How privatisation of foster care is turning vulnerable children into money-making commodities

Foster care is a safety net for children who, for whatever reason, cannot live with their family; a last-resort option to protect and support young people with difficult home lives. However, increasingly, carers and young people in the system are becoming investment opportunities for private equity firms to make serious money. 

A whistleblower has spoken to The Big Issue about the impact on vulnerable young people of the growing privatisation of the care sector. Speaking on condition of anonymity, Andrew (not his real name) told us that, during his time working at a number of Independent Fostering Agencies (IFAs), he was alarmed by their business model approach, with carers seen as profit generators and staff incentivised to get more children into care. Foster carers were referred to as “gold bars”, while children were “treated like commodities.” 

“In local authorities, the emphasis is on keeping foster placements down, because we want as far as possible to keep children safely in their own homes,” he told us. “Ultimately, we don’t want children to be in care. But in IFAs, they want placement numbers to be high, because each placement represents income. 

“I saw cases where management would push to get placements filled even if the child was not the right match for the carer. Recruiters would not tell carers the extent of a child’s issues, because a placement meant the income would come in. 

“We should not be getting bonuses for putting more children into care,” Andrew continued. “Children were treated like a commodity, like a bag of spuds being picked up and moved around.” 

There are currently 83,000 looked- after children in England, but the number is anticipated to rise to 100,000 by 2030. A further 7,000 are in Wales, 13,000 in Scotland and 3,500 in Northern Ireland. More than a third of all fostering placements in England are now run by IFAs, and the projected growth is being sold as offering “favourable market dynamics” to investors in private equity, with IFAs making on average a 19% profit. For residential care homes the figure is even higher, at up to 70%.  

Sarah Thomas, CEO of the Fostering Network, said it has become “normalised” for councils and private providers to see children’s services as something that should be paid for and purchased. 

Her observations were echoed by Anne Longfield CBE, the former children’s commissioner and chair of the Commission on Young Lives (which in February relaunched as the Centre for Young Lives). 

“When it comes to the private provision of children’s social care, there’s a lot of discussion about this being a ‘hot market’,” Longfield said. “People can make good profits on their investment, with lots of private equity and venture capital interest, often from overseas. It’s not about reinvesting in long-term development or social care, nor is it about long-term outcomes for children.”

An example of this is demonstrated in a 2021 brochure published by the private equity firm Clearwater International, promoting investment in the “children’s services market” with “favourable demographics” of 9% growth in the number of looked after children in five years. “Fostering is a £2.2bn market,” the brochure authors wrote. 

“There are serious questions to ask when we have a care system failing to meet the needs of children, a chronic shortage of safe and suitable homes for children in care, and yet some private providers making eye-watering profits,” said Katharine Sacks-Jones, chief executive of Become, the national charity for children in care and young care leavers. “This has to stop. Children who’ve experienced significant trauma must not be seen as a commodity.”  

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Figures obtained by The House magazine found that IFA placements consistently cost more than twice as much as in-house, local authority provision, at an average £48,000 per year (based on data from 43 responses to freedom of information requests), compared to £23,000. IFAs explain their costs as being needed to fund the care they deliver. But their increased use is putting pressure on council budgets. 

“IFAs know that local authorities are really stuck and need the placement, so they can charge more,” said Andrew. “If there is a child who urgently needs a placement, and it’s 6pm on a Friday night, they have few options of where to go.” 

A 2020 report written by Longfield when she was still children’s commissioner quotes a local authority employee explaining how “we have no alternative” but to “pay up” whatever fees are asked. She described how a regular IFA “came in with a package well over the usual price … they had us over a barrel and we paid.”  

When The Big Issue asked her about foster carers being referred to as “gold bars”, Longfield said: “I don’t get surprised by much, but that did quite take my breath away.”  

In 2022 the long-awaited Independent Review of Children’s Social Care, a 278-page report authored by Josh MacAlister, called for a “radical reset” in “a system increasingly skewed to crisis intervention, with outcomes for children that continue to be unacceptably poor and costs that continue to rise”. 

The report argued that such a reset could see 30,000 more children housed safely in their own homes, helping prevent disruption and distress to families – and saving the economy billions of pounds on providing residential children’s social care. It would require an urgent £2.6bn rescue package to pull children’s services out of crisis, stop the spiralling numbers going into care and dampen rocketing costs.  

In response, the UK government put forward a £200m package of measures that included a trial for regional commissioning programmes, an increase in national minimum fostering allowances, a pilot early help model for families and £9m to support kinship carers. 

“I am glad the government supports the direction of travel towards more help for families early on,” said Longfield. [But] childhood is short, and children in need of care or in care do not have five years to wait for a pilot. We know what transformational change looks like but it needs ambition and money from the government, or we will have another generation of vulnerable children who are failed by a lack of political will.  

“These are children who are in vulnerable situations through no fault of their own. They are our future teachers, doctors, scientists. 

“All of them have bright futures and we can and should provide them with the springboard they need to achieve success. That should be what drives providers of social care.” 

Andrew added: “There’s lots that can be done and we know what can be done. Now we need a common-sense approach and for politicians to take tough decisions. Because right now, it’s wrong. It’s all wrong.” 

The Big Issue approached the National Fostering Agency, a nationwide network of independent local fostering agencies, for comment. None of the claims in the article relate to the National Fostering Agency. 

Care Day takes place on 16 February, and is the world’s biggest celebration of care experienced people.

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