A briefing put together by charity The Howard League for Penal Reform looking into factors that can contribute to the criminalisation of children in residential care highlights the fact that private companies own almost three quarters of the children's homes in England.
It said that demand for places is currently outstripping supply and, with the number of local authority-run homes continuing to fall, private companies are gaining a greater share of the market.?
At the end of August last year, 43 private companies ran 41 per cent of all children's homes in England, with the five largest companies accounting for about 17 per cent of all homes.??
However, only 14 per cent of privately-owned homes were judged to be "outstanding" overall by Ofsted in 2016/17, compared with 25 per cent of homes run by local authorities and 19 per cent of homes run by voluntary organisations.
"Local authorities, as corporate parents, are legally required to ensure that the homes they are placing children in are complying with their obligations, even if those homes are hundreds of miles away," the report states.
"Local authorities should be routinely asking for balance sheets from providers, which clearly show how the money they have received for each child has been spent and how much profit has been made."
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The report, Hearts and Heads, warns that children in residential care are 13 times more likely to be criminalised than other children and says homes must adopt new principles to change this.
It calls for organisations that run children's homes in England to have clear policies about when to call in the police and adopt a child-centric approach.
It suggests that staff need to be made aware of the consequences police involvement can have on children's lives and says that low-level incidents and disputes should never lead to police involvement.
"The best scenario for a child living in a children's home is to not have any contact with the police at all, just like any child living in a family home," said Frances Crook, chief executive of the Howard League for Penal Reform.
"Instead of being criminalised, children in good homes are being loved, cared for, nurtured and supported."
Other recommendations made by the charity include considering children's emotional needs, robust matching to make placements more stable and developing homely environments.
The charity's report highlighted work being done by Hampshire County Council as an example of best practice. The council has knocked down three quarters of its children's homes and replaced them with new buildings designed with input from young people, which has resulted in features such as en-suite bathrooms and offices situated outside children's living quarters.
Hampshire's Pillars of Parenting approach was also praised for encouraging staff to focus on caring about rather than for children.
"Providing the very best care for children in children's homes requires hearts and heads," said Crook.
"Local authorities and children's home owners must first consider the emotional needs of children - the ‘hearts' principles such as good parenting, providing a homely environment, listening to children and treating them with dignity and respect.
"Next come the ‘head' principles, which deal with the business side of running a home. Good management is needed to provide stable placements for children, to value, train and support staff, and to set up proper protocols to prevent unnecessary calls to the police."
The report also backed the Independent Inquiry into Child Sexual Abuse's call for children's home care staff to be regulated by a professional body.
Research released by the Howard League last year reported that police are often inappropriately called out to children's homes to deal with minor incidents with young people.
That research also found that 13- to 15-year-olds in residential care are six times more likely to be criminalised than looked-after children in other types of placement.
