By Andrew Topping, Local Democracy Reporter
A council director has described the foster care market as “in crisis” after an investigation found some private-sector companies are recording a 20-33 per cent profit rise on placements for looked-after children.
Nottinghamshire County Council’s finance committee chairman spoke last week about recruitment issues for in-house foster carers, causing the authority to look towards private agencies for its most vulnerable children.
Now concerns have been raised after the Competition and Markets Authority, a Government-backed agency, lay bare the stark challenges faced by councils in funding children’s social care.
Colin Pettigrew, the county council’s corporate director for children’s services, told councillors some local authorities are seeing costs for a residential placement surge due to a reliance on the private sector.
It comes as the council recorded a 2.4 per cent overspend in its children and young people’s budget, equating to £2.2 million, relating to issues with placements for looked-after children in the county.
The average cost for an in-house placement is £4,000 each week, or £210,000 per year, but Mr Pettigrew spoke of his concerns private companies are making a “high level of profit” from the placements.
One council in the East Midlands, he says, was quoted £45,000 per week for one placement – equating to £2.3 million per year for a single child.
The Competition and Markets Authority investigation, Mr Pettigrew said, found the private sector is “providing too few places at too high a cost”, and he told councillors he, too, has concerns about the ongoing picture in care.
“I think the market is in crisis, that’s the finding of the Competition and Marketing Authority and the independent review into children’s social care,” he told the finance committee on Monday (November 22).
“There is a high level of profit in that the Competition and Marketing Authority saw a range of 20 and 33 per cent profit margins in looked-after children.
“People may have a view as to whether anyone should be making that level of profit.”
Mr Pettigrew also told councillors he was concerned about the long-term impact of the pandemic on children requiring care.
He says there has been a rise in the number of referrals since children went back to school, with concerns over the levels of funding for looked-after children moving forward.
“I am worried about what I’m describing as ‘long Covid’ for vulnerable children, not in terms of the disease but the impact not only on their learning but their care,” he said.
“There has been a significant increase in the number of referrals, and that’s partly to do with kids going back to school and hidden harms being identified.
“I am worried, as is the County Council Network, relating to the funding of children’s services going forward.”
The council confirmed last week it plans to ramp up its recruitment drive for in-house foster carers, which would provide “better outcomes” for looked-after children than the private sector.
It comes as the County Councils Network, a collective organisation of upper-tier authorities, warned major reforms and extra funding are needed to prevent a surge in the number of vulnerable people being placed into care.
The organisation believes this figure could reach almost 100,000 by the middle of this decade, up from 69,000 in 2015.
Nottinghamshire County Council figures provided to the Local Democracy Reporting Service show the county has 993 looked-after children requiring care, with the authority needing to find 554 placements since April 2021.
Speaking in the finance committee, concerns were raised about private sector “profiteering”.
Councillor Tom Hollis (Ash Ind), who represents Sutton East, said: “We need to limit some of these profits. We don’t want to see profiteering in children’s services, and when you see numbers like 20-33 per cent, it’s stomach-churning.
“We could be making better bang for our buck and they shouldn’t be making a profit from a service we have to provide.”
Cllr Mike Pringle (Lab) added: “I recognise demand will increase, so the profiteers will increase their profit, but there is something wrong here.
“Service provision should be the pride, we shouldn’t be talking about profit as it’s unbelievable.
“This shouldn’t put a demand on this council or any council, and it is wrong using children as profit.”
Cllr Richard Jackson (Con), chairman of the committee, reaffirmed the council’s ongoing campaign to boost its in-house foster care numbers, which he says will bring down costs and support vulnerable children.