Warnings of ‘biggest disaster for children’s care’ over Welsh Government proposal
OWNERS of private children’s residential homes fear that plans to eliminate profit from the sector in Wales could be disastrous and ultimately harm vulnerable young people.
Two owners told how they ran their homes and what the future might hold.
This type of residential childcare provides specialist support for lookedafter children who have been referred to them by councils. The homes have therapists, a high staff-to-child ratio – even their own schools. The cost of a placement can be around £5,000 per week, in some instances more, and some young people live in them for years.
In 2012 there were 99 registered private children’s residential homes in Wales and 24 council-run ones. Ten years later there were 222 private children’s homes and 34 council ones, although these included some settings which might only offer shortterm and respite care for young people with a disability. Strip away the short-term break and respite element and there were 762 residential bed places in March 2022. So these are generally small homes, not sprawling great buildings like many care homes for the elderly.
The average cost in March 2022 for a child’s residential placement was £4,857 per week, and councils in Wales were spending nearly £2.4 million a week on them.
The Welsh Government wants to rebalance the market, and intends to bring forward legislation to remove profit from children’s care. This could mean profit-making firms having to move to an entirely new model by April 2027. Ministers said young people had strong feelings about being cared for by profit-making private organisations, and they said they were giving councils and not-for-profit organisations a lot of extra money to build up capacity.
A consultation about the Welsh Government plans took place in late 2022. The consultation document said, among other things, that children’s care homes had become a “seller’s market” and that this impacted the prices charged to local authorities. It cited a report by the UK Competition and Markets Authority which found that the profit margins of 15 large children’s care home providers in England, Scotland and Wales averaged 22%.
The proposed legislation would also impact foster care, but this article focuses on children’s residential homes.
Darryl Williams worked in various roles for councils in Wales, at one point managing a team of 16 children’s social workers. He then set up a private company, Woodlands Ltd, which will be 25 years old in April.
“I’d become sick of putting children in less than average placements,” said Mr Williams. “I thought, ‘What can I do?’ Luckily I played football with my bank manager, and he lent me money for our first home,” he said.
“We have grown slowly. We now have five houses, with 21 beds, and a therapy centre. I won’t grow any bigger – I’d forget the names of my staff. We have our own school, a headteacher, nine teachers, seven teaching assistants, five house managers, and four in-house therapists.”
Mr Williams said the total workforce was 105 and that the five homes catered for boys who had gone through significant trauma. “It does take a lot of time to work though that,” he said.
Once a referral was agreed, Mr Williams said three members of staff would visit the newcomer before he moved into one of the homes. Mr Williams said all the young people had a bespoke package of care, and that new arrivals were supervised at all times as they settled in. He said around 70% of the boys were from England and 30% from Wales.
As well as the school, Woodlands has an outdoor education centre. Mr Williams said three of the boys at Woodlands had gone onto university in the last four years. One was doing a masters’ degree in chemistry. “We have broken the mould,” said Mr Williams. “It makes me amazingly proud.”
A placement at Woodlands is around £5,000 per week, and the average length of stay is around three years. “What we charge is extremely reasonable,” said Mr Williams. “The houses are maintained to a very high standard. You get quality care, the best in-house school in Wales according to Estyn in 2020, and therapy. These houses are not like institutions. Children feel valued.”
Mr Williams claimed that some children’s care homes were “making a fast buck”, charging £5,000 per week for “inadequate” care. A part of him, he said, agreed with First Minister Mark Drakeford’s commitment to removing profit.
Mr Williams said he could take more revenue as profit but that instead he reinvested it in the business. As well as staff and property costs, he said liability insurance was now £120,000 a year.
As he understood things to stand at the moment, Mr Williams said he would fold his businesses if a new profit elimination law come in. He claimed that such legislation could be “the biggest disaster ever for children’s care in Wales”. In his view, damage had already been caused.
