Title

Despite government initiatives to tackle the scourge of profiteering in children's care, frustration remains high among councils at the unedifying practice. Ministers expanded their initiative to tackle the problem earlier this year, with five regional care co-operatives created to co-ordinate commissioning and attempt to cut soaring costs.Yet Southend-on-Sea City Council recently hit out at the eye-watering costs for children's care as it continues to sap its finances.The Essex authority is forecasting a £13m overspend for this year, with children's and adult social care accounting for 97% of this.One children's residential placement currently costs Southend more than £1m a year and a further eight cost more than £500,000 each.Its leader, Cllr Daniel Cowan, said: ‘We are in the appalling situation where there are investment companies who are based in Saudi Arabia, Dubai, places like that, who are actively being encouraged to buy into the children's placement market and are deliberately buying children's homes because, at the moment, it's effectively a blank cheque.'Like many in the sector, Cowan is keen for councils to grasp the nettle and move provision back in-house. With the complexity of need nationally he argues a co-ordinated approach is necessary.‘There are lots of authorities, like Southend, who have historically felt it's financially imprudent to run in-house residential care settings when you don't know what the needs of a child are going to be. Well, the fact is that exact same model could exist on a sector-wide basis among local authorities.‘If local authority A is placing a child with significant emotional needs, but they don't have a facility, they can place them with local authority B. Local authority B has a great need for placements for child offenders and doesn't have those spaces, but local authority C runs those sorts of spaces and they can commission it from them.‘When you look around the system, there's actually a way we can all work together to take it forward and really crack the market.'Where Langley and Cowan do agree is on the need for councils to build more of their own children's homes. It is an uncontroversial position, but Cowan argues government could make a simple change to speed this provision up.But others, such as current Harlow DC executive director Tracie Langley, are sceptical about such a solution.Langley, who recently teamed up with like-minded colleagues to set up a care staffing platform to drive savings by removing councils' dependency on recruitment agencies, points to the need to often ensure family connections are preserved.‘You are always trying to keep the parents involved so that they don't find it difficult to contribute,' she said.‘If you have areas of excellence, you'll have parents and families trekking off halfway across the country in order to see their children and that doesn't feel right to me.'Where Langley and Cowan do agree is on the need for councils to build more of their own children's homes. It is an uncontroversial position, but Cowan argues government could make a simple change to speed this provision up.‘Ofsted could introduce a rapid approvals process for local authorities,' he suggests.He said the current registration process for a new home is cumbersome and overwhelmed.‘Ofsted registration is taking anywhere between six and 12 months at the moment because of backlogs, because there's lots of private settings which are applying at the moment.‘Having a rapid approvals process from Ofsted could allow local authorities to jump to the head of the queue so we could have our registrations done in six to eight weeks.'However, Cowan – who recently become chair of the Local Government Association's resources committee admits there must be a national solution to the problem.‘There has to be a national conversation about this and that has to start from the basis of completely dismantling the existing system and rebuilding it from the ground up.'It is a position shared by the Association of Directors of Children's Services (ADCS). The chair of its health, care and commissioning policy network, Dheeraj Chibber, said: ‘The Children's Wellbeing and Schools Act 2026 includes a suite of measures to curb profiteering, including plans for new inspection and financial transparency measures, as well as a price cap, but we must be careful to ensure children's placements, and lives, are not disrupted by this action.‘What we need is a co-ordinated, national plan so that provision is available in the right places, at the right time and crucially, that this meets the needs of the cohort of children in care so we can keep them as close to their family, friends and school as possible where this is in their best interests.'Talk of price caps has permeated into the national debate, but Cowan warned of the difficulty of applying such a seemingly straightforward solution to a crucial statutory service.‘If we contact a company and say "give us your price" and they come back and we say, "we're not paying that", they'll say, "well, fine", because another council down the road will. If we get that council down the road to say "no, we're not paying that either" and every council in the country says the same then, yes, I think we probably can force the market to do something.‘But I think it would be an extraordinary game of chicken, because we don't have the time for the other side to blink, and they know that it's local government that inevitably blinks first.'English local government is likely to also be watching to see how things play out in Wales, where the previous Labour Government legislated to remove profit from the running of children's homes.The new Plaid Cymru administration is expected to maintain the commitment, but there are fears within the sector that this morally admirable position risks throwing the baby out with the bath water.The aim is to have no profit in care for looked-after children by 2030. Yet around 80% of residential care in the principality is currently privately provided, with the vast majority for profit.Providers know they now have a short window of opportunity to make a profit and many are likely to then exit the Welsh market, reducing certainty and consistency for affected children.While Welsh councils are thought to broadly support the direction of travel, they want to ensure good providers remain in the market. There is a recognition that companies need to have an element of reasonable profit.There will likely be exceptions where profit will be allowed, if councils cannot find suitable alternative providers, but concerns remain that if registered providers leave the market the number of unregistered ones will go up.The situation in Wales is illustrative of how complex it is likely to be to find a solution to profiteering in the system.Ministers in Westminster and Cardiff may not like it, but they may have to heed Cowan's analysis and accept the need for ‘completely dismantling the existing system and rebuilding it from the ground up'.

Title

CHILDREN'S SERVICES

Cracking down on profiteering

By Paul Marinko | 06 October 2026

Popular articles by Paul Marinko

SUBSCRIBE TO CONTINUE READING

Popular articles by Paul Marinko