95. The Children's Homes Scandal: Part Two

0:11Hello and welcome to The Rest is Money with me Robert Paston and me Steph McGovern. Now, we recently did a special episode on the scandal of profit making in children's homes. This is the story we covered in depth about the four out of five children's homes that are owned by private companies who are making profits in the hundreds of millions of pounds every year. And I think what from the response we've had from you was particularly shocking to all of you is how many of these are owned by, you know, private equity firms and some even by, you know, sovereign wealth funds. So that's foreign investors essentially making money from our most vulnerable children, isn't it, Robert?

0:54So what really exercised so many people was just the vast profits being earned from children's services by these private sector providers. Hundreds of millions of pounds. When it comes to the biggest providers, a minimum of 300 million pounds every year, which means in total the profits will be significantly greater than that. It's the profit margin too. that's the ratio of profit to the income that they receive from councils, effectively means from you and me, whether it's through the taxes we pay or the council tax we pay. And that profit margin is 20 % plus, so that one in every five pounds that councils are providing private companies, private equity companies for these children's services is turning into pure profit for their investors.

1:46And I think as well, I know a lot of people responded to some of the figures we gave on how much it actually costs per week per child. You know, we mentioned it can be anywhere in between 10 ,000 to right up to 50 grand a week per child per week, you know, which is a staggering amount of money. I mean, a lot of these children have very complex needs and, you know, they need that extra care. But what's alarming people is how much of that being paid by local councils is going out as profit. That's right. And just to put that into a slightly flippant context, that's actually more than the value of an Arsenal box being gifted to the Prime Minister.

2:25Which is very timely, isn't it? So, you know, we've had loads of reaction to this, lots of you saying how outraged you are by it, and also people who are actually connected to the sector, who have their own kind of harrowing stories to tell in all of this. We're going to tell you about them throughout the episode. But I just want to give you a flavour of some of the outrage because I think this kind of sums up what we kind of said in this. So one of those people to respond, they're called Clarendon Riser on social media, but they said, I've never understood why key areas of social care are sold to private equity, whose business horizon is usually three years together with a debt laden operating model and extracting maximum profit for minimum effort.

3:05their business model is not conducive to long-term service provision. Similarly, Peter says, the words profit, children and care should not appear in the same sentence. And Han says, until the government intervenes, it will continue costing councils millions. Surely, it could be regulated in some way financially. And, you know, mention of the government there, that's exactly who we spoke to about this scandal, didn't we, Robert? We did. And obviously the point of talking to the education secretary is not only does this cost a fortune, I mean, astonishing amounts of money, but in many cases, the quality of care being given to these vulnerable young people is terrible.

3:48This is her responsibility. So this is what Bridget Philipson said to us about how she's going to try and bring some decency to this very important service. I mean, we've been looking in a special podcast at the scandal of too many kids being failed when they're put into care. One of the really striking trends over the last 14, 15 years has been the massive decline in support for families that are struggling when kids are young. And it's been put to me by a number of people working in this field that there is now a doom loop. that because the money isn't going in to supporting struggling families, families that might be struggling with alcoholism at home, mental health issues, families disintegrate, kids have to be taken out.

4:53They're then put into these incredibly expensive private sector provided homes. Do you as a government have plans to do more early intervention, which if you do, that's a bit like the argument in the health service. You invest in helping people to be healthier. You don't have to spend so much money on hospitals. You invest in keeping families together. Inevitably, over time, the cost of residential care for kids will be lower because fewer kids will be going into residential care. I agree entirely that it is a scandal, what we see at the moment. You know, we're talking about children and young people who've often been through incredibly traumatic childhood experiences, can no longer stay in the family home.

5:36and that's why we will be setting out plans very soon, a number of measures that we intend to take around legislating, particularly where it comes to excess profits that are being derived. Yeah, because Wales and Scotland have both committed to completely getting rid of any profit making from children's homes. Are we going to do that in England as well? You won't have long to wait to see the measures that we're setting out. We'll be doing so very soon. So there's a limit to what I can say now about the precise nature of those measures. But you've used the word excess profit. So as a minimum, we can expect that even if there is private sector provision from private equity or other kinds of private sector firms in the future, they will not be able to earn what we would call rip off profits.

