Month: December 2019

Out-sourcing and impact of privatisation: Guardian article by Prof Ray Jones

This is a draft- article accepted with minor changes/ cuts

For the past 40 years successive governments have pushed crucial services out of public ownership and into a profit-prioritised market place. Despite the dismal track record of the big out-sourcing companies failing to deliver on their public service contracts, and over-charging central and local government, they have continued to have expanding opportunities to make money from the public purse.

This is now being challenged by Labour with a commitment to bring vital services back into public ownership and control Nowhere should this be more urgent than for those services which protect and care for children.

From 2010 the Conservative-led governments have forced and coerced local authorities to contract out statutory children’s social services. Widely opposed regulatory changes were introduced in 2014 allowing commercial companies to get contracts to intervene within families to undertake children in need and child protection assessments and take decisions about the care of children. Companies such as G4S, Serco, Virgin Care, Mott Macdonald and Amey have been hovering around the Department for Education ready to hoover up the contracts.

The privatisation of children’s social services is already a big money-maker for commercial companies, with money which should be spent on helping children and families now being taken as profit. The owners of these companies are increasingly private equity companies and distant venture capitalists whose only interest is how much profit can be generated.

Three quarters of children’s homes in England are provided by for-profit private companies. Almost a third of local authorities no longer directly provide any children’s residential care. On 31 March 2018 6990 children were placed by local authorities in private children’s homes. In 2016 the average weekly cost of a private children’s home placement was £3289 If there was a profit of 10% (a low target for out-sourced public services) on these placements the total profit being taken in a year is £110 million.

For children in foster care, on 31 March 2018 16,200 (39% of all children in foster children in England were in foster placements arranged through for-profit foster care agencies A government-commissioned 2018 report found that the average weekly cost to local authorities of each these placements was £823 (compared to a cost of £553 for a placement provided directly by a local authority with its foster carers), and that the private foster care agencies were making a profit of 10.5% In a year this totals a profit of £72 million taken out of children’s social services.

In local authorities in England 15% of social workers working in children’s social services are employed through private for-profit employment agencies This is 5,360 full-time equivalent social workers, and local authorities are paying £335 million a year for agency social workers Assuming a 10% profit this means £3.35 million is being taken as profit each year. But a 10% profit margin must be a considerable under-estimate as the company accounts of just two of the many employment agencies showed profits of £2.1 million (Liquid Personnel) and £2.2 million (Sanctuary) in 2016 as well as salaries of about a quarter of a million pounds being paid to each senior manager. Profits taken from children’s social services by social worker employment agencies in England are likely to be over £10 million a year.

In total, therefore, profits of £220 a year are being taken out of local authorities children’s services by private companies. There are also overhead and transaction costs for local authorities and for the companies of children’s services being marketed and purchased by councils and these are likely to total over £20 million a year – costs which would not be incurred if the local authority were providing the help and care for children.

£240 a year is equivalent to local authorities employing 480 children’s social workers in England. With each social worker helping about 20 children and families each week that would mean almost 10,000 more children and families getting help at any one time.

There should, therefore, be strong financial incentives for local authorities to provide rather than purchase these vital services for children. But even more important, poorer quality services are being bought at a higher cost from these companies.

Eight four per cent of children in private children’s homes, and 50% of children in private fostering agency placements, are not within the area of the local authority Children are being placed at a distance in children’s homes and with foster carers unknown to social workers and their managers. The children are less visible and more vulnerable. Private children’s homes pay their staff less and have fewer staff than local authority children’s homes Short-term come-and-go agency social workers have little knowledge of the children and families with whom they are working and children and families give up having relationships with a conveyor belt of social workers. Agency social workers who may be here this week but gone next week are placing children some distance away in one-off spot-purchased placements about which they and the local authority have little information. It is a disaster which is not waiting to happen but which is happening today.

So it should be a priority for government, whether Labour or not, to turn away from the commercialisation and out-sourcing of children’s social services. A start would be for local authorities to be compared and reported on what proportions of the children they are looking after are in care directly provided by the local authority and what proportion of social workers they employ rather than buying from agencies. It would also be a start for local councillors to commit themselves to caring for children within their communities rather than sending children away to be cared for by those who are unknown to the council.