Private equity has turned care of the vulnerable into a racket that exploits both the carer and taxpayer
The three girls were born to others elsewhere, yet she calls them her daughters. She is all the family they have here. She helps with their homework and cuddles them through the inevitable tears. Their home is now her Liverpool terrace, its books jostling with African art. Maria is their foster mum. Over 10 years, she has cared for kids so troubled it hurts to hear the bare details. They come to her after being sexually abused at home, and then groomed by strangers. Teenagers are so unsettled they can’t even use the toilet – instead they urinate behind the sofa and leave turds in shoeboxes. Ten-year-olds speak only with fists – which they sometimes use on her.
Maria’s life can be counted in police callouts, urgent summonses to see headteachers, and sleepless nights. It’s 24-hour work that takes every scrap of physical and emotional effort: two children were so troublesome that for four years she never got a full night’s sleep. That means she’s paid less than the minimum wage of £7.50 an hour. But it’s never about the cash. These children come to her with no hope, no smiles, no joy, “and then you see them blossom into who they really are – and that’s cracking, that’s what makes it worthwhile”.
I visited Maria and her girls just a few days ago, as Carillion hit the news. Her world, with both tea and love on tap, could not seem further from PFI hospitals and HS2 tunnels. Yet over the past few years, unknown to the public, foster care has become thoroughly Carillion-ised. Just like the collapsed construction firm, it is now a big business that is utterly parasitic on the state and reliant on dubious financial engineering.
I understand why politicians and pundits now predict the end of the costly private-sector infiltration of public services. But to see what is happening in foster care is to realise a grim truth: the debt-ridden, return-greedy business model that has ruined Britain has wormed its way into the most private areas of our lives. It has penetrated even the intimacy of child-rearing.
Central to the new business of fostering is austerity. Because of spending cuts, the sector is booming, taking more money from councils – and thus making the cuts to come far bigger. The household benefits cap, the two-child limit for poor families, the precarious low-paying jobs market: all are helping to tear families apart – and pushing more children into care. In England, 72,000 children are in care, a total that has risen every year for nine years.
For most of us, such figures bring despondency. Among financiers, however, they represent opportunity. In 2013, the Financial Times reported that private-equity barons were sniffing around this “growth market”. Analysts called fostering “a classic private equity play”.
Sure enough, the barons have upended the industry. Once there were hundreds of private fostering outfits, typically small and set up by former social workers, but now finance firms have hoovered up many of them. The result is an expensive oligopoly.
Take Maria’s home city of Liverpool, where almost 900 children live with foster parents. Private agencies take care of just under a third of those – at a cost of over two-thirds, £10.5m, of the council’s £15m fostering budget. A city hit so hard by austerity that it teeters on the verge of bankruptcy now spends so much on private foster care it has had to cut back even more on vital services.
Nor is Liverpool alone. In a 2016 report, the government adviser Martin Narey found that private foster agencies were “charging almost 92% more” than local authorities.
The National Association of Fostering Providers (NAFP), which represents all the major chains, among others, can see “very little evidence that compares the cost of like-for-like placements of children in foster care”. Yet Liverpool council provided me with just such a comparison. It has recently recruited a carer from a for-profit agency, who looks after two girls and a boy, aged seven and under. For that, the agency had charged the council £1,956.40 a week. Now she’s in-house, the fee has fallen to £758.34. No wonder Liverpool’s cabinet member for children’s services, Barry Kushner, is recruiting more carers for the council.
There is a difference between paying for foster care, which is labour-intensive, and profiteering off the backs of children. The big money certainly doesn’t reach the carers. Before joining the council as a foster mother, Maria worked for a private agency – on the same pay.
One reason for agencies to charge more is that they take on older children with more complex needs. The NAFP argues: “Local authorities tend to place less complex children with their own in-house foster carers.” Yet Kushner reports a senior manager at a giant private agency telling him: “We want older children. We want complex needs.” This is a business model based on monetising vulnerability.
