Removing profit from children’s social care could cost Welsh councils “millions and millions and millions”, one council boss has warned.
Many children in care in Wales are looked after in care homes run by private companies making a profit, with some owned by private equity firms.
But due to skyrocketing costs and concerns about standards, the Welsh Government is planning to stop these care companies from making profits by looking after children.
However, a lack of detail on how this will work has caused council bosses to be anxious about what comes next, with the potential for gigantic costs to the taxpayer.
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Deborah Driffield, director of children's services at Cardiff council, said: “[Many] private providers are now saying they’ll stop trading in Wales and they’ll go over the border, because in England they’re not facing the same situation.
“It’s very easy for providers to not only move across the border, but to stay here and just take English children from England, which will have huge implications for us.”
She told councillors on the children and young people scrutiny committee about her concerns during a meeting on Tuesday, February 22. Heads of children’s services across Wales have written a joint letter saying while they agreed with the principle, they were “very anxious” about the plans to eliminate profit from the sector.
She said: “There are a number of options which will come onto the table later on. Some of them will be quite unpalatable in terms of cost. We could, as local authorities, buy out all the private providers, which I would imagine cost millions and millions and millions. I don’t suppose that’s something we’re going to get funding for, but maybe we will.”
The commitment to remove profit from children’s social care formed part of the recent cooperation agreement between the Welsh Government and Plaid Cymru. This promised to “put in place a framework to remove profit from the care of looked after children”. But key details of how this will actually work remain to be seen.
Councillor Lee Bridgeman, chair of the scrutiny committee, said: “Will we be pushing the Welsh Government to provide that detail? Because overnight to say ‘we’re going to eliminate profit’, would leave Cardiff council and children in a hell of a state. Are we going to open things in house or are we going to work with the third sector?”
Cardiff council already spends more than 10 per cent of its revenue budget on children’s social care, and the costs are increasing. From April 2022 to March 2023, the council has budgeted £79 million to spend on children’s social services, almost double the amount in 2012–13. A lot of this money is for paying private companies for placements in care homes.
Finding out exactly how much each placement costs is difficult. A previous freedom of information request regarding the cost of each external placement was refused by the council. The response claimed it would take 44.5 hours to collate the cost and provider of each of the 1,336 external placements made between April 2018 and March 2020.
Despite the cost, if private for-profit companies ceased trading in Wales due to the Welsh Government’s new policy, councils would still be faced with having to find care homes to look after a similar number of children—only with far fewer options of where to place them.
One solution could be for these companies to split into two, with a for-profit operation in England and a not-for-profit operation in Wales. Another option would be for councils to open their own care homes in house, of which a few have recently opened in Cardiff, although an issue with this would be a shortage of qualified and experienced staff.
Ms Driffield said: “There is a model we could start working on, where they have two separate parts of their organisation, one of which will be for profit, one of which won’t. We can start negotiating and looking at that, and we’ve set up meetings to see what that would look like legally, but also to reassure providers that we want to continue to do business with them.
“I don’t think it’s just about eliminating profit, I think it’s about improving outcomes for children and improving the quality.
“As we’re increasing the number of children's homes that we’re opening, we’re finding it very difficult to get the right staff in—experienced staff who absolutely commit to those children—because local authorities gave up all of their in-house provision a number of years ago, so we don’t have a cohort of staff.
“I think the Welsh Government will have to look at a national training programme, if there’s going to be that competition for a really small pool of staff.”
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