‘Exploitative’ children’s home firm profits to be curbed

The measures come as council-run children’s services are struggling with rising demand, complex cases and spiralling costs.

Local authorities say there were more than 1,500 children in 2023 for whom councils were paying over £500,000 a year to be placed in residential homes, with a lack of other options being the most common reason.

Meanwhile, a 2022 report by the Competition and Markets Authority found the 15 largest children’s home providers make an average 23% profit per year.

The government will set out legislation in Parliament on Monday that will require major care home providers to share their finances with the government, so it can challenge what it describes as profiteering.

This will also include a “backstop” law that would place a limit on those profits, which the government can put into effect if the companies do not do so voluntarily.

The government says the measure will also allow it ensure that the largest providers do not suddenly collapse into administration, leaving children homeless.

But Andrew Rome, an accountant and leading analyst in the field, said the 10 largest providers only account for 26% of all children’s homes in England, with many providers being much smaller.

He told the BBC that this measure will miss “smaller opportunists who are charging the extraordinary prices for unregulated [or] unregistered services”.

Mr Rome also said gaining oversight of large providers’ finances would be difficult as they often operate through a network of companies, while smaller firms may only have to disclose limited financial information.

He added that a “backstop” law to limit profits was “close to impossible to design and police”.