These are children who have been through more concentrated trauma than most adults ever have to face. They should be all that counts. Instead, they are cogs in giant financial machinery. Take the biggest firm of all, the National Fostering Agency. In the past six years it has been passed between three private equity shops. It’s currently under Stirling Square Capital Partners – which also owns businesses making “premium trousers”, running holiday parks and deploying armed guards.
The National Fostering Agency is held by a division called SSCP Spring Topco. Going by its last published accounts, it has been loaded up with vast expenses and debt, so much so that it paid no corporation tax in the 18 months to March 2016. Further down is a note that discloses that the foster care business is carrying a loan for £62.5m from yet another division of Stirling Square Capital, this one based in Luxembourg. The annual interest on that loan is 14% and it runs for 10 years. Neither the National Fostering Agency nor Stirling Square Capital wished to respond to my list of questions, but this looks like a way to funnel millions spent by British taxpayers on disadvantaged children out of the country to a tax haven. As the Guardian reports, such chicanery is common among the financiers who now run foster care.
I ask Maria what she makes of this and she boggles. She is self-employed: no paid holidays, no company pension. Women such as her work around the clock to give troubled children the best possible start in life – and their labour is being used to rake off profits by financial engineers they will never meet, for whom foster care is just another business in the portfolio. “Oh my God,” she keeps saying. “I feel such a mug.”
Maria’s name has been changed at her request, and some details obscured
• Aditya Chakrabortty is senior economics commentator for the Guardian
Analysis reveals multimillion-pound dividends and huge salaries at independent foster agencies
Foster care agencies run for profit by private equity investors are pushing up the cost of placing vulnerable children with families, local authorities have warned.
Concern about independent foster agencies (IFAs) came as a Guardian investigation revealed that one of the largest firms in the sector channelled money to Luxembourg via a complex loan arrangement. Analysis of the accounts of several private equity-owned IFAs, which charge councils to match children with foster carers, also reveals multimillion-pound dividends paid to investors and six-figure salaries for directors.
The details emerged ahead of the government’s national fostering stocktake, which is due to report on the sector. Ahead of the report, councillors and foster care veterans voiced concern at the effect of IFAs on council budgets. IFAs typically pay carers higher fees than local authorities and sometimes offer “golden handshakes” worth up to £3,000 to poach them from rival agencies.
David Simmonds, a Conservative councillor who is vice-chair of the Local Government Association (LGA), said that if cash constrained local authorities could pay carers more to retain them they would end up spending less overall.
“What appears to be happening is that the agencies see they can make money out of something local authorities have to supply by law,” he said. “They offer carers 25% more and then charge the local authority double or triple what they would pay in-house and make a nice bit of profit. From the agency’s point of view it’s a no-lose situation. The shortage of carers means there isn’t competition so prices don’t come down. It’s a market that isn’t functioning, to the detriment of the state.”
Carers are in short supply, but councils are legally obliged to find a foster home for vulnerable children, meaning they are often forced to turn to IFAs if they don’t have in-house carers. Fees paid to IFAs per foster child are almost 92% higher than those paid directly to carers registered with the council, according to a 2016 report by government adviser Sir Martin Narey, with the average fee per week rising to £759 for IFAs, from £396 for council-registered carers.
Narey said the gulf was “very large”, even if there were some reasons other than profit to explain it – such as IFA-registered carers taking on more challenging cases. According to Coventry city council, its IFA placements cost £40,000 on average per year compared with £30,000 for council-registered placements.
The number of children living with foster carers registered to IFAs rose 5% to 17,410 from 2012 to 2016, according to government figures, compared with a 1% rise in children with carers registered directly to the council, to 34,395.
Liverpool councillor Barry Kushner said the cost of paying inflated fees to IFAs had cost the council an extra £6m in one year. He said the council has begun trying to lure foster families back in-house by offering incentives such as reduced council tax, training and free leisure centre passes.
A spate of mergers and acquisitions among foster care firms, typified by last year’s £400m tie-up between the National Fostering Agency and rival Acorn, has fuelled concern about IFAs.
Andy Elvin, chief executive of fostering and adoption charity TACT, warned that consolidation would reduce competition.
