistered children's homes in, I think, Norwich several years ago.

Arethosemyfeet

Yeah, I've been aware of the problem for a while but I haven't the foggiest clue how we deal with it. Many of these children have incredibly complex needs that are exacerbated by the dysfunction of the care system. They needs protection and most of the time so does everyone around them. These illegal placements are the visible symptom of a whole festering abscess of a care system that doesn't do what it is supposed to do - step in and parent children who have no other option and help them heal. The problem is that bureaucracies suck at parenting and without a stable home life healing is a pipe dream. Even with the best possible circumstances - long term stable foster care with a path to adoption - things frequently break down around adolescence. I don't know if there is a country that has it sussed, I doubt it, but I know we haven't. Even if you brought these services back in-house to councils how would you find the staff who could offer what the children who've suffered the most need? You can't make a job out of giving a child absolute certainty of love and care, the children who most need stability and continuity get a revolving door of rapidly burning-out social workers and underpaid and undertrained children's home staff.

Puzzler

As if the costs of care system were not bad enough, it inevitably churns out hundreds of dysfunctional adults when these looked-after children reach 16/ 18 and are turned out on to the streets.

chrisstiles

I think at least one of the lessons is that whatever the costs and harms of the system, privatisation and under-regulation has made both worse.

And the second follows from the first, because the first to get into the sector were well healed PE firms who could afford to lobby against further regulation (and abuse was already rife before the entrance of the smaller players - as is also the case with elder care):

via the FT article of this morning:

These landlords are following a path worn by private equity investors. For the past decade and more, private equity firms have been investing in children’s care, attracted by the high, stable fees on offer. The biggest 10 providers, backed by private equity investors such as Keys Group, Cap10 Partners and Graphite Capital Management, account for one-fifth of the market.
The profits made by such established players had “piqued people’s interest” and led to a rush of “general speculators”, said Mark Kerr, chief executive of the Children’s Home Association, an industry body.

See an article from a year ago warning about the concentration of foster care under PE companies:

https://www.theguardian.com/society/2025/jul/07/nearly-a-quarter-of-foster-places-in-england-provided-by-private-equity-backed-firms

Baptist Trainfan

And what's more, the companies' profits are presumably made from our taxes.

sionisais

I’ve done a little digging and found that the cost of children in care is about £3.1 billion for some 82,000 children. The cost for accommodation and “care” has increased significantly more than that of the number of children. The overall figures are not dissimilar to those of the asylum seekers and refugees system, in which again the majority of the expenditure is on accommodation. There appears again to be a gravy train in operation. I’d like the National Audit Office to go further, but I think their remit is set on reporting and recommending.
NAO report

chrisstiles

sionisais wrote: »

I’ve done a little digging and found that the cost of children in care is about £3.1 billion for some 82,000 children.

AFAICT that figure is explicitly for the costs of "supporting looked‑after children in residential care" and the number of those is "16,150"

Further:

"The demand for places, along with a largely private provider-led market has led to local authorities competing for places and providers charging higher fees. The estimated annual spend per child in a children’s home has increased from an average of £239,800 in 2019-20 to £318,400 in 2023-24 in real terms"

So the dependence on the private market has driven up costs because it was a sellers market -- I presume the latest news story about the inadequacies of small providers is the flip side of that, as there's a rush of people looking to make a fast buck.

Again from the FT:

Macie later cycled through more homes in Enfield, Bedford, Uxbridge and Watford. In one of them she said she nearly died of a citrus allergy because a staff member did not speak English well enough to call an ambulance. Some staff appeared “completely unqualified” for the role that involves being responsible for vulnerable young people, she said.

“People can just genuinely just go buy a house, make a company . . . copy and paste off Google some safeguarding procedures and stuff, and then social services just pay them to put children in there.”

The ultimate villain is the replacement of what used to be a government provided service (which actually was quite bad to begin with) with a privatised system (which was worse). An acquaintance is fond of calling these kinds of systems 'Coasian Hells' after Ronald Coase of 'the firm is a network of contracts' fame: https://www.harrowell.org.uk/blog/2018/01/31/in-the-eternal-inferno-fiends-torment-ronald-coase-with-the-fate-of-his-ideas/

sionisais

My mistake, thanks for the correction.
I’m so angry (I’d say fuming but I detest the term) that this issue hasn’t led to widespread condemnation. I suppose all parties that have been in government are culpable and are therefore keeping their heads down.

Arethosemyfeet

sionisais wrote: »

My mistake, thanks for the correction.
I’m so angry (I’d say fuming but I detest the term) that this issue hasn’t led to widespread condemnation. I suppose all parties that have been in government are culpable and are therefore keeping their heads down.

That and nobody wants to admit they've no idea how to fix the problem.

sionisais

I’m puzzled. Governments rarely shy away from changing things they know nothing about.
Mostly they follow the method attributed to Gaius Petroneus Arbiter, or confronting any challenge with reorganisation, which provides an illusion of progress as one has different characteristics of the process to measure (part of Business Analysis 101, from about 2005). Bloody KPIs.

chrisstiles

sionisais wrote: »

I’m puzzled. Governments rarely shy away from changing things they know nothing about.
Mostly they follow the method attributed to Gaius Petroneus Arbiter, or confronting any challenge with reorganisation, which provides an illusion of progress as one has different characteristics of the process to measure (part of Business Analysis 101, from about 2005). Bloody KPIs.

Yeah, but in this case changing things would be against the orthodoxy that privatisation is better, and would run into people with fat lobbying budgets (and the powers of patronage over post political careers).

Doublethink

Basically, this is a good example of why market forces screw over public services when they have no state provider of last resort.

They legally must place the children, so private providers can charge whatever they like when there is a bed shortage. If there was some state provision then councils could negotiate prices down or insist on regulated homes. As it is, they’ve no choice they can’t leave the children on the street.

This is the same issue as American insurance based health care. If government has to payout, you can charge much higher prices. If government was paying cost with no middle man it would be a lot cheaper in the long run - but it involves upfront investment and the government having to take responsibility anytime something goes badly wrong as it inevitably does from time to time.