Private fairness income from fostering as disaster engulfs youngsters’s care

One of the UK’s biggest private fostering firms more than tripled its profits last year as it continued to cash in on the crisis in children’s social care.

Profit before tax at Compass Community Ltd, which is owned by private equity firm Cap10 Partners, soared to £10.8 million for the year to March 2024, up from £3 million the year before, according to recent accounts filed with Companies House. The firm’s turnover surged to £139.7 million from £108.6 million the previous year.

Compass noted that the number of children in care was increasing, and as a result demand for its services had risen.

It says it will invest its profits to grow its capacity to meet ‘unmet demand’ by recruiting more foster carers, as well as opening new homes and schools.

Alongside its foster care operation, Compass is one of Britain’s largest providers of children’s homes as well as schooling for young people with additional needs.

Private fostering agencies make money by charging local councils for placing children in foster homes.

Concern: Compass noted that the number of children in care was increasing, and as a result demand for its services had risen

Industry sources say their fees are double or triple what the cost would be if councils were to make their own placements.

Profit-making agencies are contracted by the state to recruit and train foster carers. These carers must undergo an assessment, a home visit and final checks from a fostering panel.

They are then matched with a child based on the carer’s preferences, experience and training. About 57,000 children in England are in foster care.

Fostering, though usually driven by altruism on the part of the carers taking in children, is also a big and growing business.

Some 44 per cent of all foster carers are sourced through independent agencies, according to education watchdog Ofsted.

Compass, led by boss Bernie Gibson, is the third largest private foster care provider in England.

The top two, the National Fostering Group and Polaris, are also owned by private equity groups.

In demand: Boss Bernie Gibson is increasing capacity

Many foster care agencies began as local and small-scale, but have been gobbled recently up by private equity firms, turning the sensitive area of children’s foster care into big business.

According to Ofsted, on March 31 last year, Compass was providing 3,135 foster care places.

The company is also England’s fifth-biggest private children’s home operator, with 49 properties under its ownership, together offering 251 spaces for children.

As profit-seeking firms have become an increasingly dominant presence, the number of foster carers has shrunk to its lowest in a decade. Abut 6,500 more fostering families are needed in England, charities say.

Many, however, are put off by low pay and lack of workers’ rights. Most foster carers are classed as self-employed and as such are not entitled to a minimum wage, sick pay, paid leave or pensions. Some rely on benefits to supplement their income.

There is growing anger among many foster carers, who are accusing the private operators of profiting from their labour while they rely on the State to pay their bills.

The Fostering Network, a UK charity, said the number of carers in England fell to a ten-year low of 42,615 for the year to March 2024 from 45,370 in 2021.