Government opposes profits from child protection – why not from care?

Andy Elvin analyses the amount of money made by private organisations in foster care, and asks why the government can't ensure profit is kept from it

profits
Photo: Melpomene/Fotolia

by Andy Elvin

This month the new President of the Association of Directors of Children’s Services, Dave Hill, spoke out against Independent Fostering Agencies (IFAs) offering £3,000 “Golden Hellos” to foster carers to switch agencies.

He said: “We think it is very sharp practice because we’re recruiting, training, assessing and approving those foster carers. We just think that is morally absolutely wrong.”

He encouraged ministers to consider Scotland, where laws state fostering agencies which are profit making cannot approve, review or terminate the approval of foster carers.

I have every sympathy with Dave Hill and would urge the English government to look at copying the Scottish legislation, and have urged Department for Education to do just this.

Ed Timpson said recently, in the midst of the concerned responses to the ‘exemption’ clause contained in the Children and Social Work Bill, that the government will not privatise Child Protection”. And it won’t, as the private sector wants no part of a service where they operate to a fixed cost but can’t control how much demand will be placed on that service.

Big business

However the care system was part privatised some years ago. It is legal and above board, and it is big, big business. The Sunday Times reported last weekend how two of Britain’s biggest foster care companies, Acorn and the National Fostering Agency, were to merge in an ambitious £400m plan.  

Also Corporate Watch claim that in 2014/15 the eight largest commercial fostering agencies made £41 million in profit between them from providing foster placements to local authorities.

If the children get good foster placements and achieve good outcomes, so what? That’s the argument commercial agencies use. It’s a good point, surely outcomes are everything, and the process and structure are secondary?

Excessive

This is fine to a point but the profits are excessive and coming directly from cash strapped local authority children’s budgets. Money that could be spent on looked-after children. Also local authorities, charities and not for profit fostering agencies are achieving great outcomes for children without taking out profit.

The practice of using what are essentially bribes to get foster carers to switch agencies is also potentially harmful to children in foster care. Our experience is that moving agencies can be disruptive to carers when the new agency does not turn out to be all it was cracked up to be.

It would be interesting to track carers who switch in such circumstances, how many are still carers for their new agency 18 months later?

However local authorities who pressure carers to come “in-house” and work for the LA or they will move the children in placement also need to desist, again this destabilises good placements for children.

There is also the issue of the different business model between large commercial IFA’s, local authorities and not for profit IFA’s. In commercial operations occupancy of available foster care places is king and managers are judged largely on this. This can lead to a loss of focus on the best interests of the child. The same argument can be levelled at local authorities which desperately try and place children with LA foster carers when a more suitable IFA option is available.

Longer term this rarely saves money and is often not in the best interests of the child.

Profit from care

We need to decide if we, as a sector and a society, are content to allow venture capital to profit from the care of vulnerable children? The Government are seemingly determined to exclude the private sector from the child protection system, so why not the care system? There seems no logic to this demarcation.

Surely the profit that venture and private capital take can be better spent on children in care? Especially as further spending cuts are coming down the line.

The DfE “stocktake” of foster care seems like a great opportunity to do this. It may be that local authorities and charities have something to learn from the private sector about providing efficient foster care services but I see no reason to allow the continued presence of venture capital and overseas pension funds in this sector.

Perhaps Clause 15 could be used to allow a region of local authorities to opt out of allowing commercial IFA’s to provide foster care for them, we could then see if there was any negative impact on outcomes or if foster carers working for LA’s and charities can provide the service without the profit. Or they could pilot new commissioning options seeking to remove the IFA/local authority tension, and minimise profit making from the care of vulnerable children.

Using Clause 15 to lessen the role of the private sector in public services, now there’s an innovation.

Andy Elvin is the chief executive of TACT

7 Responses to Government opposes profits from child protection – why not from care?

  1. Gerald July 19, 2016 at 11:47 am #

    So Andy as a Charity I suppose everyone works for nothing and all your costs are covered by donations.
    The Private Sector is no different in its Revenue and gets the same as you do , the profit , which you seem to despise actual goes to the investors as their earnings for their investments, very similar to the interest you pay on the loans you have from the Banks etc.
    Very basic stuff really, why do you make a big issue out of this I wonder ? surely you are not insinuating that the Public get any inferior service are you ?

