The largest independent providers of children's social care in England made profits of more than £300 million last year, a new report has revealed.
The report, commissioned by the Local Government Association (LGA), found that the 20 largest providers collectively made £310 million in profit in 2021/22. This represents a 19% profit margin on their total income of £1.63 billion.
The LGA, which represents councils in England, said it was "wrong" that some providers were making such large profits when money should be invested in supporting children.
The report also found that council spending on privately-run children's homes has more than doubled in the past six years, from £736.6 million in 2015/16 to £1.5 billion in 2021/22.
The LGA is calling for greater financial oversight of the largest providers, saying that the current system is "not fit for purpose".
The report also found that there has been a significant amount of mergers and acquisitions in the children's social care sector in recent years. This has led to concerns about the impact of such activity on children living in care.
👉A new LGA report found private providers of children’s homes made over £300m in profit last year.— LGANews (@LGANews) October 28, 2023
🗣️ @weezegee tells @ObserverUK "Councils are having to divert more and more money away from early help services and into homes for children in care."https://t.co/h5qkTLXM9d
The LGA said that the government needs to do more to ensure that children in care are getting the best possible support.
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.”
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