Revealed: scandal of England’s ‘inadequate’ private children’s homes

More than 100 privately run children’s homes in England with serious failings have been branded inadequate by inspectors, with several found to have links to private equity firms, an Observer investigation has found.

Poorly trained staff, chaotic management and a series of incidents that left children’s safety in danger were cited in official reports by Ofsted, which inspects children’s homes, as it concluded they were providing inadequate care. Several have closed since inspectors raised concerns.

The Observer examined the most recent Ofsted inspection of private children’s care homes. It found that 114 homes were given the lowest “inadequate” rating, which triggers further investigations. Of those, about 20 were run by providers with links to private equity. It comes amid continued frustration with the “broken” provision of children’s care homes.

Private firms now play a large role in providing care, with more than three-quarters of homes in England run by the sector in 2021. Local government figures have also pointed to the growing role of private equity, warning that the pursuit of profits and debt that can follow is not a sound basis upon which to run care homes.

Anntoinette Bramble, chair of the Local Government Association’s children and young people board, said: “The Competition and Markets Authority has confirmed our own findings that private equity providers are making extremely high profits and carrying concerning levels of debt that risks the stability of homes for children in care, which is paramount if they are to thrive.”

Graphite Capital, which has a stake in the Hawksmoor restaurant chain, currently has a stake in three companies which managed six homes with inadequate ratings. All have closed since their inspection, two before Graphite took a stake in the relevant company.

At one of the properties run by Compass Children’s Homes, a staff member failed to share a plan about a “significant visit” for a child and his brothers and sisters. “As a result, the child missed out on seeing all of his brothers and sisters together before some moved on to adoption,” inspectors found. Their report said that shortfalls “compromise children’s physical and emotional health”.

At another run by a provider in the Horizon Care group, inspectors found children living in a “hazardous environment” which triggered an environmental health investigation. They found that when a child told staff she had self-harmed, “staff did not ask more about this, nor did they find out if the child needed medical attention”. Horizon has public contracts with two councils worth £1m million, according to Tussell, which tracks public contracts.

A spokeswoman for Graphite Capital said its ownership had no bearing on the decision to close any of the homes. She said Compass and Horizon had above average Ofsted ratings among all the homes they ran and “substantially exceed industry norms”, with Graphite investment allowing companies to improve their homes.

Aspris, which is partly owned by Waterland Private Equity, has two homes with significant failings which received the lowest possible rating from Ofsted, while a third inadequate home has closed. At one of the homes, run by Progress Care and Education Ltd, inspectors found that one child was physically prevented from leaving his bedroom, but “records of this incident did not demonstrate that this restraint was necessary or proportionate”. It adds: “Furthermore, the continuity of children’s care has been significantly affected by a high use of agency staff and high numbers of staff absences. For example, in one week in March 2022, 15 different agency members worked at the home.”

A spokesperson for Aspris said: “We currently have two residential children’s homes rated as ‘inadequate’, a figure which will reduce to one shortly following a recent re-inspection. By comparison, nine of our homes are currently rated as ‘outstanding’ by Ofsted. We have complete confidence that the standard of service provided to those in our care is unaffected by our ownership arrangements.”

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Ardenton Capital has a stake in companies that run two inadequate homes. In one, run by Radical Services Ltd, inspectors stated: “The garden is littered with cigarette butts and rubbish waiting to be taken to the tip, and is overgrown and uncared for. Interior decoration is not of a high standard, particularly in the child’s bedroom.” The home, whose ultimate owner is now Pebbles, is closed after discussions with Ofsted. Michael Walsh, chief executive of Pebbles, said: “Our owner Ardenton has always said and continues to say, ‘what do we need to do to be better at providing the care the children need?’. As long as investors have this long-term approach, with children at the heart of everything, then I think there is a place for this type of owner in our sector.”

Josh MacAlister, who chaired a government-backed independent review of children’s social care, called for a “whole system reset” to create regional bodies to oversee and build the children’s homes that are needed. “Children’s homes provide a safe harbour for some of our most vulnerable children and many of the staff who work in these homes go above and beyond,” he said. “However, the review found that the ‘market’ of care for children is broken. Profiteering, children being moved far from their communities and a shortage of homes that meet children’s needs are all urgent problems which need fixing.”

A spokeswoman for Graphite Capital said private provision generally costs local authorities no more than they would be paying for in-house residential care. “Without the private sector investing in new capacity, there would be nowhere for children and young people requiring residential care to go.”

The Observer analysed the most recent inspection data for every privately run children’s home in England, including those which subsequently closed, on 14 June.