The social care system in the UK is broken.
Privatisation and rampant profiteering by select for-profit businesses that seek to monetise some of our most vulnerable has had severe consequences for the rest of the market.
Lower-quality homes and eye-watering price tags for child placements have left some local authorities facing tough choices when it comes to finding a place for children in social care to call home. Research has shown that there are typically 50 children each day awaiting a place (GOV.UK), with more and more ‘at-risk’ children being placed in unregistered homes, where staff are not checked by Ofsted. Together Trust have found that there has been a 277% rise in these illegal placements between 2020 and 2023.
The social sector has time and time again proved its capability to deliver high-quality, impactful services at pace, often alongside challenging socioeconomic contexts, with any excess profits re-invested into solutions that improve outcomes for the communities they serve.
This begs the question of whether there is a role for social investors to play in terms of intentionally investing and co-investing alongside local authorities, charities and foundations and other sources of capital to enable and empower the not-for-profit segment of this market.
In this blog, Digital Content Manager, Annie Constable, explores the current state of the sector, how and why social investors are getting involved and what lies ahead for social investment in this space.
The State of the Sector
100,000 children in the UK live in social care. In this context, social care can be defined as meaning that a child is ‘looked after’ and the local authority is legally responsible for ensuring the child is cared for.
Of those 100,000 children, 91% felt lonely or isolated while in the care system, while more than 10,000 children (10%) experienced high placement instability, meaning they have undertaken more than three home moves in a single year.
The most common reason for a child to be placed in the social care system is to ensure they are protected from abuse or neglect in the existing family home. Other common reasons that may lead to children going into social care include unaccompanied young asylum-seekers, children at risk of criminal or sexual exploitation or a parent’s inability to look after them due to disabilities, illness or serving a prison sentence.
As with many things, the consequences of being placed within the social care system in 2024 are not experienced equitably across society. Children in the poorest 10% of neighbourhoods are 10x more likely to be in care and are therefore disproportionately represented in the system.
A Place to Call Home – Action for Children
Social Investment in action: supporting the children in social care sector
There are more and more examples of social investors playing a part in the diverse financial toolkit of not-for-profit providers, who are seeking alternative sources of capital to help them establish high-quality new homes and deliver at pace.
Read on to discover how three organisations have secured social investment and what that’s meant for their organisation as they seek to provide essential services to a struggling system…
We are Juno CIC
We are Juno CIC is a not-for-profit children’s residential service, creating a sustainable alternative to profit-driven models that dominate the children’s residential landscape.
They used Blended Finance (£250k) as part of a diverse financial toolkit, including loans from Wirral MBC (£1m, 7.5%, 10 years), Liverpool City Region Combined Authority (£800k, 5%, 10 years) and a private social investor (£800k, 5%, 10 years) to open Juno Oxten, a home for up to four local young people.
Juno are creating a network of high-quality, not-for-profit homes that transform opportunities for children growing up in the care system across Liverpool City Region, and beyond.
Here's what Managing Director, Sophie Clarke, had to say about their experiences with social investment…
“Blended social finance has provided We are Juno CIC with the resources we need to design and develop high quality homes for children in Liverpool City Region. As a new provider, we’re learning about what’s required to achieve the very best for young people. Our socially minded investors have provided the flexibility and support we’ve needed to move forward”
Read their full case study or find out more about We are Juno CIC via the We Are Juno CIC website.
Lighthouse Pedagogy Trust
Lighthouse Pedagogy Trust (LPT) is a charity that creates children’s homes where young people can thrive, with education at the centre of their holistic approach, enabling children in care to have the same opportunities as everyone else.
They used social investment in the form of £250k in Blended Finance from the Postcode Innovation Trust, alongside capital from Treebeard Trust (£2m) to help them to renovate and open their first children’s home in Sutton – click here to take a virtual tour of the home.
