Children need help, councils have a legal duty to find them somewhere safe, and private providers hold most of the capacity. The taxpayer gets the bill. That is the gap where the money is being made.
Children’s social care is not collapsing because nobody noticed. It is collapsing because England has allowed a shortage of safe homes for vulnerable children to become a market.
The Public Accounts Committee set out the scale of it in January 2026: private providers run 84 per cent of children’s homes in England and control 74 per cent of places. Seven of the ten largest are owned by private equity firms. The Department for Education told the committee it does not fully understand these companies’ finances, does not know what a fair price for residential care looks like, and needs new legislation just to force them to hand over financial information.
So the state has handed over vulnerable children, legal responsibility and huge sums of public money, and still cannot see inside the companies sending the invoices.
This is not a normal market. If a child cannot safely stay at home, the council must find somewhere immediately. If no suitable local place exists, the search widens. If only one bed is available, that bed is the answer. The council cannot walk away. The provider knows that.
The Competition and Markets Authority found the fifteen largest providers had average operating profit margins of 22.6 per cent, with prices climbing 3.5 per cent above inflation every year. Residential care costs have hit £3.1 billion.
The LGA has recorded councils’ highest-cost placements running from £9,600 to £32,500 a week, with the worst reaching £63,000. That is more for one child in seven days than many workers earn in a year.
And not all of that money goes to care.
For every £100 spent on the four biggest independent fostering agencies in 2024, £21 was profit. Interest costs for the five largest private equity-backed providers run at £102 per bed per week, roughly 16 per cent of the average fee. That is public money being used to service corporate debt rather than fund care.
Meanwhile, councils are cutting youth services, family support and early help because crisis placement costs are taking up everything else. Prevention gets cut because the emergency bill has to be paid. More children reach crisis. Placements cost more. The bill climbs. Less money is left to stop the next family falling apart.
The system rewards shortages rather than preventing them.
The official language makes it sound manageable. Placement sufficiency. Market stability. External provision.
Behind those phrases are children who have been moved miles from home because nothing suitable exists nearby. Children are separated from siblings, schools and social workers. Children are put in emergency settings because the registered system has run out of beds.
In September 2024, nearly 800 children in England were living in unregistered homes that Ofsted cannot routinely inspect. That is what failure looks like when it reaches a child.
Private providers will say they are filling a gap the public sector cannot fill. Sometimes they are. Many staff in children’s homes do difficult, exhausting work for modest pay. They are not where the scrutiny should stop.
The ownership model matters.
Lord Wood of Anfield told the House of Lords in January 2024 that the market was “completely broken”, describing providers making high profits, increasing margins and carrying large levels of debt while growing their share of the care market.
Why should a system built on public money and legal duty produce that outcome while councils buckle?
Providers hold the places. Councils hold the duty. Children need help now. The taxpayer pays what the market dictates.
The question is no longer whether there is a crisis. The numbers have settled that.
The question is who owns the companies charging these fees, how much profit they are extracting, and what happens to the children inside the system while the invoices keep climbing.
Until those answers are forced into daylight, the market will keep talking about care while running on a shortage.
The council has the legal duty.
The provider has the bed.
The child has no choice.
And the bill keeps landing.