How voracious private equity firms plunder local authorities to make millions in profits from vulnerable children and young people in care (Thread) 1/
2/ You may never have heard of SSCP Spring Topco. It is a private company based in Jersey that is responsible for the lives of hundreds of children in care or with special needs in England.
3/ It has been growing at a rapid pace, unchecked by regulatory authorities. Its latest accounts, just published, show it now rakes in more than £265 million a year from local authorities. £265 million.
4/ This company trades under many names, often claiming to be ‘local’ or ‘family run’. This is a deceit. They include National Fostering Agency, Pathway Care, Hillcrest and Options Autism. Different brands but all part of the same corporate scam.
5/ The business is structured to put as much distance as possible between the actual delivery of care and the ultimate owner, Stirling Square Capital Partners, a private equity firm that pays no tax & evades public scrutiny while screwing as much money as possible from taxpayers.
6/ SSCP earned profits of £22 million from foster care and children's homes last year. But this is where the real scandal of private ownership begins.
7/ Stirling Square treats children’s services like Wonga used to treat hard-up families. It makes most of its profits (untaxed) by lending millions of pounds to SSCP at usurious rates of interest.
8/ SSCP has been loaded with an extraordinary amount of debt (around £739m). Normally, this would be unsustainable. But in this case it is underwritten by taxpayers. What’s more, Stirling Square (and friends) hold much of the debt and charge SSCP fees for the privilege.
9/ This needs to be spelled out: SSCP pays massive interest charges and fees to its owners from money provided by local authorities for the care and support of vulnerable children.
10/ Look at these interest rates.
11/ An example of fees and costs (this one item amounts to £750,000)
14/ I know this all feels very technical. But, quite simply, it shows how millions of pounds are being syphoned off to tax havens instead of being spent on children and young people in care.
15/ Why do local authorities do it? Because they have little choice. To use the Wonga example again, they need the money today, not in one year or five years. They have nowhere else to go.
16/ Privatisation of children's services is bad for children, bad for families, bad for taxpayers.
It doesn't have to be this way.
17/ Meanwhile, the sharks at SSCP are preparing for another bumper year. The economic shock of COVID19 is an opportunity for them.
18/ Finally, when you see the Government 'consulting' @theNAFP and the Independent Children's Homes Association about children in care, this is what they are signing up to.
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Ofsted has published new data showing how children's homes have become a huge, money-spinning business. If you are squeamish about these things, look away now. 🧵
More than 4 in 5 children’s homes were owned by private companies (2,748 homes, 83%), which accounted for 9,648 places (77%) of 12,458 places.
The 22 largest companies owned 968 homes, which is 35% of all private children’s homes, and 28% of all children’s homes.
Just 1 in 6 private children’s homes (434, 16%) were owned by a single provider rather than part of the ownership chain of a larger company.
Shocking but true... local councils paid the Government of Abu Dhabi £173 million last year for the care and education of children in care via the private company Witherslack Group. …te.company-information.service.gov.uk/company/035791…
Profits of almost £36 million represent a margin of around 20%, which is extraordinary given the nature of the 'business'.
To find out who owns Witherslack you have to track back through other companies until you get to Witherslack Aggregator, and then at the very end in small print there’s this:
More on the privatisation of the care of vulnerable children. You may never have heard of Graphite Capital. But this private equity firm has been one of the UK’s biggest providers of children’s homes and foster care over the years. 🧵
In the past it has bought and later sold companies like Compass and National Fostering Group, extracting millions of pounds while loading them with colossal debts before selling them on to investment groups. Standard financial engineering, but with children in care as assets.
These days it owns the Horizon group of companies. Horizon runs 42 children’s homes for around 120 children and nine schools. It also provides supported accommodation for almost 400 young people, from the age of 16, including many who are still in council care.
Ofsted has suspended this children’s home in Staffordshire run by the private company TS Children Services Ltd because of serious failings in the care of vulnerable children. This home was only registered in January. reports.ofsted.gov.uk/provider/2/272…
This is the second children’s home recently registered by TS to be found to be putting children at risk this month. The first home is in Dudley.
Children in care for sale: Compass Community, one of the UK’s biggest providers of foster care, children’s homes and special education, has been sold by Graphite Capital to another private equity firm, Cap 10.
No purchase price disclosed, but Compass was paid more than £100 million by local councils for care and education last year.
It won’t surprise regular readers to learn that Cap 10 is based in the offshore tax haven of Luxembourg….
A Sunday slice of foster care life: 15 months or so ago, when the boys first came to live with us, they struggled being in crowded spaces. When we took them for their first ever haircut, they were very anxious. 🧵
The young barber sat down on the floor with them, outside his shop, and talked gently to them until they felt ready to go inside. His care put them at ease and they sat for him so he could cut their hair.
Fast forward, and our two happy and confident boys always look out for him and give him a cheery wave. They run in for their haircuts and share all their news. He always remembers who they are and what they’re about, no matter how busy he is.