The growing use of private children's homes and out-of-area placements has become a concern for many local authorities, raising questions about the impact on children and their families, continuity of care, and cost. For our latest Expert Voices event, we brought together research and practice perspectives to explore what a shift from private profit to public good could look like in children's social care.
We were joined by Rosie Maguire, Policy and Programmes Manager at the Centre for Thriving Places (CTP), who set out the findings of new research undertaken with the Centre for Local Economic Strategies (CLES), Co-operatives UK and the New Economics Foundation (NEF), and by Mike Boddy, Head of Service for Children's Homes at Hull City Council, who shared how Hull has rebuilt its own children's homes provision to keep children closer to home. The discussion was chaired by Stephen Whitehead, our Head of Evidence and Data.
Unfortunately, a technical fault meant we lost the recording of the session, so we are not able to share it here. This blog draws on both speakers' presentations to summarise the key findings and practice examples discussed on the day.
Ending extraction from the care system
Rosie started her presentation by contextualising her research. Right now, instead of supporting dignity, the care system is leaking money, and failing the people who rely on it most. That is the problem the report, Ending Extraction in the UK Care System, sets out to address: money being pulled out of the care system instead of being invested in it, at a time when care already accounts for up to 70% of local authority spend and sits alongside some of local authorities' most significant statutory duties.
As the economist Christine Berry has put it: “What's significant here is not just that care has been made a commodity to be bought and sold, but that the business of care has been made an asset to be leveraged and speculated with.”
Once care can be bought and sold, in other words, it can also be leveraged. Rosie set out how private equity firms, hedge funds and offshore billionaire owners now dominate large parts of the sector as a result, using debt, rent and complex ownership structures to pull money out of care systems and local economies. Some separate out property from the service itself, charging rent back to the very services they own. Others take on high levels of debt, with interest payments draining money away from frontline care. Providers have paid directors million-pound salaries while frontline workers rely on statutory sick pay, and some accepted further public subsidies during the pandemic while still paying dividends to shareholders, all while local authorities are, in Rosie's words, “over a barrel”, forced to contract out services against shrinking budgets, rising demand, and narrow definitions of value for money.
Mapping care contracts and providers' financial returns across the West Midlands, the North East and South Yorkshire, the research found £256m of profit generated in care delivery over the three years to 2023-24 alone, more than double 2000-era levels once adjusted for inflation. Regionally, that meant £103m of profit in the West Midlands, £94m in the North East and £59m in South Yorkshire, with over a third of all profit, £87.7m, going to providers owned by private equity firms, tax haven parent companies, or both. The gap in who benefits is stark. The highest-paid directors were commonly paid around ten times the level of average wages, and in several cases twenty, thirty or even sixty times more, while direct care workers, three-quarters of them women and disproportionately from global majority backgrounds, were paid £11.20 an hour on average, below the Real Living Wage. As Rosie put it, this isn't just inefficient, it's unjust.
The report is direct about what this means for the wider debate on social care funding. Politicians and pundits tell us that there simply isn't the money to invest in social care, and that we can't afford to borrow more to build a better system. But, as Rosie set out, this research suggests the money is often already there. It just isn't reaching the people who need it, or the workers delivering the care, because so much of it is being drawn out as profit, rent and interest payments instead.
This pattern is especially visible in children's social care, where local authorities are seeing a growing number of new children's homes open outside their own boundaries, moving children away from the communities, schools and relationships they know. It's a trend many local authority and combined authority officers recognised immediately when the research was shared with them, describing it as just the tip of the iceberg.
The research also points to what a better system could look like, starting with understanding where public money goes and reshaping who delivers care and on what terms. Rosie set out three practical starting points for local and regional authorities: commissioning differently, through dedicated care provider frameworks organisations must meet before they can even tender, sometimes described as a social licence to do business with the public sector; market shaping, supporting cooperative development and social economy providers to operate locally; and community empowerment, handing over leadership, ownership and accountability in how care is designed, in the way the Equal Care Co-op does, treating care as a spectrum and bringing local people directly into its design and delivery.
Hull's alternative: bringing children home
Mike Boddy then set out how Hull has put many of these principles into practice through its “All With Us” programme, built around a simple but powerful idea, that home is not just a place, but a language, a feeling and a set of local rules that children understand. Too many children in the care system, he argued, are moved away from everything and everyone familiar to them, at exactly the point they most need stability.
Mike set out the case for change. Private placements had brought instability and trauma, limited oversight, and too little consistency of care close to home. Hull's response was to build an ambition around keeping children connected to their community, healing through relationships rather than distance, and treating community itself as a source of stability, underpinned by a genuinely unified approach to corporate parenting across the council.
The result is Hull's own “iCare” model, individualised, imaginative and innovative. Children in Hull's care told the council plainly that it is the staff who matter most, and that their home should “look like everyone else's”. In response, the council worked on a plan to develop more high-quality children's homes within the city, designed to be whatever a child needed, when they needed it, and able to draw on strong multi-agency support because children remained in the place they already knew.
That multi-agency approach relies on close partnership working. On housing, the council has taken a mixed approach to acquiring homes within Hull, buying small housing stock, purchasing off-market, and developing purpose-built homes, shaped throughout by listening to children, home staff and the Parent Carer Forum. On health, the partnership goals are equally practical, with funding secured for four more clinicians, children's home staff supported to become therapeutic carers themselves, and a shared “one language, one approach” between care and clinical teams, so that children get therapeutic help in the place they feel safest.
The impact, Mike reported, has been felt both by children and by the wider city, with improved health outcomes, fewer placement breakdowns, positive milestones achieved, and a strengthening of community and local leadership around care. Financially, the model has also delivered savings, with an average annual cost reduction of £1.8m that can be reinvested back into care. Mike shared powerful direct quotes from young people that demonstrated the impact these changes have had: one young person said, “I've never lived anywhere I felt so loved and understood”, and another said, “the staff understand me, I can speak to staff, they are my family, they keep me safe”. As Mike was keen to stress, these are the voices that count above everything else, the true measure of whether the model is working.
Hull's model has also attracted national attention. It has been the subject of a case study by the Ministry of Housing, Communities and Local Government, the council has hosted government representatives to help inform national policy, and it has shared learning directly with local authority peers in Dudley, Stockport, Greater Manchester, North Yorkshire and Cheshire. Looking ahead, Mike set out Hull's next steps, including developing new local delivery models, a more proactive approach to housing, and continuing to share the model nationally to help other areas keep more children in the communities they know.
A better way is possible
Taken together, the two presentations offered both diagnosis and demonstration: research setting out clearly how value is drawn out of the care system, and a local authority showing what it looks like to build something different in its place. Questions from attendees picked up on both strands, from how other areas might build the case for insourcing to the practicalities of workforce and housing that make a model like Hull's possible.
We are grateful to Rosie Maguire, Mike Boddy and Stephen Whitehead for such a rich session, and to everyone who joined us. You can read the full report, Ending Extraction in the UK Care System, here. Keep an eye out for future Expert Voices events, or sign up to our newsletter to hear about them first.