The cost of residential care for vulnerable children in England has nearly doubled over the past five years, raising significant concerns about the quality of care provided. According to a recent report from the National Audit Office (NAO) that’s up councils spending £3.1bn on residential placements in 2023-24. The state’s unrevised rules have produced such a “dysfunctional” market. The report highlights that 84% of children’s homes are operated for profit, with the 15 largest providers averaging profits exceeding 22%.
Ezra entered residential care at the age of nine, and was shuffled into an unimaginable 60 different placements during his youth. He remembers bad experiences in multiple homes, ranging from unhealthy environments to abandonment, where they failed to take care of him.
“I do not know where the money is being spent,” Quinton remarked, reflecting widespread concerns about financial management within the system. He added, “We were told to wear shoes if we wanted to shower because they didn’t clean up the glass properly.”
The NAO report attributes rising costs to a record number of children entering care, the increasing complexity of their needs, and a profit-driven market that often prioritizes financial gain over quality care. By March 2024, two-thirds of children in residential care currently found themselves placed outside their local authority. Almost half of these children resided over 20 miles from home.
Emma Wilson, the report’s author, focused on one overarching problem. She stressed that the residential care system does not provide good value for money.
The NAO report concludes that the system of residential care for looked after children is not delivering value for money. And costs have skyrocketed to over three billion over the last five years. At the same time, too many kids remain outside of appropriate environments. Wilson stated.
The Department for Education acknowledged the systemic issues at play, stating, “Vulnerable children across the country have long been let down by years of drift and neglect in children’s social care, which this report lays bare.” The department is initiating significant reforms aimed at improving outcomes for vulnerable children and “driving the largest ever reform of children’s social care.” They are adamant that children’s lives not be lived in the cycle of crisis. This pledge goes a long way toward fixing the glaring lapses pointed out in the NAO report.
Sara Milner, former founder of Cherry Wood children’s home, pinpointed a major problem. She shared that staffing costs account for 80% of costs in the industry. This sets up the reality that better managing personnel might be the key opportunity to simultaneously save more money and provide better care.
Claire Bracey, the Children’s Homes Association at the Profit before People protest lamented how profit margins would not be found in other social care sectors. She stated that the report “is once again lifting the lid on the extortionate profits that are being made from providing homes for our most vulnerable children.” Bracey stressed that this “invisible market failure” leads to an urgent crisis for the futures of the kids we look after. He made sure to add, “Children in care should not have to wait.” Urgent steps must be taken now.
Mark Kerr from the Children’s Homes Association contends that council-run homes can sometimes be more expensive than private ones. “We know that official data shows that local authority costs are higher,” Kerr explained. He added that if there is a value-for-money question, “then the independent sector arguably demonstrates more value for money than local authorities.”
