Private equity firms are making huge profits from children’s homes while council services are being slashed to pay the soaring costs for youngsters’ care, a councillor said.
Cllr Sarah Bennett-Wake was speaking after hearing one provider is charging Cheshire East Council £11,000 a week to care for one 17-year-old with complex needs.
Speaking at the children and families committee while discussing the first financial review of 2025/26, Cllr Bennett-Wake said: “There was a report out the other day from the National Audit Office, and it found seven out of 10 children’s homes are owned by private equity firms and the costs have doubled over the last four years, and these companies are making a good 23% profit out of this.
“So not only have we got inflation, we’ve got a higher number of children that need our support, people are making profit out of that.”
When Poynton Cllr Michael Beanland (Con) asked if this was relevant to the debate, Cllr Bennett-Wake replied: “Our residents need to understand why other services are being cut back because of the overspend in children’s [services], because of profit.
“They’re playing politics with children’s lives. We can’t put profits before children.
“And I think that the general public needs to realise we have a statutory and moral duty to look after our children, and money’s being taken away from other services because some people are making huge amounts of money out of children’s misery.”
Committee chair Laura Crane (Sandbach, Lab) agreed.
“It doesn’t sit quite right with me that profit is being made at the expense of our children’s lives,” she said.
She added: “We are beholden to private equity firms, in the main, when it comes to some of these contracts.
“That is something that should be out in the public domain.”
Cllr Jos Saunders (Poynton, Con) said the issue of children’s homes and profit had been going on for decades under governments of various political colours.
She added: “Most of the services we provide are statutory, we’ve got no choice.”
Earlier in the meeting, Cllr Sally Holland (Congleton, Con) said that during a frontline visit to a children’s home, she was shocked to hear one provider was charging £11,000 a week for a teenager with complex needs.
Head of commissioning Martyn Baggaley said unfortunately that was not unusual and the most expensive he had heard about was one local authority paying £52,000 a week for a child.
“So, this is the kind of crazy figures for some of our most complex children that we’re now looking at,” he told the committee.
He said the council was looking at using a tool which had been developed to challenge some of the costs in those packages.
Cash-strapped Cheshire East is forecasting a £3.1 million overspend this year, and that is in addition to the planned use of £25.3 million exceptional financial support.
The figure includes a projected overspend of £9 million within children and families, which is largely due to increased costs of placements and staffing.
(Story by Belinda Ryan, local democracy reporter)
It’s written into the key performance indicators for demonstrating success by local authorities regardless of whether the parental neglect or abuse passes the threshold for children to be removed from birth families. As long as the government continues to use this system to fund safeguarding public services the year on year growth in children with social workers will continue to grow. Current trends are suggesting that one in four children will have social services involvement in their lives before adulthood. This dramatic increase cannot be explained by parental abuse only, it would mean that the government wants society to believe that a quarter of all children are being neglected or abused by their families. While poverty increases in the families these children are from, the family support is reduced to £300/child/month for low income families while those same children are worth three times as much to foster carers who are paid on average £1000/child/month. Councils are going bankrupt and motorist based charges are intentionally increasing to shore up the government’s funding KPIs and funding targets.
There has to be a total lack of strategic planning for these costs to be so high. I am sure these costs are far higher than sending a child to Eaton. These Private Equity Firms must perceive Local Authorities as Cash Cow. Just as Cheshire East see the citizens who have to pay their council tax as an open ended ATM.
It is totally ridiculous. Some one needs to get a grip.
What happened to the concept of delivering value for the tax payer?