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Rebekah Wilson and Claire Methven O’Brien examine human rights abuses and profit-making in corporate children’s homes
Even Charles Dickens might be lost for words to describe the predicament of vulnerable children in state care, and their exploitation for profit, in the 2020s. In Hard Times (1853) he outlined the ‘Gradgrind philosophy’:
‘… that everything was to be paid for. Nobody was ever on any account to give anybody anything, or render anybody help without purchase… Every inch of the existence of mankind, from birth to death, was to be a bargain across a counter.’
Worldwide, private companies and investors are increasingly involved in the delivery of essential public services, social and elderly care. In the UK, this manifests prominently in the private children’s home sector. As we highlight in this piece, the care of some of our society’s most vulnerable children, namely those subject to care and, often, accompanying Deprivation of Liberty Orders, has become a lucrative source of revenue for corporations and investors. Yet a growing body of evidence highlights the negative consequences for human rights of this trend.
Human rights treaties, to which the UK is a party, safeguard the right to liberty and security of person. Relevant international instruments include the European Convention on Human Rights (Art 5) and the United Nations Convention on the Rights of the Child (UNCRC). Art 37 UNCRC provides:
‘No child shall be subjected to torture or other cruel, inhuman or degrading treatment or punishment…
'No child shall be deprived of his or her liberty unlawfully or arbitrarily. The arrest, detention or imprisonment of a child shall be in conformity with the law and shall be used only as a measure of last resort and for the shortest appropriate period of time…’
Accordingly, any restrictions of a child’s human right to liberty must be authorised by law. Even where a child is already in the state’s care, authority must be obtained for any further limitations on his or her liberty, for instance, due to restrictions on movement in a place of care or arrangements for constant supervision. In England and Wales, Deprivation of Liberty orders (DOLs) are sought from a High Court judge in the Family Division under the court’s inherent jurisdiction in this context.
The case of AB (A Child: human rights) [2021] EWFC B100 illustrates the devastating consequences for human rights of the failings of corporate providers involved in the care of children. The case concerned a 12-year-old child (‘AB’) who was placed by the local authority in a care home run by a UK-registered company, Horizon Care Ltd. Horizon Care is one of the largest corporate providers in the UK children’s home sector, operating 50 care homes, over a dozen special schools, and various other facilities.
Over the course of almost two years in Horizon Care’s home, the child was subject to repeated unlawful deprivations of liberty and physical restraint interfering with the rights against torture, cruel, inhuman or degrading treatment or punishment under Art 37 of the UN Convention of the Rights of the Child and Art 3 of the ECHR. Given COVID-19 pandemic-related restrictions, for months AB was deprived of direct family contact, a further requirement of Art 37 UNCRC. There were suspicions that AB was bullied by other children and possibly subject to assault by care home staff.
Eventually, AB’s social worker contacted Ofsted, the UK statutory body responsible under the Care Standards Act 2000 for overseeing children’s social care and schools, which investigated the home in question. The OFSTED report was ‘scathing’. According to the judge in AB’s care proceedings:
‘The conditions… shocked even senior managers of the company that operates the home when they visited... AB was living in a neglected, chaotic and unsafe environment.’
Consequently, the Horizon Care home’s authorisation to provide residential care for children at that home was revoked; AB and the home’s other residents were relocated to other facilities; and Ofsted issued a list of requirements to be met, including staff training and improvements to the property.
Taken alone, AB’s case, and others like it, are profoundly troubling. Yet their significance deepens when situated within sector-wide and international trends. In Europe and North America and elsewhere, as noted above, elder and social care services, including children’s homes, are run by corporations. Such firms are increasingly owned or backed by private equity firms; behind such firms stand commercial and institutional investors such as insurers, state and private pension funds.
In the UK, this ownership and investment model is common: 75% of children’s care homes are private, and eight of the 10 largest UK private providers involve private equity. This includes Horizon Care, the company that operated AB’s home, which was acquired in 2019 by Graphite Capital, a private equity firm with a range of global pension funds, insurance companies, and endowment funds as its investors.