6:19Yes, we will be tackling that and looking to better regulate the sector overall. We are spending a lot of money as a country on some really poor outcomes for very vulnerable children. And that goes to the wider question that you just presented there about where you spend your money. We are doing far too much in terms of crisis intervention much later down the line. We are not doing enough as a country to provide the support that children and families need much earlier, but also the greater support that is required around foster care, around kinship care and making sure that wherever possible, children can remain within a stable family home.

6:54Can I just ask you on that? The numbers of foster parents have collapsed. And yet there are large numbers of actually parents who would provide foster care. What's gone wrong? you're right the numbers have we've seen a big drop we're doing a lot of work in the department to try and respond to that and also to increase the number of foster carers i think also some of the work i've seen that councils have been doing about bringing some provision in house is really important too so one of the first visits i did as secretary of state was to a children's residential home in derby where the local authority had brought that provision in house because there will always be some children who cannot you know because of the very complex nature of what they've experienced and often some quite big behavioral challenges there they will need more specialist care but we have to make sure that that's really high quality and I think part of what we're looking at through the legislation is how we can support local councils to work together on this to provide better provision not being so dependent especially on privately equity because they provision.

7:58The Ofsted have said themselves, you know, they are in charge of often the foster agencies, they're in charge of some of the SEND providers, you know, they cover every aspect of vulnerable child's life, don't they? And something like a quarter of local authorities are saying the escalating costs of their childcare responsibilities are putting them on the brink of bankruptcy, of collapsing. Yeah, it's not sustainable. But I think crucially, it is also not delivering good outcomes for young people. I mean, you look at the longer term prospects for young people who've been through the care system and they're really, really terrible.

8:35So as well as addressing what we need to do now around young people where the state does have to step in, we need to do more to honour our responsibilities as a country to people who've been through the care system. So is it going to change then? Yes. And can I just ask the other thing that really shocked me when we started doing this investigation was the kids in unregistered homes. So kids who have totally fallen through the cracks end up in homes that, again, Ofsted themselves have said are unsafe and unsuitable, can be miles away from where they're originally from. And they're kind of left to fend for themselves.

9:08The private sector providers are saying these are too complicated for us. And so you get these unregistered, unregulated providers who are being paid hundreds of thousands of pounds effectively to act in the way that, well, in the old days, you know, you would have called them borsals they're basically locking these kids up and i know we don't on top of that i've sort of admitted they don't know how many there are of them which is i mean that must frighten you it does i mean all of this is i mean appalling genuinely um appalling not least when you consider the young people that we're talking about the experiences that they've had up until this point in their lives and why it's so crucial they get the right support i am speaking with ofsted about all of this about whether they've got the powers that they need whether we've got the regulation right with the new chief inspector who took up post at the start of the year.

9:55So, again, the legislation that we're looking to set out as soon as we can will be about responding to what we're talking about here. I noticed as well, there's kind of pilots happening, government pilots around kinship and things like that. Can you tell us any more about them in terms of what they are? Because it's obviously way better, even if kids have to be taken away from their parents, if they can live with their grandparents or an aunt and uncle, that is a way preferable solution, most people would say. Kinship carers do an absolutely amazing job and rightly tell me that they don't feel they get the recognition or the support that they need.

10:27So it's sometimes about the support that they need, because obviously it's a big responsibility to take on the raising of a child, perhaps a family member, or sometimes it can be family friends who step in. And so I'm speaking with organisations, working with kinship carers about the support that they need, but also how we move to a system where we port and encourage kinship carers to take on responsibility for children where they can't remain with their birth parents. Because we just haven't got the system kind of tilted in the right direction to provide that level of support. There's a couple of other related issues.

10:58So you'll know Josh McAllister did a report on all this for the last government, now a Labour MP. He made, I thought, two quite powerful points to me. One is, if we as a nation can find, I mean, hundreds of thousands of families to look after Ukrainian refugees, why can't we do something similar when it comes to our own young people who don't have homes? So is there any chance, as it were, of a sort of national campaign, a bit like, you know, encouraging people to take in refugees to actually become foster parents? And the other thing he talks about, which, again, I thought just made a lot of sense, you talked about encouraging local authorities to work together.

11:43He thinks an alternative approach to residential care as and when we need it is to have local authorities club together and build collectively owned, publicly owned residential care centres so that they can, in a sense, share their resources. So some of that work is happening, but I think there's further to go. And again, we're looking at how we make that a reality and the legislation that will underpin it. I think in addition to that, for me, it's not just about councils directly delivering services, but often there are some really good examples where they've partnered up with charities, with other organisations to do that.

