Private equity firms now control or partly own more than half of the largest providers of fostering and children’s homes in England, prompting renewed calls to ban profit-making in children’s social care. An analysis by the thinktank Common Wealth revealed that the four largest independent fostering agencies — responsible for nearly a quarter of fostering placements — have paid out over £200 million to shareholders through interest payments since 2020.
The investigation highlighted that approximately one-third of fostering placements and one-fifth of children’s home placements are managed by companies owned or backed by institutional investors, including private equity firms, hedge funds, venture capitalists, and sovereign wealth funds.
Common Wealth’s report noted that these fostering agencies often rely on shareholder loans, enabling investors to lend money to the businesses at interest rates well above typical bank loans, frequently between 8% and 14%. This approach has allowed the companies to distribute at least £205 million to shareholders via these mechanisms over the past six years. The practice effectively reduces taxable profits and serves as a wealth extraction tool for investors.
National Fostering Group, the UK’s largest independent fostering provider with more than 4,000 placements, is currently owned by Stirling Square Capital Partners. Since 2020, it has paid more than £116 million in interest on shareholder loans and an additional £71 million on preference shares. BSN Social Care, a regional fostering agency majority-owned by MML Capital Partners supporting over 850 children, has distributed more than £7 million in shareholder loan interest during the same period.
Andrea Egan, general secretary of the trade union Unison, described the findings as a “wake-up call” for systemic reform in children’s social care. She called profiteering from services for vulnerable children “obscene” and criticized decades of outsourcing essential publicly funded services to private investors. Egan urged a return to public sector provision, arguing that it would enhance accountability and ensure funding reaches frontline care.
Sophie Flinders, a senior data analyst at Common Wealth who led the research, advocated for legislation to prohibit private companies from profiting from publicly funded essential services. She emphasized that public spending on children’s social care should be concentrated on improving care quality rather than generating returns for shareholders.
The UK government has acknowledged concerns about profiteering in the sector and pledged to improve oversight, with profit capping identified as a potential last resort. In Wales, the government has committed to eliminating for-profit providers in children’s social care by 2030. Common Wealth is calling for an immediate pause on new for-profit providers and a comprehensive audit of children’s homes to identify illegal operations.
National Fostering Group responded to the report by stating that all funding received is directed toward frontline care. BSN Social Care was also approached for comment but had not provided a response at the time of publication.