One major reason for the growing presence of private equity and other investors in the public care sector is its value. The UK children’s home market is worth £6.5bn annually, while the UK adult social care system costs £22bn a year. Private companies can charge more than £30,000 per week or £1m per year for placements for children with significant care needs. Secure public children’s homes, by comparison, cost £270,000 per year. In addition, the market is highly lucrative. Indeed, profit margins for the UK’s 15 biggest private children’s home operators have escalated to an average of 22.6%, while social care investors more broadly often enjoy ‘double-digit’ returns.
Companies like Horizon Care claim that such profits derive from the lower operating costs and ‘increased efficiencies’ they achieve compared to state providers. Yet, the evidence points in other directions. First, the prices charged by private children’s home companies to local governments have dramatically increased by 84% in the UK since 2015. Second, as a UK regulator recently found, corporate children’s homes are ‘making materially higher profits’ than they should be able to in an ‘effectively functioning’ market.
At the same time, many owners of private-equity backed care companies, both in the children’s and adult care sectors, burden these companies with debt, often in the form of expensive loans to hedge funds via holding companies in offshore jurisdictions. When care companies are bought out, such arrangements are effectively removed from public scrutiny. If such loans turn bad, as they have done regularly, tax-payers are left to pick up the pieces.
These trends are not unique to the UK but widespread and systemic. Given the severe and often irremediable character of human rights abuses in care or other public service settings, this poses an urgent challenge.
International standards, such as the UN Guiding Principles on Business and Human Rights and OECD Guidelines for MNEs, to which successive UK governments have subscribed, require businesses, including investors, to respect human rights. Emerging recognition of this responsibility is found in new national and EU laws on corporate human rights due diligence, as well as ‘sustainable,’ ‘responsible‘ or ‘ESG’ investment frameworks.
In principle, under such standards, companies like Horizon Care and its owners should be accountable for any alleged involvement in human rights abuses. Their investors should exercise leverage to avoid harm to human rights and where this is not possible, responsibly exit from their investments.
In practice, however, the impacts on human rights of the financialisation of social care services for vulnerable individuals remain largely neglected by international actors and invisible to ‘sustainable investment’ frameworks. Investments in the social care sector would, for instance, not raise concerns based on OECD guidance on high risk sectors, or proposals for EU criteria on ‘social’ investments, for example.
It must be doubted whether, when Parliament enacted s 33(3)(b) of the Children Act 1989, it could have envisaged the circumstances of vulnerable children subject to DOLS orders now.
The National DOLS Court is tasked with making orders which permit the most severe restrictions on a child’s human rights in often harrowing circumstances, such as where there are no other children in a placement, just supervising adults. It is impossible to imagine how some of these placements must feel for any young person, let alone a young person who has already experienced trauma in life.
What became s 33 was debated in Lords Committee. In response to an amendment that would have given the court power to direct the local authority in its exercise of parental responsibility, the Lord Chancellor said:
‘... this Bill generally retains the current balance of power between courts and local authorities. It gives children, parents and others greater rights and remedies with regard to contact and the discharge of a child from care... However, it has taken from the Review of Child Care Law the principle of clarifying and emphasising the responsibility of local authorities.
'Seeking to strengthen rather than undermine that responsibility, the Bill imposes a new duty on local authorities to establish a procedure for considering representations – and we know that that includes complaints – made to them about the discharge of their functions.’ (Cols 372-373)
Yet for many children and parents, the procedure for considering representations as to the exercise of their parental responsibility pursuant to s 33(3)(b) will simply be out of reach. In light of cases such as those of AB and others referred to here, the general adequacy of the current framework for oversight and remediation of human rights abuses, by local authorities, or their profit-making delegees, must further be doubted.
The UK government has been told repeatedly of the pressing need to address problems in this area. A succession of High Court judgments has highlighted the lack of placements for children subject to DOLS orders, in particular. Most recently, in Re X (Secure Accommodation: Lack of Provision) [2023] EWHC 129 (Fam), Sir Andrew MacFarlane, sitting as President of the Family Division, handed down an eviscerating judgment in which he said:
‘It is not the role of the courts to provide additional accommodation; all the court can do is to call the problem out and to shout as loud as it can in the hope that those in Parliament, Government and the wider media will take the issue up.’
Those engaged in child law must surely share the President of the Family Division’s concerns, while Dickens might today indeed be astonished at how much of the ethos he portrayed in 1853 regrettably endures.
Rebekah Wilson is barrister specialising in family law and children’s human rights at Garden Court Chambers, London.
