'Exploitative' children's home profits to be curbed

Plans aimed at preventing companies that run children's homes in England from making excessive profits will be set out by the government on Monday.

It says it will bring forward new measures that will require large providers to disclose their finances. If they do not limit their profits voluntarily, they will face a legal limit on how much they can make.

The government also intends to strengthen the powers regulator Ofsted has to investigate and fine "exploitative" children's home providers that prey on a stretched care system.

Education Secretary Bridget Phillipson said "thousands of children have been failed" within the care system.

Responding to the government's plans, the Children's Home Association (CHA), which represents providers in England and Wales, said the new Ofsted powers that will "tackle unregistered and unregulated illegal residential provision is long overdue".

However, it argued the "backstop" law that threatens to cap providers' profits "risks serious unintended consequences" as it would "incentivise more providers to adopt offshore interest and debt-driven business models".

The CHA also criticised Phillipson's comment that the sector was letting families down, saying it was "not involved with families or their decisions" and took in children "because social work and preventative measures fail, likely due to local authorities' lack of financial resources".

Paul Carberry, chief executive of charity Action for Children, welcomed the government's plan, but said that "urgent investment in not-for-profit and public sector provision is required to create stability and make sure every child gets the placement they need".