Children's homes hit by buyout fears

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Concern at private equity's role in social services
The collapse of a private equity-backed care home dealing with sexually abused and autistic children has sparked renewed concern at the advance of financial buyers into British public services.
Sedgmoor, owned by established private equity firm ECI Partners, ran 45 homes for vulnerable children. It went into administration two weeks ago.
After selling most of the care homes, administrator KPMG spent several days urgently liaising with local authorities to find places for dozens of children. Charities claimed some had nowhere to go after the school day ended.
Jack Dromey, Unite deputy general secretary, said: 'It beggars belief that the care of the vulnerable might now be put at risk by the cost-cutting which is a characteristic of private equity. Inevitably long-term care considerations will give way to short-term profit-making.'
But sources close to ECI blame its demise on a shift in government policy which saw children moved out of care homes into foster homes. The policy change has prompted a stampede of private equity firms into the foster-care sector. The venture capital firm 3i and a number of other financial buyers still run dozens more children's care homes.
Experts say private equity firms now control 30 per cent of the independent foster agency market. Last December, Sovereign Capital bought the country's second largest foster agency, NFA, and at least six big agencies have fallen to private equity players. Sources say foster businesses are keen to turn to private equity as a ready source of capital to fund rapid expansion.
The trend has sparked deep unease among children's charities, who say private equity-backed foster agencies are piling extra work on social workers and will raise charges to local authorities.