Children’s homes: Providers’ ‘exploitative’ profits to be curbed

“Frankly some of the accommodation and placements are deeply, deeply shocking,” she told BBC Breakfast, adding that this was due to both the conditions and the “terrible outcomes” for some of the most vulnerable children in the country.

The changes are part of a major overhaul of the children’s social care system, which supports and protects vulnerable young people.

The measures come as council-run children’s services are struggling with rising demand, complex cases and spiralling costs.

Local authorities say there were more than 1,500 children in 2023 for whom councils were paying more than £500,000 a year to be placed in residential homes, with a lack of other options being the most common reason.

Meanwhile, a 2022 report by the Competition and Markets Authority found the 15 largest children’s home providers make an average 23% profit per year.

The government will set out legislation in Parliament on Monday that will require major care home providers to share their finances with the government, so it can challenge what it describes as profiteering.

This will also include a “backstop” law that would place a limit on those profits, which the government can put into effect if the companies do not do so voluntarily.

The government says the measure will also allow it to ensure that the largest providers do not suddenly collapse into administration, leaving children homeless.

But Andrew Rome, an accountant and leading analyst in the field, said the 10 largest providers only account for 26% of all children’s homes in England, with many providers being much smaller.

He told the BBC that this measure will miss “smaller opportunists who are charging the extraordinary prices for unregulated [or] unregistered services”.

Mr Rome also said gaining oversight of large providers’ finances would be difficult as they often operate through a network of companies, while smaller firms may only have to disclose limited financial information.

He added that a “backstop” law to limit profits was “close to impossible to design and police”.