“We are moving towards some de facto monopolies or potential cartels of private IFA supply,” he said. “As companies get bigger and have more power over local authorities, they hold more of the supply. This can lead to costs being increased to local authorities, because they need the placements.”
The merger between Acorn and NFA created a vast fostering company owned by private equity group Stirling Square Capital Partners (SSCP).
Analysis by the Guardian of accounts filed at Companies House reveals that the firm uses a corporate structure that transfers money to a parent company in Luxembourg. SSCP owns the firms via subsidiary SSCP Spring Topco, which had annual revenues of £104m but lost £21m after hefty interest payments on loans. This included an interest payment on a £62.5m loan from the Luxembourg parent company. Interest payments have the effect of reducing a company’s taxable profit.
The accounts also show that SSCP Spring Topco’s highest-paid director took home £319,345 for the year. The Guardian has contacted Stirling Square for comment about whether the loan structure generates a tax benefit.
Two other companies in the sector, Orange Grove Fostercare and Partnerships in Children’s Services (PICS), are owned by private equity group Sovereign Capital. Labyrinthine accounts for the Orange Grove group show that a parent company, Boston Holdo B, paid investors a dividend of £1.7m last year and took investor loans of £5.4m, paying an interest rate of 14%.
Sister company PICS paid £2.2m interest on borrowings including £14m of loans from investors, some of whom were company directors. The highest paid director took home £200,000, including pension contributions.
Sovereign said the high-interest loans were “normal practice” and that it paid all “applicable” tax.
Elvin said: “Any money leaving the system is not being spent directly on vulnerable children. Therefore all dividends, bonuses etc are being paid directly from taxpayers’ money allocated to be spent on children in care.
“The private sector is not driving down cost through competition, it is not driving up quality and it is taking out significant sums of taxpayers’ money. Where is the benefit to the taxpayer or to children in care?”
In late 2016, The Children’s Family Trust (CFT) applied for a sum of money from the National Lottery to fund a project titled ‘Ace in the Pack’. The hope for this project was to develop our current Children’s Guides for our Looked after Children, making the information that needs to be accessible to them more user-friendly and interactive. With the support of Paul and Max from ‘C&T’, we anxiously awaited the outcome of this application and began thinking about how this money could help us develop our current packs.
We are absolutely thrilled to announce that we were successful in our application and thanks to the National Lottery, we have been able to completely re-vamp our guides for looked after children and bring them into the 21st century!
Each playing card is representative of a different piece of information, message or topic. Given the generosity of the National Lottery, we wanted to make sure that our cards are looking progressively towards the future and therefore, in an age where technology is paramount, we decided to incorporate the use of QR codes to elaborate on the snippets of information displayed on each card. We understand that not everyone will have access or be able to use a smart phone or tablet to scan the QR codes, therefore they are just additional information for our children and young people, expanding on the information already provided on the playing cards.
The information detailed on our cards was created in consultation with a group of young people in our care, as well as a team of staff with differing experiences of fostering and skills. By combining these groups of people, we were able to ensure that our cards not only met the requirements of the children’s guide for our organization, but also took into consideration the kinds of information that our looked after young people felt would be beneficial to other children in our care. As children are at the heart of CFT, we wanted to involve them in this project and we were thrilled to have the participation of some of our children and young people who feature on the cards as they talk about their experiences and give advice from their time in care. We would like to thank Callum (age 16) and Adam (age 15) for all their hard work and input on this project, they really demonstrated their creative ability and passion towards a project, especially when working with Paul and Max to be filmed and helping to edit some of the content!
Previously our children’s guides were issued dependent on a child’s age, however going forward, we wanted to recognize that there is no ‘one size fits all’ when it comes to children and young people, and therefore wanted to equip the children in our care with additional information or ‘extras’ we feel would be useful for them, appropriate to their level of understanding.
In addition to our new interactive cards, each child or young person will now receive a non-branded welcome bag which containing a pack of the our playing cards, a wallet containing information for important contacts, a notepad and a weekly planner with dry wipe pen. In addition to this, our children and young people will also be issued with leaflets appropriate for them. These additional extras, along with the ‘Ace in the Pack’ playing cards, will make up our brand new children’s guide which will be issued to all our children and young people in early 2018.
