LGA Profit making and risk in Independent Children’s Social Care Placement Providers: Update report December 2020

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ICHA Media release

Embargo: 00.01, Friday 29 January 2021

Contact: Peter Sandiford CEO, ICHA: Peter.Sandiford@icha.org.uk


LGA Profit making and risk in Independent Children’s Social Care Placement Providers: Update report December 2020 https://icha.azurewebsites.net/Public/Document/Download/1113?fileName=5933354b-6c43-48fd-8d67-b782b4970172.pdf

This is a dispassionate and data driven report and as such, is welcomed by the ICHA.  However, this most recent update was mandated to focus entirely on the money coming into the largest providers with no quantifying information regarding the use of those funds.  The report does recognise that money is not being taken out of the sector as some infer but is in fact being reinvested.

The reader must also bear in mind that the greatest proportion of the sector is comprised of small providers who, as demonstrated by the recently released 7th State of the Sector report https://www.icha.org.uk/Public/Document/Download/3?fileName=e0c7f4b5-4ed8-491c-9273-11cadfb34df3.pdf  (incidentally also compiled by Andrew Rome), are often just breaking even.

The report confirms that there are a small number of equity and stock market backed providers who are viable, and whose leverage does not appear to put the sustainability of the organisations concerned at risk. Whilst the ICHA is aware of the dangers of leverage, we are reassured by the message there is no indication that this is imminent, or indeed likely.

The report demonstrates that there is continued growth, not just acquisition, in the sector which we know is needed. As local authorities do not appear to have the ability to meet this need, then the private and voluntary sector must continue and will, necessarily, grow to meet the needs of children requiring a home.

It should be recognised that growth has been driven by need and by local authority commissioning practices. In this respect, equal scrutiny is required of the forces driving these developments and shaping the current market.

The collapse and underfunding of local services have resulted in larger providers filling these gaps for their children. Their provision of education, therapy, mental health services, step-across to fostering, and overall responsiveness and flexibility to need, to name but a few, come at a cost. These include staff, training, buildings and furnishings, research, development, innovation, planning and co-ordination of these ever-expanding entities. Most of these costs are rarely considered when making assumptions about profiteering and remain largely hidden.

Large providers are also leading the way in terms of quality as measured by Ofsted with well over 80% of their homes being assessed as either good or outstanding.  In addition, many are currently adopting objective means of measuring the impact of their provision, something that local authorities could be leading the way in when measuring against value for money.

If these large providers were to stop trading, local services would be inevitably be put under further pressure due to sufficiency of provision. There is arguably not the capacity or breadth of expertise currently within local authorities to meet the complex needs of our children, and local authorities rely upon the private and voluntary sectors to respond rapidly to the needs of children requiring this care. Whilst there is an argument for oversight, we must acknowledge the fact that these organisations care for one of our most ignored and vulnerable section of society very well, with great expertise, compassion, rapidly respond to need, and children requiring care are benefitting from their existence.

Peter Sandiford


07597 982533


 Notes to Editors

 The Independent Children’s Homes Association Ltd (ICHA) is the voice of providers of residential child care services and resources across England and Wales. We are a Not for Profit Limited Company.

ICHA’s Vision: ‘Exemplary Residential Child Care.’

ICHA’s Mission: ‘A member-led organisation driving excellence in residential child care through innovation, collaboration and sector leadership’.

ICHA represents both large and small providers.  Some members have just one home whilst others have many homes across a wide geographic area.

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