Claire Methven O’Brien is a Lecturer in Law at Dundee Law School, University of Dundee. She is Chief Adviser and Senior Researcher at the Danish Institute for Human Rights, and an Honorary Lecturer in the School of Management at the University of St Andrews.
Even Charles Dickens might be lost for words to describe the predicament of vulnerable children in state care, and their exploitation for profit, in the 2020s. In Hard Times (1853) he outlined the ‘Gradgrind philosophy’:
‘… that everything was to be paid for. Nobody was ever on any account to give anybody anything, or render anybody help without purchase… Every inch of the existence of mankind, from birth to death, was to be a bargain across a counter.’
Worldwide, private companies and investors are increasingly involved in the delivery of essential public services, social and elderly care. In the UK, this manifests prominently in the private children’s home sector. As we highlight in this piece, the care of some of our society’s most vulnerable children, namely those subject to care and, often, accompanying Deprivation of Liberty Orders, has become a lucrative source of revenue for corporations and investors. Yet a growing body of evidence highlights the negative consequences for human rights of this trend.
Human rights treaties, to which the UK is a party, safeguard the right to liberty and security of person. Relevant international instruments include the European Convention on Human Rights (Art 5) and the United Nations Convention on the Rights of the Child (UNCRC). Art 37 UNCRC provides:
‘No child shall be subjected to torture or other cruel, inhuman or degrading treatment or punishment…
'No child shall be deprived of his or her liberty unlawfully or arbitrarily. The arrest, detention or imprisonment of a child shall be in conformity with the law and shall be used only as a measure of last resort and for the shortest appropriate period of time…’
Accordingly, any restrictions of a child’s human right to liberty must be authorised by law. Even where a child is already in the state’s care, authority must be obtained for any further limitations on his or her liberty, for instance, due to restrictions on movement in a place of care or arrangements for constant supervision. In England and Wales, Deprivation of Liberty orders (DOLs) are sought from a High Court judge in the Family Division under the court’s inherent jurisdiction in this context.
The case of AB (A Child: human rights) [2021] EWFC B100 illustrates the devastating consequences for human rights of the failings of corporate providers involved in the care of children. The case concerned a 12-year-old child (‘AB’) who was placed by the local authority in a care home run by a UK-registered company, Horizon Care Ltd. Horizon Care is one of the largest corporate providers in the UK children’s home sector, operating 50 care homes, over a dozen special schools, and various other facilities.
Over the course of almost two years in Horizon Care’s home, the child was subject to repeated unlawful deprivations of liberty and physical restraint interfering with the rights against torture, cruel, inhuman or degrading treatment or punishment under Art 37 of the UN Convention of the Rights of the Child and Art 3 of the ECHR. Given COVID-19 pandemic-related restrictions, for months AB was deprived of direct family contact, a further requirement of Art 37 UNCRC. There were suspicions that AB was bullied by other children and possibly subject to assault by care home staff.
Eventually, AB’s social worker contacted Ofsted, the UK statutory body responsible under the Care Standards Act 2000 for overseeing children’s social care and schools, which investigated the home in question. The OFSTED report was ‘scathing’. According to the judge in AB’s care proceedings:
‘The conditions… shocked even senior managers of the company that operates the home when they visited... AB was living in a neglected, chaotic and unsafe environment.’
Consequently, the Horizon Care home’s authorisation to provide residential care for children at that home was revoked; AB and the home’s other residents were relocated to other facilities; and Ofsted issued a list of requirements to be met, including staff training and improvements to the property.
Taken alone, AB’s case, and others like it, are profoundly troubling. Yet their significance deepens when situated within sector-wide and international trends. In Europe and North America and elsewhere, as noted above, elder and social care services, including children’s homes, are run by corporations. Such firms are increasingly owned or backed by private equity firms; behind such firms stand commercial and institutional investors such as insurers, state and private pension funds.
In the UK, this ownership and investment model is common: 75% of children’s care homes are private, and eight of the 10 largest UK private providers involve private equity. This includes Horizon Care, the company that operated AB’s home, which was acquired in 2019 by Graphite Capital, a private equity firm with a range of global pension funds, insurance companies, and endowment funds as its investors.