Once again we would really like to thank everyone involved in this project including Paul & Max at C&T, Callum and Adam and the staff closely involved in this project, Jayne Figgett, Shelley Candlin, Emma Higgs and Connie Ingles.
We hope you are all as excited about the new guides as we are and we hope that our children will enjoy using them as they play their way through important information!
The Foster Care Co-operative (FCC) will be working with Shaping Our Lives and the University of Worcester on some groundbreaking research - looking at what barriers potentially stop disabled people from becoming foster carers, and how these barriers could be overcome.
Gail Granger, one of FCC’s social workers based in the Midlands, is lending her experience to the project in order to provide an ‘industry perspective’ and an ‘employer’s voice’. This will support Dr Peter Unwin, Principal Lecturer in Social Work at the University of Worcester, and the research he has initiated.
The research, entitled ‘Mutual Benefits: the potential of disabled people as foster carers’, will be funded by a grant from the DRILL programme (Disability Research on Independent Living and Learning) – which is a £5 million research programme funded by the National Lottery.
It is very important that the fostering task should be as inclusive as possible. Not only does this enable more people to become carers, but it also provides diverse carer-to-child matching options when looking to provide children with a home. In theory, the better the match, the more stable the placement should be.
Other than some very wide criteria and a full assessment and checking process, the main requirement for becoming a foster carer is to be able to care for children in your home. If this criteria can be met, there shouldn’t be any reason why a person can’t become a carer – no matter what disability they may have.
Ian Brazier, executive director of FCC, said: ‘Matching the needs of every child we look after is the fundamental requirement for successful fostering. Every child is different and the diversity of their needs can only be properly matched if we have a wide diversity of carers willing to take on this challenging but rewarding task.’
FCC are very much looking forward to the results of this research, along with how any barriers to disabled people becoming foster carers can be overcome. They are also extremely proud of Gail for lending her expertise to this ground-breaking piece of research.
You can read more about the research here.
Thousands of new foster carers are required each year in order to care for vulnerable children. If you are thinking about becoming a foster carer or you have some questions about fostering eligibility, you can call FCC on 0800 0856 538 or message them here.
We welcome Nadhim Zahawi to his new role as Parliamentary Under Secretary of State at the Department for Education. We note with some concern that this is an unpaid position, and truly hope this is not a reflection of the priority placed on the role by this Government. Indeed, it is vital that his appointment marks the start of an increased profile for children's social care as well as a new period of stability within the Department for Education, especially given the importance of 2018 for fostering. We will be seeking a meeting with Mr Zahawi at the earliest opportunity.
We look forward to the release of the national fostering stocktake report as soon as possible – it is essential that publication is not delayed as a result of the ministerial change. We would urge the Minister to fulfil the Government’s commitment to consult widely with the fostering sector – including foster carers and especially fostered children and young people - on the report’s recommendations before making any decisions on the direction forward.
The Minister will also have a vital role in driving forward the much-needed improvements to fostering that result from the stocktake consultation. While 2017 saw a significant focus on fostering, with the Education Committee’s inquiry and the stocktake, it was a year of conversation, introspection and discussion rather than action, momentum and change. This is the year when change must happen within fostering, and we need the Minister to lead the way - thousands of fostered children and young people, as well as the families that care for them, are depending upon him to deliver.
Barnardo's has responded to reports today that a child was referred to children's services every 49 seconds last year.
Barnardo’s Chief Executive, Javed Khan, said:
"The figures highlight the rising demand on children’s services which have insufficient resources. We are working closely with local authorities on preventative strategies that support families to reduce the likelihood of children being taken into care.
However, without enough secure, stable and caring foster families, children in care risk being moved around; placed somewhere that’s not right for them or separated from siblings because there is a need for 7,180 more foster families in the UK.
We need more loving carers to foster children especially those who are older, disabled, are from ethnic minorities, and siblings, as they often struggle to find families.
Fostering can be a life changing, life enriching experience for carers and children. Barnardo's views its relationship with foster carers as a partnership offering continued support, training and advice for as long as it is needed."
