Call for cap on children's homes fees as owners make 'huge amounts of money'

Councillor Susan Hinchcliffe, leader of Bradford Council, said the system is “broken” as local authorities are forced to bid for a small number of places at privately run homes, pay exorbitant fees and sometimes send children to live hundreds of miles away.

It comes as Bradford Council is currently paying for 196 children to stay in privately-run homes, at an average cost of almost £312,000 per child per year.

The bill will run into tens of millions of pounds and the council said that will leave less funding for early intervention work, which helps families and prevents children from being taken into care.

“It's shocking there are private providers making huge amounts of money out of our most vulnerable children and that should be stopped,” said Councillor Hinchcliffe.

“We need interventions like a cap on agency fees and a cap on placement costs so we can get to a more steady state and control this raging market.”

Private companies run more than 80 per cent of children’s homes in England and a shortage of places has driven up prices in recent years.

The average cost stood at £3,830 per week per child in 2020, but Bradford Council has seen that rise to £6,000 a week.

In England, the 20 largest providers were paid £1.63bn last year to provide residential accommodation and they kept almost 19 per cent of the money (£310m) as of profit, according to the Local Government Association.

There are more than 82,000 children in care and councils, which are legally required to find accommodation for children who need it, must bid for places.

Marium Haque, Bradford’s Strategic Director of Children's Services, said: “For certain placements there'll be maybe upwards of 30 children all being put forward. They go through and decide which child they want to pick and then charge whatever they want.”

She also said the council is “having to send children up and down the country”, to places like Devon.

Last year the council was stripped of control over its children’s services department, after a series of damning Ofsted inspections, and it was ordered to set up a new not-for-profit trust to take over.

The council still funds these services and predicts £242m will be needed in 2023/24 – more than it will raise from council tax (£233m).

The Government spokesman said: “We recognise some of the concerns associated with profiteering, particularly with regard to large providers with complex, and sometimes opaque, ownership structures.

"We are working with Ofsted and the sector to develop plans for a financial and provider oversight regime to increase transparency for example on ownership, debt structures and profit making across both independent fostering agencies and residential children’s homes.

“Local authorities are responsible for providing safe, appropriate homes for children, and are held to account for the quality of care they provide.”