The government has yet to respond in detail to the latest, shocking findings about the poor performance of for-profit social care providers, and what a report from Oxford University calls the “astounding pace” of children’s home privatisation. But the revelation that almost all the residential care settings forced to close by regulators in the 12 years to 2023 were privately run must lead to change.
Opponents of outsourced public services are sometimes criticised for putting principle before practice. Who cares who is doing an operation or providing a foster placement – this argument goes – as long as they do it well? Academics have created an innovative data resource that is also a counterblast. Their study deals with social care, not public services in general. But its conclusions about the rate of failure in for-profit provision are a wake-up call that ministers, local government leaders and everyone else who cares about the social care system must not ignore.
Lack of evidence about outcomes has been a bane of this sector, along with chronic underfunding, rising need and an unwillingness by successive governments to commit to solutions. Even now, a great deal of information is missing – for example, about the costs of different kinds of provision, how private equity businesses compare with other owners, and how local authority commissioners compare with each other. But there is no proof that privatisation has driven efficiency savings – a key rationale for outsourcing. Instead, the data points to three areas of serious concern.
First is the sheer extent of the private takeover of social care provision, with almost all adult care homes now run for profit, along with 80% of children’s homes – a startling rise of more than 20 percentage points since 2010. Second is the finding that private care homes were disproportionately likely to be closed by regulators – with all the upset and disruption to people’s lives that this entails. One company, Atlas Project Team, was ordered to shut 14 care homes in 2012.
Third is the way that market incentives have led adult care homes to be concentrated in wealthier areas – where providers hope to attract profitable, self-funded customers – and, conversely, for children’s care homes to be in clustered in poorer ones where overheads are low. This pernicious trend, which campaigners have complained of for years, has led to many thousands of children being sent out of their local areas, risking long-term damage to their relationships and lives. Increased third-sector provision (by charities and other non-profits) has not materialised, although this has long been a stated objective of outsourcing.
This is a painful and painstaking record of failure, which calls for a response beyond the repetition of Labour’s manifesto commitment to build a national care service. Wes Streeting, the health secretary, has strongly defended the use of private providers in the health system, arguing that this is the only way to bring waiting lists down in the short term. But the public has so far heard little about the government’s plans – or views – about the role of the private sector in social care. On the future of children’s homes, in particular, it must now be pressed. The evidence is clear: market incentives have distorted access and lowered quality too. A new approach to public service reform is desperately needed. Ministers must show that they can learn from past governments’ mistakes and avoid repeating them.
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