    • Katharine July 19, 2016 at 4:40 pm #

      I run a small private care company and we all get paid less than our local authority counterparts. I am sick of social workers asking us if we are volunteers! NO who do they think pays my mortgage! I know my director makes very little profit and could make much more in any other industry yet he is painted as some fat cat…not!
      According to Community Care, Local Authority provisions cost 2.5x as much so why are we made to feel guilty!

  2. LongtimeSW July 19, 2016 at 4:03 pm #

    £41 million in profit?

    Yet another example of people in the caring profession who have no shame. It is becoming an infestation by these vultures into all areas of social care, adult and child alike. (By the way, I bet thier carer’s rates are not much more than LA rates other than the bribe of £3000)

    Meanwhile frontline Local Authority workers have struggled on in the same period with little or no pay increase – little wonder people are leaving this evermore emotionally corrupt profession in droves

  3. LongtimeSW July 19, 2016 at 4:07 pm #

    Abnother thought –

    “Government opposes profits from child protection . . . . . . ”

    Give them time, give them time . . . . .

  4. LongtimeSW July 19, 2016 at 4:11 pm #

    Apologies comment above should have read ” . . .-– little wonder people are leaving this profession in droves when it is evermore emotionally corruptly run

  5. Dr Mark Kerr July 25, 2016 at 2:44 pm #

    There are several large fostering agencies making profit in Scotland. Clever accounting, management charges and inter company loans between English domiciled companies and the Scottish counterpart, still allows profits to be made.

    There is also no evidence that the not for profit sector provides lower unit costs to local authorities. One model makes a profit, the other a surplus, either way the savings are not passed on to the local authorities.

    There are also an increasing number of foster agencies masquerading as not for profits; they are just not for profit ‘now’, instead profits are distributed later as part of an exit strategy.

    Finally, we very rarely see true ‘outcomes’, just cross sectional snap shots. When one looks at time series data on outcomes fro care leavers, the sector as a whole has failed and no form of provision is exempt from being collectively responsible for this abstract failure.

    And Clause 15 will turbo charge the privatisation of all of children’s services, including child protection – refer back to my comment on Scotland for how. Further, if clause 15 was to be used to prohibit profit, then for parity, the charity sector should be prohibited from making a surplus.

  6. Another SW/ex inspector August 5, 2016 at 9:03 am #

    It’s tiring to see these posts from Andy Elvin He often leaves out large pieces of information and misrepresents the facts. Dr Kerr is well researched and correct.

    Not for profit and charity doesn’t mean much. In a previous article Andy Elvin suggested the English system should be like Scotland in that all Child Care providers had to be not for profit. He didn’t explain how FCA (privately owned), NFA (SSCP Spring Bidco Ltd) and Foster Plus (owned by Sovereign Capital) all own and run agencies in Scotland – to name a few.

    Given that his agency, TACT charge similar fees to the majority of independent agencies, he fails to explain how using an agency such as his would be more cost effective for LAs or that not for profit agencies have better outcomes for children.

    Yes, some Private Equity houses have purchased the so called therapeutic agencies which by coincidence charge nearly double for the same type children with little evidence of better outcomes. It is also these same agencies recruiting carers with Golden Hellos rather than investing in recruiting new families. I have seen below standard carers welcomed to these agencies and avoid issues of quality with their existing agencies. By nature of their ownership the private equities companies are usually owned by offshore companies who are highly tax efficient and albeit legally, avoid paying anything like the taxes the rest of the sector pay. I believe it to be morally corrupt not to be paying your fare way into a system that provides you with your profits. However, from 20 plus years experience, I must say the majority of the independent sector are doing a great job for a reasonable fee.

    It isn’t as simple as Andy Elvin would like to portray. Local authorities always fail to include all costs when calculating in house fees. Essentials like staffing and buildings costs are left out and they frequently claim their costs are just the Foster Carers element. IFA fees are all inclusive.

    Not for profit and Charity means very little. ISP was not for profit and was bought by Sovereign after a constitution change, Safe Houses Fostering (SE) claimed to be Not for Profit and was bought by Next Step Fostering another private agency. I am aware of another Charity agency that has profit extracted through the means of management fees to a private company.

    I would cynically suggest Andy Elvin is using this soap box to attract carers to TACT, hoping they’ll feel morally more comfortable with a charity, whilst knowing that support by LAs is reducing to nothing in the wake of cuts.