Monday 22 October 2007

Children's Homes - the Latest Target for Private Equity Firms

As a constituency MP and also someone who has worked in local government and for a time in social services I have taken an interest in care services. Most recently I have been raising concerns in my area about the care of the elderly. I have been particularly worried about what has happened to home care since it has been largely privatised and also residential care for the elderly which is now largely provided in private care homes.

However I don't know how but I missed it. Missed the fact that the role of looking after children taken into care by the state has largely been privatised over the last decade. In the Observer business section at the weekend I was shocked to read that 65% of children's homes are now in private hands. Earlier this month I discovered that fostering is now largely under the control of private fostering agencies.

With companies able to charge between £2000 and £4000 per child a week this sector of the welfare state has become an attractive opportunity for profitmaking by the private sector and in particular private equity companies which are always seeking new fields in which a lucrative profit can be made.

Recenty however one of the biggest players, Sedgemoor backed by the private equity company ECI, has gone into administration. This is only three years after its group gave a £20 million payout to its investors. Sedgemoor's childrens homes are now being sold off leading to uncertainties for the staff and for the future care arrangements of the children.

I don't know how we have allowed the care of the most vulnerable members of our society to be privatised and passed over to institutions whose main and overriding motivation is profitmaking.

The Chief Executive of the Adolescent and Children's Trust summed it all up for me when he said "Our concern with private equity firms moving into the sector is that their prime motivation is making a profit not the quality of service they provide. I think it is immoral to want to make money out of children living in care."

I couldn't agree more. I also think it is immoral for any Government to pursue policies which allow this to happen.