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The Guardian view on children’s social care: a heartbreaking market

The system is in crisis and profiteering providers are making it worse. The case for reform could hardly be clearer

A little girl hugging a teddy
‘The report notes the strong connection between economic deprivation and child abuse and neglect.’ Photograph: Dave Hunt/AAP
‘The report notes the strong connection between economic deprivation and child abuse and neglect.’ Photograph: Dave Hunt/AAP

There are 80,000 children in the care of local authorities in England. At the current rate of growth of 2% a year, the figure will be 100,000 in a decade. If removing more and more children from their families was producing good results in terms of preventing harm, and setting them up for life, that would be one thing. The truth is that while there are positive experiences of care, and inspirational stories of people who overcome tough beginnings to build successful lives, far too many are repeatedly failed. Care-experienced people face some of the most severe disadvantages of any section of the population. Overrepresented among homeless people and in the criminal justice system, they also suffer from worse health, education and employment outcomes than almost any other group.

This is the moral and social case for reforming the children’s social care system, the rising cost of which is also placing huge pressure on councils. A review promised in the Conservative party’s 2019 manifesto, and prepared over the past year by Josh MacAlister, makes no bones about the extent of the dysfunction – or the role of the private sector in exacerbating it. While local authorities have faced an ever-tightening squeeze on budgets over the past decade, the private providers that control 83% of the residential care market have been cashing in. Profit margins averaged 22.6% in 2016-20, and the Competition and Markets Authority believes that fostering is on a similar trajectory, with a handful of providers increasingly dominant.

Mr MacAlister is right to state that, like state education, looking after children should be organised not around a profit motive but an ethic of care. The duty of councils, as set out in the Children Act 1989, is to “make such use of services available for children cared for by their own parents as appears ... reasonable”. Children in care, in other words, should be treated like other children. Rather than nationalise existing children’s homes, or cap their profits, Mr MacAlister wants councils to band together and squeeze them out by rebuilding their own services or, if they prefer, commissioning not-for-profit ones.

Of course this and other proposed improvements will cost money. The review suggests a budget of £2.6bn over four years, some of which could be raised from a windfall tax on providers. Given ministers’ reluctance to tax energy giants’ profits, the chances of them doing this seem small. But the review comes with a warning that unless they do something the situation – and cost – will spiral out of control.

To reduce demand, the review’s key proposal is a new community support system called “family help”. If early intervention were to be boosted, it suggests, 30,000 children who would otherwise end up in care could live safely with their families. Also recommended is a new focus on kinship networks, and payment of allowances. Other suggestions include the welcome one of shifting responsibility for youth offending from the Ministry of Justice to the Department for Education.

So far, signs that the government will respond constructively are not good. The education secretary, Nadhim Zahawi, said on Monday that a full response would take months. The report notes the strong connection between economic deprivation and child abuse and neglect. The reality ministers cannot hide from is that to reduce the risks facing vulnerable families, poverty needs to be reduced. Mr MacAlister is right to refer to the life chances of care-experienced people as a pressing issue of civil rights. It is good that their views and voices are listened to more than in the past. But while councils’ resources are stretched to breaking point, and ministers refuse to raise benefits, life for these unlucky children is unlikely to get better.