Nuala Sharpe runs Landsker Child Care, which runs eight children’s residential homes with 30 places in Neath Port Talbot, Bridgend, Vale of Glamorgan and Pembrokeshire, with her husband and fellow director Paul Thomas. It was set up in 2000.
The homes are for vulnerable boys
and girls aged eight to 18 with complex needs, and they have a separate school building. “Our goal is to provide them with the best years of their childhood. We deliver sector-leading therapeutic care,” said Ms Sharpe.
Ms Sharpe said Forest School sessions were provided, plus courses in things like food hygiene, and that some older children did volunteering or had job placements in cafes, health spas and the construction sector. One child, she said, played in a local football and rugby team. Others got involved in gymnastics and the Air Cadets. She added that retention rates among the 125 staff were high, with managers staying for an average of 16 years. “The winners are the children,” she said.
Ms Sharpe preferred not to say what the weekly placement cost was, but she said it was average or just below average, that it hadn’t gone up in four years, and that the business’ profit margin was 6%. She said the homes used to cater exclusively for children in Wales, but now 40% of the young people were from England. She said she kept in touch with many of them after they had left. Like Mr Williams, of Woodland, Ms Sharpe said she felt there were “bad apples” in the sector and that she supported a rebalancing of the heavily private-led market.
But she felt small to medium-sized businesses like theirs were being tarred unfairly with an “unethical” brush, and she claimed the proposed elimination of profit had chilled the sector.
“We are in an impossible situation,” said Ms Sharpe. “We can’t go to banks or financial institutions to borrow money. We are hearing that some companies are swapping from children’s care to adult only. We can see the sector deteriorating around us, and one of the factors is the proposed policy. There is a danger that you will eliminate good practice.”
She added: “Our fear is that the public sector can’t deliver better quality of care or deliver it cheaper.”
The Welsh Government’s consultation on its profit removal policy had a joint response from the Welsh Local Government Association (WLGA), which represents Wales’s 22 councils, and other bodies representing social services directors and council fostering services.
The joint response said there was support for the principal of removing profit from the care of looked-after children, and that there was recent evidence of private equity expansion within children’s residential care in Wales, but it urged caution due to a “pre-existing placement crisis”.
A lot of work has been going on in the background on the proposed policy. Asked for its current position, a WLGA spokesman said: “We’ve previously outlined our support to eliminate private profit from the care of looked-after children. However, there are still some concerns about local government’s capacity and financial resources required to achieve this. The commitment to eliminate private profit from children’s care has been highlighted as having a detrimental impact on the availability of placements.”
Rocio Cifuentes, Children’s Commissioner for Wales, said she strongly backed the principle of “safely” removing profit.
The Welsh Government is looking for an independent contractor to examine how the profit elimination policy would maintain or benefit outcomes for lookedafter children, and what the consequences might be.
A Welsh Government spokeswoman said: “Feedback from young people indicates they have strong feelings about being cared for by privately-owned organisations that make a profit. We do not believe that profits should be made from caring for children and intend to bring forward legislation to end this.”
She said regulator Care Inspectorate Wales said there was currently no direct evidence of an impact on the number of placements, but that “this commitment brings challenges and complexities”.
“We have developed a robust programme of work to assess impact and to manage and mitigate against risks as well as to develop best practice,” she said. “We are giving particular consideration to how we prevent or mitigate disruption to young people.”
She said legislation would be introduced later this year to achieve its aims, although it wouldn’t take effect straight away, and that ministers were investing an extra £68 million from 2022 to 2025 to help councils build in-house capacity for residential and foster care provision.
The Children’s Homes Association, which represents the majority of the residential sector, including public and charity providers, described it as the “forgotten sector” of social care. Its view was that the costs of any elimination of private providers from Wales had been “dangerously under-estimated”, and that the planned changes were worsening placement availability in Wales, impacting the wellbeing and life chances of children in care.
The association also suggested that privately-run residential homes were on average 10-20% less expensive than council-run ones, but added: “We will continue to support and work with all stakeholders, including the Welsh Government, with the aim of ensuring every child has the right care, in right place, at the right time.”