Leveraged debt is sucking scarce resources out of the care system

Since 2005, the club has paid out £815 million in debt interest repayments.

What has this got to do with children’s social care?

Well, these are precisely the financial arrangements that private capital use to buy chains of residential children’s homes and fostering agencies. They borrow the money to buy them and then load the debt onto the children’s home company or fostering agency they have just bought. 

All of this is perfectly legal. The issue is that the debt must be serviced, and interest payments covered. So, who’s paying off the interest on all this leveraged debt. Well, you and I are. The debt interest is part of the fees these firms are charging local authorities to look after children in residential or foster care. This is money intended to pay for the care of some of the UK’s most vulnerable children. Instead, it is paying interest (at rates way above Bank of England base rate) on debt that has been artificially inserted into the children’s social care market. The lenders tend to be Hedge Funds controlled by multi-millionaires; they are adding to their fortunes by collecting interest from money that was intended to transform the lives of children in care.