The home has led to a great degree of stability for the children placed there and their team turnover is significantly less than the rest of the sector, leading to strong, long-lasting relationships between children and practitioners. They are also in the process of launching the first ever degree-level qualification for professionals working in children’s homes in collaboration with Kingston University as part of their efforts to improve standards of care nationally.
Director and Founder, Emmanuel Akpan-Inwang spoke to their experiences of taking on repayable finance to renovate their first children’s home…
“We could not have achieved the milestone of opening our first children’s home without social investment. It allowed us to go ahead with the refurbishment of the building and meant that no compromises were made to the quality of the renovation. The impact of social investment continues to pay dividends for the children who live in our home."
Read their full case study here or learn more about who they are and what they do via the Lighthouse Pedagogy Trust website.
Social adVentures
Social adVentures is a wellbeing social enterprise specialising in health, children’s services and social care that run alongside social businesses such as childcare nurseries, training, a community gym and forest schools. They seek to provide the radical change required to improve the life chances of our most vulnerable young people.
Using innovative ways to improve outcomes for the children in the community they serve, they provide local placements, keep siblings together and provide support for staff / interventions to help keep children settled in their homes.
They secured a £401,000 unsecured loan from Social and Sustainable Capital to purchase, open and run their first purpose-led residential children’s home in Salford, Greater Manchester. Altogether, they deliver more than £2m in social value each year and have provided 37500 government-funded childcare places in total – learn more about their impact.
Here’s what Chief Executive, Scott Darraugh, had to say about their experiences with social investment and their plans for the future…
"...the investment from SASC has enabled us to accelerate our entry into this market and we have now opened our first children’s home. We have ambitious plans for the future and are excited about providing positive outcomes for young people.”
Read their full case study here or check out the Social adVentures website for more information about how they support children in residential care and other essential services for their community.
What next?
While the statistics outlined at the start of this blog contributed to a rather bleak picture of the current state of the sector, there are reasons to be hopeful that change lies ahead for those affected by the quality – or lack thereof – of children’s services.
Just last week, the government announced the ‘biggest overhaul in a generation to children’s social care’ with new powers handed to Ofsted to crack down on exploitative providers alongside a requirement for more transparency around their finances.
Within this announcement, not-for-profit providers and those backed by social investment are called on to come forward to set-up more homes to strengthen the system, and the government will be looking at how they can best support this to happen.
Amelie Montague, Investment Director at Better Society Capital is exploring how social investment can better support the sector, forming part of the financing package required to catalyse change;
“While there are numerous challenges & failings in the children’s social care market that urgently need to be addressed, there are also 100+ organisations providing high-quality, child-centred services – and these are exactly the types of organisations we want to support to grow their services and impact. We believe social investment can play an important role in giving organisations greater choice in how to fund their growth plans with capital that’s patient and impact aligned.”
In conclusion...
Bringing it back to the question posed in the title of this blog: Can social investment be used to fix what’s broken in children’s social care services?
The level of capital and legislative changes required mean there is not a quick, one-size-fits-all solution that can be provided by social investment. However, I do believe that repayable finance can play an integral part in enabling and empowering not-for-profits to scale their impact delivery at pace, and this is even more powerful when delivered alongside other sources of capital.
Ultimately, partnership and collaboration between providers, social investors, public funders and local authorities will be vital to ensuring better social outcomes for the children who need it most.
If you’re a social investor and you’re interested in exploring investing more intentionally in this area, please contacted Annie (aconstable@goodfinance.org.uk) to learn more about the work currently happening in this area and how you can be added to the shared database.
If you’re a social enterprise / not-for-profit provider operating in this space looking to use social investment to scale impact and delivery, please email Annie (aconstable@goodfinance.org.uk) to understand more about our tools / resources and how they can support you in navigating the process.
This includes...
- The ‘Is It Right For Us’ tool
- The Investor Directory
- The Outcomes Matrix
- The Cost of Capital Calculator
....as well as our collection of case studies to explore how organisations like yours have harnessed the power of social investment.