12:17So there is expertise that's out there that sits beyond councils that I think we need to consider. On foster carers, I think that's a good challenge. I think there are lots of people out there who would want to provide that support, would be interested in becoming foster carers, but find it too complicated, the system too drawn out. We've got to make it work more effectively. So that was our chat about this incredibly important issue, this scandal in the care of vulnerable children. I mean, I've named Bridget Phillipson for a while now. She's been one of Keir Starmer's more favoured colleagues for some years since he became leader.

12:58He massively rates her. She's got this incredibly important brief, education, which I think there's an argument for saying in any government, education is normally the most underrated and arguably the most important portfolio that any minister can have. What did you make of her? Yeah, it's interesting because I've got hope in the fact that Bridget has had what I would call a kind of normal upbringing in that, you know, for a start, she's from the Northeast. So she will straight away understand the kind of regional inequality that's seen across the country. And the fact that, you know, she is free school meals kid brought up in a council house by a single parent, by her mom.

13:42and you know I've had this kind of optimism that she's going to totally get it the thing that I think is interesting about her is that she did the purely academic route of you know doing really well at school going to Oxford to study and then you know coming out I know she worked with her mum on the refuge the women's refuge that they had but I feel like she's not that different in the sense of has a similar background in terms of education to pretty much everyone else in government. So from hearing her, I feel like she does understand some of the issues, but I'm not, I'm still not convinced that it isn't just lip service to, for example, vocational training and the needs of children in vulnerable positions who don't have the structure at home to do well at school, who get lost between the cracks of the system, whether that might be through them not getting into school or their parents not focusing on getting them into school or whether it's because they have, you know, not eaten properly or whatever else.

14:43I still feel like I'm not hearing the right things from our politicians. And she sounded like a politician, didn't she? So I listened to Bridget's interview during the election campaign that she did with our colleagues, Rory and Alistair, on The Rest is Politics. And I mean, she certainly has relaxed a bit. since becoming Secretary of State. She was way more open, I think, with us than she was with them. You know, that's not altogether surprising. Stakes in some ways were much higher during the election campaign. Every politician that one came across was sort of walking on eggshells just in case they said something that would, you know, blow up their party's chance.

15:27But even so, I suppose I felt, I don't know if disappointed is the right word, but struck that so many of these big challenges are still at the stage of being recognised by the government as big challenges. And you always assume that opposition parties do more detailed work in opposition so that some of these problems can be addressed quite rapidly. I don't know what you felt. I came away thinking, yes, she recognises what she's got to do, but we are months, in some cases, maybe years away from getting the detailed solutions. I totally agree because I would have assumed that, as you've just said, these problems have existed for a long time.

16:14The problems in their children's homes has existed for a long time. You know, the problems in schools in terms of preparing kids for work, homeschooling, childcare provision, all of that has been a problem for a long time. it's not like she's suddenly learned all this so I think you're right there was a bit too much well you'll just have to wait and see wasn't there and reviews and everything else and obviously they've got to do their due diligence I guess but it did feel like there wasn't any meat on the bone it was just all the bones laid out before us and not the meat on them but I do like her and I think I feel more confident seeing her as education secretary than I ever have for any of the others And, you know, you and I have both met a lot of them and spoken to them a lot about the same things.

16:56And I do feel more confident in her than I have with quite a few of them in the past. Yeah. And look, you know, she went to a proper comprehensive. And she plainly wants comprehensives to succeed. And that is an absolutely essential start. I mean, just one final thing before we move on or move back, shall we say, to the scandal of what's going on in children's homes. And I suppose the other thing, after we stopped talking to her, and I don't know if this was our fault or her fault, but on your really important skills and vocational training agenda, I was struck that there was no mention in what was in total something like an hour of conversation of T levels.

17:36Yes. Yes. That's a really good point. The qualification for 17 and 18 year olds that were developed by the last government that are supposed to be the sort of vocational equivalent of A-levels. Now, you know, I know that T-levels are in a terrible mess. The take up is not what it should be. FE colleges are really struggling to get these things off the ground. I mean, it was just interesting to me that she didn't raise it as any kind of a pathway to success. Yeah. And it's really interesting you say that because you're right. And we probably should have asked her about that. When I was talking to the chief executive of the Association of Colleges, David Hughes, before we talked to Bridget, I talked to the people in the FE sector quite a lot.