Staff development is an integral part of working at St Christopher’s. At various points in your career you have the opportunity to apply for funding to complete training in a relevant area.
Sam, manager of a 16+ service, asked for support to complete a counselling and psychotherapy certificate.
Training that makes a real difference
“Since October 2017, I’ve been studying for a Certificate in Counselling and Psychotherapy at the Tavistock and Portman NHS Foundation Trust, a specialist mental health trust based in North London. I have been attending a seminar and lecture every Tuesday morning, reading set texts and completing observations from my placement.
“The lectures and seminars give me an opportunity to develop my understanding of psychodynamic psychotherapy and psychoanalysis, and this further underpins the theoretical background on how I work.
“For my placement I was fortunate enough to be able to use the St Christopher’s football team, which I am involved with two nights per week. Writing my observations of the sessions has helped me keep an objective eye while participating in them and reflecting more deeply on the psychological factors at play. This is further aided by the work group discussions that I participate in at the course.
“The course is giving me a greater understanding of the development of the young people I work with, but it is just as applicable to the staff I work with. It’s helped me understand how development that occurs in infancy, childhood and adolescence is no less relevant to adults and I’ve become more aware of my own emotional states and subsequent responses.
“So far the course has been mostly theoretical, which complements the Counselling Skills course I completed last year, all contributing to an increasing ability to work theoretically with young people and staff teams. Hopefully, I’m becoming more effective in my role and this is bringing skills and knowledge to St Christopher’s. But the proof is in the pudding!”
Want to work for a charity that invests in your development? Take a look at St Christopher’s vacancies today.
Children and young people from Team Fostering recently spent time with care home residents at Broadacres Care Home, Rotherham, as part of a scheme to bring young and elderly together. It was arranged as part of our Volunteer Programme, which helps young people develop a range of skills and experience to enhance future employment prospects.
The young people spent several hours with the residents over the festive period, playing board games and pass the parcel. The group of children and residents read poems and books together, performed songs and took part in a festive quiz.
Broadacres resident Iris Oldfield, 89, said: “I don’t have a young family so I was absolutely delighted to spend time with the young children.”
Julie Eveleigh, Interim Manager at the home, said: “Team Fostering approached us to bring the children in to entertain our residents.
“They put on a buffet and kept the residents company with games, music and dancing.
“The experience had huge benefits for both the residents and children and we’re hoping there will be many more visits in future.”
The children and young people who took part in the scheme worked incredibly hard and have taken a lot from the experience. Broadacres have invited the young people back for future events and activities, and this was a fantastic scheme which really brightened up the festive season for both parties.
Some of the most vulnerable young people in our society are being failed by a care system which doesn’t meet their needs, writes Education Committee chair Robert Halfon
Foster carers provide an invaluable service for thousands of young people. Yet as the Education Committee found in our fostering inquiry, the reality is that the foster care system in England is under significant pressure. Some of the most vulnerable young people in our society are being failed by a care system which doesn’t meet their needs. In our report, we have been very clear that efforts need to be redoubled to ensure that as a country that we value foster children, foster carers, and foster care.
For too many children and young people, their experience of care is that of something which is done to them, not with them. As we would expect, there are laws and guidelines intended to encourage placement stability and the involvement of young people in decision-making about their care. But the sad fact is that this isn’t always applied in practice. One young person we heard from said they had been through eight placements in four years, another spoke about having ‘moved six times in less than no time’, while another had lived in thirteen different foster placements and two children’s homes in five years. This frequency of placement can only be damaging to children’s wellbeing, their development and their future prospects. More needs to be done by government to ensure young people and children don’t face the prospect of a dizzying number of foster care placements.
In our report, we also made clear that young people should be placed with their siblings whenever it is possible and appropriate to do so. There must be greater efforts by social workers and others to facilitate regular and meaningful contact when it is not. Indeed, there must be greater involvement and better information for foster children on their placements, and a consistency of practice to ensure all young people are able to benefit from an appropriate and positive experience of foster care.
