Children England⁽¹⁾ welcomes today’s report on the scale of profit-making, debt and financial risk among children’s service providers, and we hope it will force open a much-needed public debate about the realities and ethics of ‘care markets’. The report brings detailed financial analysis and accounting insights that confirm and add to the picture that Children England has been reporting and raising public alarm about over many years.

In particular, the report shows that:

• The operations of the so-called care ‘market’ are fuelling the growth of a small cartel of big companies, growing in dominance and profitability by acquiring smaller, struggling companies at increasing pace. This is something our Chief Executive has been predicting and warning against since publishing this analysis in 2014,⁽²⁾ and a book chapter in 2016 on why ‘market competition’ in public services ⁽³⁾ leads inevitably to new cartels and monopolies.
  
  
• The lack of market regulation and oversight, or any other body with the power to intervene to prevent the kind of mergers and acquisitions that are fuelling profiteering and the dominance of cartels, is also something we very much support LGA in raising – as we have been doing since 2014. We would question whether following the CQC market regulation model is enough in the children’s care sector, however. We don’t just want foresight and warnings of the risk of ‘Southern Cross’ style collapses, we believe that every care provider and every merger or acquisition should always be assessed on the basis of what it means for children in their care, not simply what it means for financial stability or sudden losses of capacity.
  
  
• The levels and risks of the scale of debt on which children’s care now relies are as great a concern as the levels of profit (sometimes more than 20% a year) being made through doing business with the state. The precariousness of debt is an issue that we raised the alarm about in this 2016 article,⁽⁴⁾ and repeated very publicly in oral evidence to the cross party Select Committee ⁽⁵⁾ on Housing, Communities and Local Government a year ago this month.
  
  
• The fact that there remains only a small number of charities among the independent care providers included in this study reflects the wider fact that charities have become an increasingly tiny part of the care system for children, while the private sector has grown steadily, and more recently very rapidly.

As the membership body for children’s charities we believe it’s really important to stress the vital distinction between charities and private firms and private equity. No charity has any shareholders and by law all of their funds and assets must be devoted to the children and families they serve, rather than extracting profits, dividends or other financial benefits from the work they do with councils to care for children.

Thirty years of the commissioning ‘marketplace’ has rendered this important distinction almost invisible by suggesting it doesn’t matter who provides care as long as they can compete in a ‘level playing field’. But as today’s report underlines, it does matter who provides, and how they make their money. The ‘market’ is not a level playing field for charities any more than it is for small local providers trying and struggling to compete with the most profitable giants.

Children England’s CEO, Kathy Evans, said:

That such a frightening and brutally commercial report is needed to describe the system that cares for our society’s children when they can’t live at home should shock us all – both those unfamiliar with the marketisation of care and those of us trying desperately to keep children at the heart of it.

Care is not a product, it is a verb. Caring well for a vulnerable child in the most formative and distressing period of their young life requires strong human relationships, not cold commercial transactions. Caring for children is not something over which anyone should want to compete, and many people and organisations who really do care are trapped in this market system. 

We cannot simply point fingers of blame at the people who run, commission or work in the organisations trying their best to care for children in the system today. It has taken over 30 years of dangerous and counterproductive marketisation of care to end up in the alarming situation this report describes. It demands an urgent, wholesale commitment to reimagine the right way to organise and fund care long into the future.

I agree with LGA that urgent action is warranted to safeguard against the worst excesses and risks in the ‘marketplace’ today, but we must look to the government’s promised care review to have the courage and vision to think again about the whole system – and as well as a sense of chronic urgency, Children England also has radical ideas and passion ⁽⁶⁾ to bring to any such discussions.

 

Notes to editors:

1. Children England is the independent voice of the children and families voluntary sector, championing children and those who work with them since 1942. childrenengland.org.uk.
   
   
2. Correcting a history of market failure (2014)
   Analysis of the care market by Kathy Evans, Children England CEO
   https://www.childrenengland.org.uk/correcting-a-history-of-market-failure

3. Public service markets aren’t working for the public good… Or as markets (2017)
   Chapter by Kathy Evans originally published in Kittens Are Evil: Little heresies in public policy
   https://www.childrenengland.org.uk/blog/public-service-markets-arent-working-for-the-public-good-or-as-markets

4. Apocalypse NAO – Children England responds to analysis by the National Audit Office and others describing the crisis in children’s social care
   First published in CYP Now, November 2016
   https://www.childrenengland.org.uk/blog/apocalypse-nao

5. Evidence to the Committee on Housing, Communities and Local Government (February 2019)
   https://twitter.com/Kathy_CEO_CE/status/1097112030899777536?s=20
   From House of Commons, Housing, Communities and Local Government Committee, Fourteenth Report of Session 2017-2019 “Funding of local authorities’ children’s services” published 1st May 2019: https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1638/1638.pdf

6. Children in Charge: rethinking the systemic problems facing the funding and commissioning of children’s care by Kathy Evans, 2016
   https://www.childrenengland.org.uk/Blog/children-in-charge-original-proposal

7. Commissioning: it’s about time for clarity about cost, price and real effects of competition
   Kathy Evans for CYP Now, May 2019
   https://www.childrenengland.org.uk/blog/commissioning-its-time-for-clarity-about-cost-price-and-the-real-effects-of-competition
8. Profit making and Risk in Independent Children’s Social Care Placement Providers
   Local Government Association report February 2020
   http://www.revolution-consulting.org/wp-content/uploads/2020/02/Profit-Making-and-Risk-in-Independent-Childrens-Social-Care-Placement-Providers-Final-26Feb-Report.pdf