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Private Equity Firms Are Making Millions Out Of Failing Children’S Care Homes - Yet Care For Vulnerable Is 'unacceptable'

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http://www.independent.co.uk/news/uk/home-news/revealed-private-equity-firms-are-making-millions-out-of-failing-childrens-care-homes--yet-care-for-vulnerable-is-unacceptable-8815656.html

Private-equity firms and multimillionaire property dealers are making millions of pounds from dozens of children’s care homes that failed to provide acceptable standards of care for the most vulnerable young people in society.

A major review of the industry launched after the Rochdale child-grooming scandal has revealed that 63 privately owned children’s care homes across the country did not meet the Government’s minimum standards.

Ofsted inspection reports included in the landmark study, commissioned by the Education Secretary, Michael Gove, reveal that one in three homes run by Advanced Childcare Limited, Britain’s largest private provider, failed to be classified as “good” or “outstanding” by the education watchdog. Officials now class any institution that fails to meet this benchmark as “unacceptable”. The Cheshire-based company, which charges councils up to £208,000 a year to care for a single child, is owned by GI Partners, a US private-equity firm which has around £4bn of assets under management.

The second-largest private-sector provider was Keys Childcare Limited, which runs 68 homes and is ultimately controlled by the Pattersons, a Northern Irish family who are also involved in property development and who are worth £70m, according to the latest The Sunday Times Rich List.

Almost a third of the children’s care homes owned by the Co Down-based company also failed to meet the Government’s acceptable standards of care for vulnerable young children, yet made £1m in profits last year. A spokesperson for the family said the Government’s data was out of date.

...

Advanced Childcare is owned by a US fund set up by Rick Magnuson, a former banker at Nomura and Merrill Lynch. According to its latest accounts, turnover was up 50 per cent year-on-year and post-tax profits soared around 25 per cent to £2.6m due to “continuing reviews of staffing costs, effective rotas in the homes and robust overhead management”.

Chief executive Rizwan Khan is listed as a “residential care worker” at Companies House yet was anointed “Northern entrepreneur of 2013” earlier this year, and holds a bewildering array of 26 separate company directorships.

He is thought to be the highest-paid director of the company, taking home £206,000 last year, according to the latest available figures – £42,000 more than the year before. The firm’s ultimate owner is GI Partners, which manages more than £4bn of assets from offices in London and Menlo Park, California. In 2009, the company reported its first fund had awarded backers three times their original investment.

The 52-page dossier published yesterday found councils in England spend more than a £1bn a year on caring for fewer than 4,900 children. It calculates that councils spend an average of £4,000 a week to place one child in a home, several times what it could cost to educate them at some of Britain’s leading public schools.

It would be useful to know how many PE care homes there are altogether and how many are run by the state / councils and how many of them are failing.

However it's clear once more the private sector in some area's is again providing unbelievable value for taxpayers and in no way is the taxpayer getting ripped off.

Care is another boom area where you can easily milk profits and provide little value in return. Most of these care homes are staffed by low paid workers doing long hours, whilst the bosses milk the profits. Still no doubt those running these companies feel they are bastions of the free market whilst leeching of the taxpayer.

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Not news....people and business everywhere make money from vulnerable and needy people.......if people had no needs money could not be made from them they service/pay for themselves. ;)

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Perhaps councils should seriously consider public boarding schools for teenagers in their care with fostering during the holidays if it is cheaper which according to the extract above it is. One or two "looked after" children per public school would be manageable and the kids would probably fare better as well.

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Perhaps councils should seriously consider public boarding schools for teenagers in their care with fostering during the holidays if it is cheaper which according to the extract above it is. One or two "looked after" children per public school would be manageable and the kids would probably fare better as well.

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Perhaps councils should seriously consider public boarding schools for teenagers in their care with fostering during the holidays if it is cheaper which according to the extract above it is. One or two "looked after" children per public school would be manageable and the kids would probably fare better as well.

It would be a decent bailout for the private education system that is struggling as a lot of middle class people are finding out they aren't really middle class.

However it would be a great test to see how these schools cope with children from under privileged backgrounds.

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However it's clear once more the private sector in some area's is again providing unbelievable value for taxpayers and in no way is the taxpayer getting ripped off.

Care is another boom area where you can easily milk profits and provide little value in return. Most of these care homes are staffed by low paid workers doing long hours, whilst the bosses milk the profits. Still no doubt those running these companies feel they are bastions of the free market whilst leeching of the taxpayer.

In the main, the only people who will spend the money building facilities are these PE people. And you'd be amazed at just how ridiculous the councils are at the slashing of pay rates (and risking care standards) they demand from operators. The staff are low paid, but granny farming is actually low margin. Having been through finances of some of the bigger players, the more specialised care is expensive - up to £6K a week - but that's because it's specialised. If your nurses are on £40K plus NHS transferred pensions costs (and the private lot can't get away with just a mere 14% contribution), and you need to provide 24 hour on one care, then that IS damned expensive to provide.

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