A Conservative council leader has accused private equity-owned care companies of exploiting vulnerable children by demanding unnecessary and expensive support packages to boost profits. Barry Lewis, leader of Derbyshire County Council, said former family-run businesses acquired by private equity groups were trying to extract 'as much cash as possible' from local authorities.
Lewis claimed firms insisted on wraparound care when it was not needed and threatened to take their services to other councils if the package was rejected. He cited examples including a company charging £652 a week for in-house education after a child had moved to college, and another billing £192 a week for activities that never took place. One provider added £1,000 to a weekly bill without explanation.
Derbyshire’s spending on private residential care for children has risen from £14m in 2018 to £34m in 2023, projected to reach nearly £47m this year. The council needs to make £39m in savings in 2024-25, with children’s social care being the single biggest cost driver. Lewis warned that cuts to children’s centres and early help services would lead to more children entering care in future.
A national shortage of placements means councils have little choice but to accept excessive charges. Lewis described the market as 'a seller’s market', with around 20 children for every placement. He called for a cap on fees, saying councils were being extorted and treated 'as diamond mines'.
Over 80 per cent of children’s homes in England are now run for profit, many by private equity-backed chains. Unlike Wales and Scotland, the UK government is not seeking to eliminate profit-making from children’s care, instead focusing on rebalancing the market through better commissioning and capital funding for council-run homes.
A Department for Education spokesperson said profiteering was 'wholly unacceptable' and that the government is developing a new financial oversight regime. Mark Kerr of the Children’s Homes Association acknowledged the challenges but cautioned against oversimplifying cost data. The government’s recent £500m social care funding was described by Lewis as 'a very small sticking plaster for a very large wound'.
