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
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