One major reason for the growing presence of private equity and other investors in the public care sector is its value. The UK children’s home market is worth £6.5bn annually, while the UK adult social care system costs £22bn a year. Private companies can charge more than £30,000 per week or £1m per year for placements for children with significant care needs. Secure public children’s homes, by comparison, cost £270,000 per year. In addition, the market is highly lucrative. Indeed, profit margins for the UK’s 15 biggest private children’s home operators have escalated to an average of 22.6%, while social care investors more broadly often enjoy ‘double-digit’ returns.
Companies like Horizon Care claim that such profits derive from the lower operating costs and ‘increased efficiencies’ they achieve compared to state providers. Yet, the evidence points in other directions. First, the prices charged by private children’s home companies to local governments have dramatically increased by 84% in the UK since 2015. Second, as a UK regulator recently found, corporate children’s homes are ‘making materially higher profits’ than they should be able to in an ‘effectively functioning’ market.
At the same time, many owners of private-equity backed care companies, both in the children’s and adult care sectors, burden these companies with debt, often in the form of expensive loans to hedge funds via holding companies in offshore jurisdictions. When care companies are bought out, such arrangements are effectively removed from public scrutiny. If such loans turn bad, as they have done regularly, tax-payers are left to pick up the pieces.
These trends are not unique to the UK but widespread and systemic. Given the severe and often irremediable character of human rights abuses in care or other public service settings, this poses an urgent challenge.
International standards, such as the UN Guiding Principles on Business and Human Rights and OECD Guidelines for MNEs, to which successive UK governments have subscribed, require businesses, including investors, to respect human rights. Emerging recognition of this responsibility is found in new national and EU laws on corporate human rights due diligence, as well as ‘sustainable,’ ‘responsible‘ or ‘ESG’ investment frameworks.
In principle, under such standards, companies like Horizon Care and its owners should be accountable for any alleged involvement in human rights abuses. Their investors should exercise leverage to avoid harm to human rights and where this is not possible, responsibly exit from their investments.
In practice, however, the impacts on human rights of the financialisation of social care services for vulnerable individuals remain largely neglected by international actors and invisible to ‘sustainable investment’ frameworks. Investments in the social care sector would, for instance, not raise concerns based on OECD guidance on high risk sectors, or proposals for EU criteria on ‘social’ investments, for example.
It must be doubted whether, when Parliament enacted s 33(3)(b) of the Children Act 1989, it could have envisaged the circumstances of vulnerable children subject to DOLS orders now.
The National DOLS Court is tasked with making orders which permit the most severe restrictions on a child’s human rights in often harrowing circumstances, such as where there are no other children in a placement, just supervising adults. It is impossible to imagine how some of these placements must feel for any young person, let alone a young person who has already experienced trauma in life.
What became s 33 was debated in Lords Committee. In response to an amendment that would have given the court power to direct the local authority in its exercise of parental responsibility, the Lord Chancellor said:
‘... this Bill generally retains the current balance of power between courts and local authorities. It gives children, parents and others greater rights and remedies with regard to contact and the discharge of a child from care... However, it has taken from the Review of Child Care Law the principle of clarifying and emphasising the responsibility of local authorities.
'Seeking to strengthen rather than undermine that responsibility, the Bill imposes a new duty on local authorities to establish a procedure for considering representations – and we know that that includes complaints – made to them about the discharge of their functions.’ (Cols 372-373)
Yet for many children and parents, the procedure for considering representations as to the exercise of their parental responsibility pursuant to s 33(3)(b) will simply be out of reach. In light of cases such as those of AB and others referred to here, the general adequacy of the current framework for oversight and remediation of human rights abuses, by local authorities, or their profit-making delegees, must further be doubted.
The UK government has been told repeatedly of the pressing need to address problems in this area. A succession of High Court judgments has highlighted the lack of placements for children subject to DOLS orders, in particular. Most recently, in Re X (Secure Accommodation: Lack of Provision) [2023] EWHC 129 (Fam), Sir Andrew MacFarlane, sitting as President of the Family Division, handed down an eviscerating judgment in which he said:
‘It is not the role of the courts to provide additional accommodation; all the court can do is to call the problem out and to shout as loud as it can in the hope that those in Parliament, Government and the wider media will take the issue up.’
Those engaged in child law must surely share the President of the Family Division’s concerns, while Dickens might today indeed be astonished at how much of the ethos he portrayed in 1853 regrettably endures.
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