“Fears raised about foster firms”

By Shafik Meghji

| 09 October 2007

The UK's largest fostering and adoption charity has voiced fears about the number of agencies in the sector owned by private equity companies.

It comes after residential care home and education provider Sedgemoor, bought by private equity firm ECI in 2000, went into administration (CYP Now, 3-9 October). The Adolescent and Children's Trust (Tact) is warning there is a danger something similar could happen in the fostering sector.

"The fact that more than a third of fostered children in the independent sector are now with agencies owned by private equity companies should be of great concern," said Tact's chief executive Kevin Williams, who is also spokesman for the Fostering Through Social Enterprise Consortium. "Private equity's primary motive is to maximise the return on their investment. Sedgemoor is a reminder that where the profit motive is paramount the consequences can be disastrous for children and staff."

Sixteen per cent of fostered children are placed with independent agencies and more than 30 per cent of them are fostered through private equity-owned companies, according to Tact.

This week further details emerged about the fallout from Sedgemoor going into administration. Administrator KMPG told CYP Now the company had been "winding down" its activities for several months and only had 30 residential homes - housing 72 children - by the time it went into administration.

Half of these homes have now been sold to Keys Childcare, two more than originally announced, saving 170 jobs (CYP Now, 3-9 October). Children at the remaining 15 homes have now been rehoused.