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Public vs. Private Sector Funding

EHP Consultancy

Portfolio for legislative and regulatory compliance, commercial knowledge, operational and strategic governance & management in children & social care UK

Public v Private Sector Funding

The Children’s Homes Association responded to a Local Government Association (LGA)

report into children’s homes. The LGA is the national membership body for local

authorities. They are committed to ensuring that councils have the resources needed to

provide the necessary support locally to meet the needs of children in their care,

including those with more complex or challenging needs.

The CHA stated their shared concerns about the findings from the assessment of large

private equity providers, particularly the debt levels being carried out. However, this is not

reflective of the sector as a whole. The majority of CHA membership are small providers

that achieve small margins to ensure the viability of their organisations and critically are

not carrying significant levels of debt. The CHA also challenged the overall presentation of

the costs and profit elements of the LGA report.

The CHA notes that assessing the increase in individual placement costs is interesting. For

the period used in the report using the most accurate cost data from the Personal Social

Service Research Unit, who produce the unit costs for ALL providers rather than a small

sample, costs increased by:

• 47% for local authority provided residential care (£3435 per week to £5059)

• 49% for independent providers of residential care (£2789 per week to £4153)

The increase in weekly cost is nearly the same. These representative costs of the whole

sector also demonstrate that the independent sector consistently provides residential care

at a significantly lower cost than local authorities. As the CHA rightly state “This combined

with the independent sector caring for a higher need cohort of children and young people,

demonstrates value for money on public spending.”

Is your consultant continually ‘horizon scanning’ to keep your potential business up

to date?

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