Children’s Care Homes: Private Equity

Lord Wood of Anfield Excerpts

Tuesday 30th January 2024 Lords Chamber

Asked by

[Lord Wood of Anfield]

To ask His Majesty’s Government what regulation they are planning in response to the findings of a recent investigation by the Observer that private equity firms’ investments in children’s care homes in England have doubled since 2018.

[The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)]

My Lords, we recognise the concerns that the noble Lord refers to, particularly around large providers with complex ownership structures. We agree that sometimes placement costs are too high. That is why we are providing £259 million of capital funding to support local authorities to increase care placements and ensure that they meet children’s needs. We will introduce a new market oversight regime that will increase transparency on debt structures and profitability.

[Lord Wood of Anfield (Lab)]

My Lords, I thank the Minister for that Answer. The problem, however, is that the current mixed economy in the children’s care market is completely broken. Private equity providers are making high profits in the sector, increasing their margins and carrying large levels of debt, yet expanding their share of the care market at the same time. Meanwhile, increasing numbers of councils face crisis or even bankruptcy. Can the Minister tell us how the Government plan to eliminate specifically private equity profiteering in this sector? Can she also clarify whether it is government policy to substantially reduce the presence of private equity firms in the children’s care market?

[Baroness Barran (Con)]

I am glad that the noble Lord used the word “profiteering”: he beat me to it. As he has heard me say before, the Government are not against profit-making but they are against profiteering. Having much greater financial transparency will go some way to addressing his concerns, but the fundamental thing that has to shift is having fewer children in children’s homes and more children in foster care. That is why the Government place such emphasis on supporting foster carers and, indeed, kinship carers.