Foster Care Contracts ‘Overpriced’

Children’s services departments are paying £100m a year over the odds on contracts with companies providing fostering and residential care services, it has been claimed.

Ray Hart, a former director of efficiency at Kent County Council, said that individual councils could save up to £400,000 annually on fostering alone, depending on their size and the number of children who were being looked after under arrangements with such firms.

He said the cost of foster care had risen by 27% in the last four years for which figures were available, and that many firms had built-in profit margins double those in other sectors.

“Some of the costs are justifiable because you’ve got the management costs and resourcing issues, but it doesn’t take a lot to look at the figures and see that savings of 10-15% are possible,” he said.

“If you look at the overall spend on private residential costs, it’s just over £1bn, so there is the ability to save £100m across England.”

Mr Hart, who now works for the OLM social services consultancy, said too few authorities challenged the costs of out-of-area contracts when they came up for annual renewal, despite “significant fluctuations” nationwide.

“It’s about authorities not being aware of the right prices,” he said.

He said that the average weekly cost to councils for children looked after by local families was £383, as opposed to £864 with private sector operators.

Plymouth City Council said it had saved £242,000 in the last financial year alone by improving the way that it procured children’s residential services from independent providers.

A spokeswoman said: “We are seeing our initial investment, the time and effort we spent getting this new way of working off the ground, now paying dividends.”

John Simmonds, director of policy, research and development at the British Association for Adoption and Fostering, said it was clear that councils could save money by reviewing procurement.

According to Department for Children, Schools & Families figures, 59,500 children were in care at the end of March last year. Of those, around 10,000 were in foster care provided by an agency.