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In The Spotlight
England’s ‘dysfunctional’ children’s care system
A new report reveals that protection of youngsters in care in England is failing in a profit-chasing sector
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Local councils are required by law to provide care for children in need but the care sector is dominated by private equity-backed operators
(Image credit: Thomas Trutschel / Photothek / Getty Images)
The Week UK
15 September 2025
The care system for children in England doesn’t represent value for money, according to a new report, with a record number of those in residential care living in challenging conditions and often moved miles away from where they grew up.
The cost of children’s homes has doubled in the last five years but the current standards of care nowhere near reflect that. A report by the National Audit Office (NAO) has described the system as “dysfunctional”.
It’s another damning indictment of a sector that has been dogged by staff shortages and higher expenses, leaving vulnerable children unsupported.
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The state of affairs
Protecting children in care has become a problem right across the country. “It is a moral failure” that thousands of children are abandoned at critical times in their lives, said a Commons Education Committee report in July, with “urgent action” required to “fix this broken system”.
On a local level, councils are struggling to find enough placements of a high standard for children. Many bounce from home to home, with no consistency or stability to speak of. A history of abuse and neglect affects two-thirds of children in care in England, said Sky News.
The challenges don’t stop there, with the problems they face continuing into adulthood. Due to “systemic failings” of the care system as a whole, those who emerge from care are “three times more likely not to be in education, training, or employment than their peers”.
Better information about the “supply and the availability” of places in care, but more importantly of specific “children’s needs”, should be the top priority for the Department for Education, said the lead author of the NAO report, Emma Willson.
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Crunching the numbers
Like many concerns at the moment, a central obstacle for care providers is funding and allocating resources effectively. Care facilities do not come cheap but the situation is beginning to spiral out of control.
Overall, the total cost of residential care in England last year was £3.1 billion, rising from £1.6 billion 2019/20, said the Financial Times. The average cost to local authorities of placements in children’s homes rose by a third to nearly £320,000 in 2023/24, meaning an average cost of around £6,100 per child a week.
In the most extreme circumstances, children with complex needs require “24-hour supervision by multiple staff” and councils had been charged up to £3.3 million a year for a single placement, said The Guardian.
Profit-run sector
Companies that are privately owned, often funded by private equity, lie at the heart of the sector. They look to take advantage of the broken system, said The Guardian, with the fees they charge far surpassing the rate of inflation, with some of the biggest providers “enjoying average annual profit rates of 22.6% a year”.
Private firms were “racking up huge profits” due to market failure, and can load the children’s homes with “high levels of debt”, which often leads to “heightening the risk of market instability”.
Their presence in the sector has grown. Now, 84% of children’s homes are run for profit, said the BBC. Because they are independent, many private care providers can “cherry pick the children they take” from councils “based on how much support they need and how much profit this allows”.
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