18:24He didn't mention T levels either. So I wonder if maybe that's, you know, they're just going to quietly disappear. I was going to say, do you think there's a risk they're going to wither on the vine and just vanish? Well, they've got to be replaced by you because you've got to have this thing. I'm sure you agree on this. It's got to be parity of esteem between vocational qualifications and academic qualifications. And we've been desperately trying to get that in this country for pretty much as long as I've been alive and we've never got it. And this felt like an important initiative, the T-Level initiative.

18:58It absolutely is, but it's just the execution of these things, isn't it? You've got to have the right skills in terms of teaching in place and it can't just be an extra thing for teachers to do and all of that. And I think that's the problem whenever these new things are announced. It's not backed up in terms of training beforehand. There is training beforehand, but not enough, perhaps. perhaps um i should tell everyone as well we actually spoke to bridget phillipson about all manner of things not t levels but loads of other things to do with child care provision and homeschooling and you know what happens to the people who don't do well at school what happens to them next we talked to her about private schools and vat on them we covered you know send as well we talked about special educational needs if you want to listen to that that's on a separate episode so um that's called how to fix education and you will hear again a full-length interview with bridget in that area too so that's available wherever you get your podcasts as ever um we should probably have a break before we come back to talking about this children's homes scandal so and i think just before the break just to point out to listeners it's worth coming back after the break for the simple reason that we had an enormous number of really powerful emails and messages from people about their own experience of this childcare scandal.

20:20And we really want to highlight some of the issues that you, the listeners, have been raising with us. Yeah. So we'll do that after this break.

20:31Welcome back to The Rest is Money with me, Steph McGovern. And with me, Robert Peston. Now, we're going to go on straight away to address the messages that you've sent us. One of them is from Lucy Mooney. And she said that the staff in these children homes are paid poor wages and don't get sick pay. If a member of staff is injured, let's say, suffers a broken arm through being assaulted by a child in crisis. And she says those sorts of assaults do happen frequently because many of these children and teenagers are pretty disturbed. She says that the staff get no sick pay and they can't work until the broken arm or broken limb is healed.

21:13And that's why she actually left providing care of this sort. I mean, that is absolutely appalling, isn't it? The lack of job security for individuals doing these absolutely vital jobs. Yeah, because what we're talking about, I guess, is agency staff who come in, who are, you know, brought in. And then if they don't get, you know, if they're sick, they don't get paid because they're agency staff. And that is a huge problem. And I think what really grates on the staff and what I can see from the messages we've had is not just, you know, I think staff in the care sector are used to underfunding.

21:53They're used to working with very little in high pressured environments. but what's really hard to stomach is then seeing companies taking loads of profit while they're working with so little and Helen Housel also makes this point she said this is why I stopped being an independent visitor which I'm imagining is you know a role within the sector she says it broke my heart that profits come before children and and that must be a recurring themy and that you know this sense of losing staff because they it's just so unfair to see what they're going through and having to face trying to help these complex kids and teenagers whilst at the same time not being properly paid or looked after properly i mean there's a former nurse jane crabtree who again pay really poor work incredibly hard it's physically and mentally draining staff training costs for any organization that's actually doing proper training are high but because you know the pay is so poor they invest people invest in the training and then you know those who would train after a while just can't take it anymore and go off and do something else so you know it's a real problem when you can't get you know decent committed people yeah and then yeah she i mean she makes that point doesn't she where there's profit to be made it is inevitably at the expense of good quality care because good quality care means staff being highly trained, well-considered, appreciated and well-paid and that comes at a direct impact on profit margins.

23:27So that's a big problem across the care sector. Another thing that came up both through our chat with Bridget on this and also lots of you getting in touch about is this issue of fostering and Jim says, I work in children's services and it's been an under-reported quiet emergency for years. We struggle to recruit enough appropriate foster carers. And sadly, we closed too many of our council-owned children's homes due to funding. This is a really important point about the fostering side of this. I know you particularly focused on this with Bridget and Josh McAllister is someone who, it was Josh who you spoke to, wasn't it, when we did the last episode, Robert?

24:06Yeah, I had a long chat with Josh McAllister. He did a lot of work on children's care services for the last government, and he's now a Labour MP, came in in the recent general election. One of the things that he pointed out to me was that Ofsted, the regulator, thinks that about one in three young people in children's homes would be way better off if they were in a foster home. And that a priority for this government, and I did talk to Bridget Phillipson about this should be to try somehow to increase the supply of foster parents. This is how he captures the both challenge and the opportunity.

