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LGA - Call to ban ‘Golden Hellos' in fostering

Council leaders are calling for a ban on independent fostering agencies using "golden hellos" to entice foster carers away from local authorities, a practice which contributes to the increasing cost of fostering services and reduces the amount of money available to help society's most vulnerable children.

The Local Government Association (LGA), which represents councils across England and Wales, is also highlighting concerns around a small number of independent agencies making substantial profits from fostering. These profits are too often made at the expense of local councils, who can be charged twice the usual cost of an in-house placement and see experienced carers poached by commercial agencies after considerable investment in their training and development. In his independent review of children's residential care, government adviser Sir Martin Narey recently highlighted that eight commercial fostering agencies made £41 million in profits in 2014/15 – money that the LGA believes would be better invested in improved services for children and young people in need.

Independent fostering agencies, including commercial, not-for-profit and charity organisations, are a valuable part of the fostering system, helping to make sure that suitable families are available to support children with a diverse range of needs. However, a minority of agencies have been offering local authority foster carers thousands of pounds to switch to their agency. As a consequence, the council which has trained the foster carer at the taxpayer's expense can then be charged double or more to buy their services back from an agency, resulting in higher costs to the authority for exactly the same service.

Cllr Richard Watts, Chair of the LGA's Children and Young People Board, said:

"Councils are looking after more and more vulnerable children and young people, and independent fostering agencies provide a valuable service in making sure we have a wide range of foster carers available to meet the needs of different children. Unfortunately, a minority of these agencies appear to be taking advantage of the system, and we feel it is immoral that such significant private profit is being made on the back of vulnerable children and young people.

"Offering ‘golden hellos' to entice foster carers away from councils does nothing to increase the number of carers available in our increasingly over-stretched system, and nothing to improve the lives of the children and young people who need our help the most. It all too often forces councils to pay higher fees for fostering services, which only serves to cut the amount of money available to help all children.

"The fact that just eight commercial fostering agencies can make more than £40 million in profits in one year is completely unacceptable. Profits of that level simply cannot be justified at a time when the public sector is facing enormous financial strain and is having to cut services to make ends meet. That much money could pay for the care of more than 1,200 of society's most vulnerable children, be invested in improved support for foster carers or fund an extensive recruitment campaign to help find some of the 9,000 new carers needed to meet current demand.

"The Children and Social Work Bill currently going through Parliament is the perfect opportunity to outlaw financial incentives to switch to independent fostering agencies. The Department for Education is also planning an in-depth review of fostering over the coming year, and the scope of that must consider the scale of profit-making in the sector, as well as the growing gap between the costs of in-house foster care and that provided by the independent sector."

In March 2015, there were 52,050 children and young people in foster care in England, an increase of 8 per cent since 2011. The system is expected to come under further strain in coming months as moves to resettle larger numbers of unaccompanied asylum seeking children begin.

Cllr Watts continued:

"Many local authorities are already at the limit of their in-house fostering provision, so will be relying more and more on independent agencies to look after some of these children and young people. It is essential that steps are taken to make sure the whole system is working well together so that councils can make full use of the range of placements available, looking after the best interests of children rather than the commercial interests of a small number of agencies."

Notes for Editors:

Statistics on numbers of looked after children are available at: https://www.gov.uk/government/statistics/children-looked-after-in-england-including-adoption-2014-to-2015

Sir Martin Narey's review of residential care in England is available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/534560/Residential-Care-in-England-Sir-Martin-Narey-July-2016.pdf

Statistics from the National Audit Office show that the average foster care placement provided by a council costs between £29,000 and £33,000 per year: https://www.nao.org.uk/wp-content/uploads/2014/11/Children-in-care1.pdf

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