Foster carers have a really important role in society and often provide fantastic care in difficult circumstances. But foster carers are underappreciated, undermined, and undervalued. We believe the Department for Education should step up and show they truly value foster carers by establishing a national college, which would work towards improving working conditions for carers, provide a resource for training and support, and give them a national voice and representation. It is only right that these hugely committed carers are given the support they need to help improve the lives of the young people in their care. A national recruitment and awareness campaign initiated by the Department for Education could also help to improve capacity in the system.
Too often foster carers also have to trudge through bureaucratic treacle. Too many carers are not adequately supported, neither financially nor professionally, in the vital work that they do. The government needs to ensure all foster carers are paid at least the national minimum allowance. Ministers must also look to make sure this allowance matches rises in living costs and allow carers to meet the needs of those they are caring for.
The government’s move to extend the extra 15 hours a week childcare entitlement to children in foster care is to be welcomed. This followed strong representations from the Education Select Committee and it is much appreciated that Justine Greening and Robert Goodwill acted on this issue. We hope that DfE ministers will seriously consider the recommendations of our fostering report and ensure that children and young people can then receive the help they need to enable them to climb the ladder of opportunity and thrive in their lives ahead.
Robert Halfon is Conservative MP for Harlow and chair of the Education Select Committee
I’d be lying if I said it did not break my heart each time a child leaves our home
We asked one of our foster children to list things she would like from her ‘forever family’, when the time came to move on. The first item at the top of her list was her own horse. She loved riding, so it came as no surprise to us. We didn’t want to spoil her dream, but at this point we had no idea how, or if, we might be able to help make her dream come true.
Saying goodbye is one of the biggest challenges faced by foster carers, as well as for the children and young people in their care. We have fostered for more than eight years, and it does not get any easier.
We are short-term foster carers, so when each placement begins there is a presumption that it is a temporary arrangement until a permanent home can be found. ‘Short-term’ may not be quite what you expect. Experience has taught us to expect a placement to last for about one year, but often it takes longer. Our most recent placement, which ended in late November, lasted for almost two years.
The children become part of our family. That’s not just my wife and I, and our two daughters. It also includes grandparents, aunts and uncles, and cousins. And these days there’s a grandson too, and another on the way. When the children leave us, they say goodbye to the whole clan. It is tough for everyone, and their absence is keenly felt.
With that in mind, we do all that we can to prepare our foster children for the next stage. We try to include them as far as possible, to make sure that the outcome is not only in their best interest but enables them to fulfil their aspirations. Most, but certainly not all, say they want to stay with us until they become adults. The promise we make to them is that their forever home will be even better than ours, or we will not let them go. We really mean it. It is a big promise and I know it makes social workers fret, for foster carers are not meant to make that sort of commitment. But if we are not ambitious for ‘our’ children, and prepared to fight on their behalf, what is it that we are trying to achieve?
Hence the list, which becomes a starting point for conversations about their future, whether they are returning to their birth family home, being cared for by a close relative, staying in long-term foster or residential care or being adopted. It may change over time, as their horizons expand. But it remains as a constant reminder to those responsible for their futures, including us, that we should aspire for the very best.
In a sense, the first steps towards the moment when we must say goodbye are taken when the children arrive, and everything we do is rooted in the need to help them thrive in the big wide world beyond our doorstep. Some children have profound needs; some must simply rediscover their self-belief to be ready for take-off. Whether it is reading or practicing maths, learning carpentry or playing football, flying a kite or playing cards, these are all life skills that most children and young people take for granted. One of our young people was surprised to learn that both our daughters drove their own cars. Since that day, one of her ambitions is to pass her driving test, get a job and buy a car. I have no doubt that she will do just that.
I’d be lying if I said it did not break my heart each time a child leaves our home. But I hope that when the time comes we have helped them acquire the skills and the wisdom to help them on their journey. That is what fostering is really all about. And I also hope we have kept our promise that their new home will be even better than ours.
And, by the way, our former foster daughter has recently ticked off that item at the top of her list, and is now the proud owner of her own horse, called T-Bone. Just so you know, dreams do come true.
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