24:47He says in 2022, 180 ,000 people expressed an interest in fostering. But what he calls the hopeless fostering approval process meant that only 2 ,000 of that 180 ,000 group of people who wanted to be foster parents, only 2 ,000 were actually approved. I mean, the opportunity cost of this appalling approval process, it's just off the charts. Yeah. And I think the thing as well is it's not a case that all of those people weren't good enough to be foster carers. It's the bureaucracy and the system, because, you know, and them not having enough staff perhaps to do all these assessments because Michelle, who got in touch with us, made a really good point about her and her husband trying to adopt a child from a local council.

25:38She was told the process should have taken six months and she was there with other prospective parents. They all completed and passed everything that was required but after two years they had still not had the home visit or met with anyone kind of formally to sign this off. The social workers didn't respond to their emails. And so they gave up. So something isn't right here. If we've got people who want to be parents who are passing these requirements, but they're waiting years and then it's not happening. And at the same time, money is being wasted in children's homes by all this excessive profit that the companies have run them are getting.

26:19This is just a mess, isn't it? It is sad. I mean, one of the things that we're all acutely aware of these days is the sort of massive risk aversion when it comes to authorizing people to take on any kind of role and any kind of responsibility with children, you know, whether it's people going into schools to help young children or indeed with fostering. And you have to assume that one of the reasons why the approval process is so unbelievably slow and why so few people get through the net is just because of this massive risk aversion that, you know, if anything pops up on, you know, it might be something that's easily explained away.

27:02But, you know, you just sort of worry that all sorts of things are regarded as red flags, where if they actually went to talk to the individuals, they would discover that actually these individuals may well be perfectly reasonable, caring, caring individuals. And those 178 ,000 people who wanted to be foster carers who have been so far told they can't be foster carers, is it really the case that the vast majority of them would produce worse care for children and teenagers than privately run homes, often hundreds of miles from where the children's families are, from where the children's schools are.

27:48I'm afraid it just fights against common sense. Yeah. And, you know, you mentioned there about, is it a case that these people are, you know, potentially seen as not suitable and that's why they're not going through. I don't even think they're getting to that point where they're finding out whether there's any red flags. I think it's just such an underfunded part of the system that there's just not enough people to actually do these assessments. And at the same time, you've got every day more and more children who quickly, desperately need a home. So they're being shoved into not just these registered homes, but also these unregistered places at the same time as they're being, as you've just pointed out, hundreds of thousands of people out there who want to take on these children and look after them.

28:34So it's just mental that there's this massive gap. I did want to pick up something that Ange told us. She said, we had a child who was kept for months in an unused school. This was for about six months. Just her, just one child in an old building with three to four members of staff. And there was no alternative. And this brings us on to this issue that you've just raised of the unregistered homes, the ones that aren't regulated by Ofsted. And, you know, one of the things we talked to, which I still can't quite get my head around, that in theory, it's illegal to put children in these unregistered homes.

29:12And yet councils do because they have no alternative. I was quite struck. I don't know if you saw it. Our former colleague, Sancho Berg, at the BBC did a really powerful investigation based on a court case of these really challenged children being put, I mean, effectively locked up, you know, with the key thrown away in brutal unregistered children's homes. I mean, this is an absolute tragedy. Yeah, it really is. And honestly, the amount of messages we've had from people telling us their own experiences in the system, like Joe Shaw said as well, the whole care system for kids is a mess as a foster carer of eight years I've watched kids go into supposed supported residential care and then being left to go to hospital alone after taking an overdose it makes me so angry is what Jo said and it and it I mean that I get you know I think of my you'll think of your kids Robert I think of my little girl and I just think you're so vulnerable as a kid to be left alone in any way shape or form in that sense it's just beggars believe and it's no wonder that care leavers end up and unhappy you know with various mental health problems but also just really pissed off with society and how they've been treated and I just want to come on as well to early intervention because again quite a few people have made a point about this and we talked to Bridget on this there was a charity that got in touch with us a social enterprise called Home Start UK and they said they are all about early intervention helping families with young children who are struggling and what they provide are volunteers who'll go into these family homes where people are struggling on a weekly basis for a couple of hours they'll provide non-judgmental practical and or emotional support so just whatever is needed to get through but their funding's been cut because of council And that is such a short term cut because the work that these sorts of charities do in keeping families together and preventing crisis ultimately saves colossal sums of money.