The Guardian view on children’s social care: no place for profit

<span>Photograph: Alamy</span>
Photograph: Alamy

The creation of a market in children’s social care was a terrible mistake. Its origins lie in the introduction of compulsory competitive tendering in the 1980s, along with the health service internal market – a model that spread to other sectors. New Labour also failed to draw a necessary line. Amid the general encouragement of outsourcing, despite its drawbacks, successive governments have failed to recognise that the provision of home life to children is qualitatively different from any other function of the state.

In the past few decades, children’s social care has been mainly privatised. The most vulnerable children in British society are commodities to be traded, regarded by investors across the world as an investment opportunity. “A business where people are able to crystallise value today” is how co-founder Farouq Sheikh describes CareTech, the biggest provider of children’s homes in the UK. He and his brother are now taking the business private with a bid that values it at £1.2bn – and loads it up with £258m of debt.

Another recent deal saw an Abu Dhabi sovereign wealth fund take a majority stake in a provider called Witherslack, a year after the company doubled its pre-tax profits. An investigation by the Competition and Markets Authority and the independent review of children’s social care commissioned by ministers were both highly critical of a market that the review described as “broken”. Businesses make huge profits by charging high fees to cash-strapped local authorities to place children, often at short notice and many miles away from their families. In the last three years Blackpool and Staffordshire, which are hotspots for children’s homes due to low property prices, took in more than 250 young people each from places as far away as Cornwall.

There is now an opportunity to do something about this dreadful situation. New evidence from Ofsted shows that privately owned homes are responsible for a disproportionate number of serious incidents – though high numbers of incidents may reflect the complex needs of particular children. Councils as well as experts are calling not just for change but transformation.

Ministers will give their response to the care review in the autumn. But the government’s procurement bill, which is on its way through parliament, is a chance that should be seized. Children’s social care should be exempted from rules obliging councils to put contracts out to tender, freeing them up to commission in a different way.

Arguments about the role of private business in other sectors are important. Opaque ownership structures help investors to make money delivering many services that are funded by the state. This raises many concerns. But they are particularly acute in children’s social care, which cannot be regarded simply as another public service. When councils seek new homes for young people who are not able to be with their own relatives, what they are looking for is the best possible substitute for family life. The relationships that looked-after children form in these settings are in some cases the most important bonds that they have and will shape their lives for ever.

It was wrong to allow the system that oversees all this to turn into a market, as the devolved Labour government of Wales has recognised with its plans to stop private companies making profits from running homes. Children in the state’s care have the right to a home life that is shielded as far as possible from market logic. Councils should invest in their own facilities and foster carers or work in partnership with not-for-profit providers, and perhaps community interest companies, over the long term. Central government must provide sufficient funds to enable them to do this. We all get only one chance to grow up.