The Adolescent and Children’s Trust (TACT), the largest fostering and adoption charity in the UK, has warned lessons must be learnt from the recent collapse of the private equity owned children’s residential and education provider Sedgemoor.
The last decade has seen a rapid growth in the independent fostering sector and in particular those fostering agencies in the private sector. In recent years private equities entry into the sector and with more children been placed with independent agencies this has caused concern amongst children’s experts and sector leaders.
16% of children with foster carers are now placed with independent fostering agencies, over 30% (5% of all children in foster care) of which are placed with private equity owned companies. Fostering through Social Enterprise is a consortium of voluntary and non profit fostering agencies and its members care for 15% of children (2.5% of all children in foster care).
Kevin Williams, Chief Executive of TACT and spokesperson for the Fostering through Social Enterprise Consortium warns that putting profit before children’s needs will place them in an unacceptable risk.
“The fact that over a third of fostered children in the independent sector are now with agencies owned by private equity companies should be of great concern. Private equity has one primary motive and that is to maximize the return on their investment. With pressures on fees from commissioners and more competitive contracting processes with Local Authorities they can only do this by reducing costs and increasing capacity – this means more workloads for staff and aggressive acquisition of smaller providers; neither of which result in good outcomes for children or carers”
He also expressed concern at the pressures on senior management from their private equity owners to meet tough financial targets at the expense of focusing on quality of service and improving the outcomes for the children they care for.
“Sedgemoor is a reminder to this sector that where the profit motive is paramount for private equity firms the consequences can be disastrous for children, staff and carers. We are already starting to see consolidation of the independent fostering sector with small and medium sized providers selling every month to private equity owned agencies.”
He added that not only will this have an impact on provision of niche fostering services, often provided by smaller specialist agencies, it could also have the effect of creating a monopoly situation for a few providers and drive out effective competition leading to higher prices and less added value. Already the five largest privately owned providers dominate the independent sector by far with most of the others, over 130 providers, with turnovers of under £2m.
“Ultimately our primary focus as a charity is ensuring the best possible outcomes for the children we care. Alongside this is providing best value for the Local Authorities that commission our services. A key part of both is providing added value in everything we do – added support and training for carers, added youth participation initiatives, added education and therapeutic support for children and young people and ultimately ensuring they leave foster care fully prepared for the challenges in their adult life”.
“The Care Matters White Paper strongly advocates for a focus on the profesionalisation of foster care and contestability in the independent fostering market but to ensure this happens the Government must look seriously at the role of private equity firms in fostering”
For more information please contact Matthew Huggins on 0208 695 8142 or 07872 818286. Notes to Editors:
- TACT (The Adolescent and Children’s Trust) is the largest fostering charity with over 310 foster carers caring for over 350 placement at any one time across the UK.
- TACT is a registered charity (number 1018963) and a company limited by Guarantee (number 2779751)
- Kevin Williams was appointed as Chief Executive in 2001 and has an MA in Social Work and a BA in Education. He is also a Trustee for the British Association of Adoption and Fostering (BAAF)
- TACT recently merged with influential policy and campaigning group Children Law UK and Independent Adoption Service and is a founding member of Fostering through Social Enterprise.