While children and carers struggle to get by, big finance cashes in on foster care

An anonymous foster carer writes: during this pandemic, we have a simple ask - give us sick pay.

Mis-classified as “independent contractors” – the lowest rung on the ladder of employment rights – most of us don’t get a penny if we get so sick our foster children are removed.

Yet as we take extra children into our homes and are asked to provide face-to-face contact with children’s birth families, we’re at high risk of catching the virus. 

This vulnerability is bad both for us and for our foster children. Foster carers who’ve caught the virus have turned paramedics away because they can’t take the risk of going into hospital and losing the child they care for.

Others face the prospect that if they got sick, the drop in income would mean they’d lose their house, leaving no home for the children to return to once they recovered. 

Given this, access to statutory sick pay at just £95.85 per week doesn’t seem a lot to ask. But despite being expected to be professional and accountable when it suits our bosses, when it comes to pay and conditions we’re told we don’t deserve sick pay: that foster carers are not workers, and fostering is not a business. 

Meanwhile some are profiting handsomely from the system: the big private fostering agencies, the investors who own them, and their CEOs.

Many private fostering agencies were set up as small, local businesses. But in recent years a few big providers have been taking over.

One such company is CareTech Holdings PLC. In 2018 they bought up rival care company the Cambian Group for £278.5m. Operating under different names including Outlook Fostering, Fostering Support Group and TLC Fostering Wales, CareTech made £50 million in profit in 2019. CareTech CEO Haroon Sheikh takes home £858,000 a year. For the majority of foster carers who earn £1.70 an hour or less,** it would take them 262 years to earn that much. 

As foster care has become increasingly privatised, foster carers like me have become cash cows for profit-hungry investors. Many of these big companies are owned by “private equity” firms. Their business model is all about extracting as much profit as they can from a business, even to the point of bankruptcy.

Take the National Fostering Agency, for example. NFA is now the largest private fostering agency in the UK, having absorbed fourteen other providers, including Acorn Care, Pathway Care and Fostering Solutions. In 2015, NFA was bought by the private equity firm Stirling Square Capital Partners (SSCP) for £250 million

One way private equity firms make money is to avoid tax by hiding their profits. They often do this by loading companies up with debt, allowing them to exploit regulatory loopholes to pay lower taxes.

For example, for eighteen months up to March 2016, SSCP didn’t pay any corporation tax at all, using financial methods like this. 

These practices make it hard to say exactly how much SSCP are profiting from foster care. However, it’s safe to say the private equity fund is not doing too badly: their latest “fund” raised £950 million in investments, and their managing partner, Mr Stefano Bonfiglio, is a multi-millionaire.

The NFA isn’t the only example of private equity cashing in on foster care. Foster Care Associates, owned by CapVest private equity firm, reported a profit of £4.89 million, and Compass Fostering is owned by Graphite Capital, another private equity firm accused of using similar kinds of tax-avoidance arrangements as SSCP.

These aren’t exceptions to the rule. This is all part of the system-wide privatisation of public services. In recent years, local councils have struggled to recruit enough foster carers. Meanwhile, private fostering agencies are able to promise higher fees in expensive advertising campaigns. Given the poverty wages offered by many local authorities, no-one can blame carers for signing up with private agencies. 

When local authorities can’t place a child with their own carers, they’re forced to contract a private agency at a much higher cost to the council. While some of this extra money goes towards caring for the child, much of it ends up lining the pockets of tax-dodging bankers.

In this way, privatisation drains local authority budgets, shrunk as they are by a decade of austerity. This leaves local authorities with less money to pay their own carers, and the vicious cycle continues.

While CEOs and private equity directors enjoy their salaries, carers like Lynn explain how not having sick pay keeps her awake at night. It’s time to make the system work for children and carers, not private business and finance.

Sign the petition for sick pay for foster carers here.

Rosie (not her real name) is a member of the foster care workers’ branch of the IWGB union.

*Based on FOI requests from 163 LAs and IFAs, just 6 provide sick pay as standard, 106 have no sick pay and the rest provide sick pay only in specific circumstances. **Calculated using figures on page 22 of the 2019 State of Foster Care report, assuming a 40 hour week. 

With thanks to IWGB volunteers for their research support. 

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