There are just over 100,000 looked-after children in England, Scotland and Wales. Most are in foster care, with a smaller proportion in residential care settings including children’s homes, secure children’s homes, independent or semi-independent living facilities and residential schools.

Historically, children’s social care was largely provided either directly by local authorities using their own in-house provision, or by third-sector organisations working in partnership with the local authority. Over the past few decades, many local authorities and charities have reduced or ended provision of their own children’s homes.

"Both Conservative and Labour governments have encouraged councils to outsource services, and the care of vulnerable children has been treated in much the same way as road maintenance and waste disposal, ostensibly cheaper and more efficient in private hands...In my opinion, local authorities should never have been allowed to abrogate their responsibility to the children and young people in their care by passing them on to private companies." Martin Barrow, journalist and local authority foster carer

Who owns children's services?

About 80% of children’s homes are privately-owned and mostly run for profit. Foster care is following this trend, with private agencies now providing homes for one in every three children living with a foster family.

Eight of the 10 largest providers of children’s social care, which includes fostering, children’s homes and other services such as residential school places, now have some kind of private equity involvement. The total income of the largest 20 was more than £1.6 billion, with 60% made by the largest four providers – Outcomes First, CareTech, Polaris and Priory, now called Aspris.

Key facts

• Research from Oxford University shows that for-profit providers are "statistically significantly more likely to be rated of lower quality than both public and third sector services".
• The 10 largest providers of children’s social care placements made more than £300m in profits last year.
• Profits among the top 20 providers of care home and fostering places now amount to 20% of their income.
• Councils have reported that spending on residential placements has increased by 84% since 2015, and that they are now diverting funds from areas such as early help for families to meet the spiralling costs. Prices for children's homes have risen by 40% since 2013, with the average placement costing £4,000 a week, or about £200,000 a year.
• More children are being placed further from their communities. 17,000 out-of-area placements from 2011-2022 in England are attributed to outsourcing care to for-profit providers.

“I see what is happening to children like me now and it’s not good, it’s not necessary, and it shouldn’t be happening – that’s what really fires me up still.” Ray Jones, Professor of Social Work at Kingston University

Why children's services must be run for people not profit

The Competition and Markets Authority says the market in children's social care is not working. They highlight three issues in particular - high profits, high levels of debt and the risk of companies collapsing.

The Children's Minister Will Quince has said that the market in children's homes is "broken". He points out that local authorities are handing huge amounts of money to profiteering private companies, with fees of £8000 a week "not unusual".

But private sector provision of children's social care is not only bad value for money. It also delivers a worse service for the most vulnerable kids in society. This affects their futures. Private companies - often private equity - are incentivised to cut corners rather than provide the care these children need.

The Scottish and Welsh governments have both committed to move away from the model of for-profit provision in children’s social care.