Millionaire Baby Brokers: Firms cash in on shortage of foster homes
Published: Sunday, 2 October, 2005, LONDON:
Private agencies are making millions of pounds out of a critical shortage of foster homes for children. Firms are charging councils on average £800 per child per week, an EVENING STANDARD investigation revealed.
This amounts to £41,600 a year to find suitable homes for the most vulnerable children in society.
One head of social services said: “It is cheaper to send the children to Eton.”
London councils are so desperate to hold on to their foster parents that two are offering them free loft conversions – worth up to £30,000 – so they can take in more children. Britain’s largest independent agency Foster Care Associates had a £56mn turnover in 2003, the last year for which accounts are available.
Its eight directors – seven of them social workers who set up the company 10 years ago – paid themselves total fees of more than £2.2mn as well as sharing pre-tax profits of almost £900,000.
The directors awarded themselves on average £285,000 each – about 10 times the annual salary of a social worker.
There is an estimated shortage of 10,000 foster carers across the UK. This has driven up the prices charged by the 150 or so independent agencies.
It costs councils between £300 and £400 a week to place children with their own approved foster carers but they cannot meet the demand and have to turn to outside agencies. More difficult children can cost as much as £1,500 per week to place in foster homes.
The problem is especially acute in London, where out of 11,500 fostered children up to one-third are found homes through independent agencies. Many of them are ‘dumped’ in outlying towns around the capital. A total of 60,000 children are fostered nationally.
A spokesman at the department for education said: “We know there are too many children being placed outside of authorities. We commissioned a report last year looking at how we can reduce that number.”
Out of the 11,500 fostered children in London, half of them are teenagers, about 3,000 aged eight to 12 and 2,500 aged under eight.
Children are typically being sent from London boroughs to Kent, miles from their schools and friends. Some 330 problem children from London are being fostered in the Margate area.
This has prompted the Kent child protection committee to compile a report, sent to ministers, warning the town is now at a ‘tipping point’ and branding the situation ‘explosive’.
Paul Fallon, director of social services at Barnet council and spokesman for all London’s social services directors, said: “Every penny we spend on one child is a penny we can’t spend on another child. If I place a child with Barnet it is £400. But it costs me about double that to place a child in an independent placement.
“It is a sellers’ market and that will impact on prices. We are stuck. It is cheaper to send children to Eton.”
He estimated that in Barnet about 30 to 40 children – about 10% of the number needing foster care – are unaccompanied child refugees. They have helped to swell numbers of children needing placements, putting added pressure on social services.
A spokeswoman for Richmond council, where private places at £900 cost three times as much as council places, said: “In emergencies we will negotiate with another borough for a temporary foster place, but that’s very rare.”
The crisis has prompted Barnet council and Hammersmith and Fulham to offer grants of up to £30,000 to foster parents to build loft conversions to house more children. A spokeswoman for Hammersmith and Fulham said the outlay would pay itself back within one to two years even if it creates just one extra fostering place.
Defenders of private agencies point out councils often do not factor hidden staffing costs – such as administration and on-call social workers – into their weekly fees. Private agencies also point out they are often called upon to find placements for the most difficult children. They point out they also provide round-the-clock social worker support as well as educational support and therapy. Not all agencies are profit-making with fostering services carried out by charities such as Barnardo’s and NCH.
Marcelle Ibbetson, service development manager at NCH, which also typically charges £800 a week, said: “We don’t think local authorities have properly costed the real cost of foster care. Their behind the scenes costs are hidden. What we provide is private placements at the specialist end of the market.”
None of the directors of Foster Care Associates was available for comment. But in an interview last year Sally Melbourne, FCA’s director for the Yorkshire and Lincolnshire region, said: “The majority of the fee we charge local authorities goes to the carer and on the welfare of the child. We are a business but we make very little profit, last year we made 5% profit.”
A spokesman for the company added: “The company specialises in children that are difficult to place. That is not necessarily behaviourally difficult children but it could be kids with five siblings that need to be kept together or from the ethnic minorities that needs to be placed in their own community. We offer a complete support structure including therapy and education, which is why the costing may look more expensive.” –
LONDON – EVENING STANDARD.