FOI/202600519542 · FOI · not held
Scottish Government Policy and Oversight of For-Profit Children’s Residential Care: FOI release
Information requested
You asked for information on the Scottish Government’s position, strategy, and any related analysis or reviews on policy and oversight of for-profit and private equity ownership of children’s homes and foster care services.
Response
I enclose a copy of most of the information you requested by email (as requested).
Some of the information you have requested is available from the Care Inspectorate’s publications. Under section 25(1) of FOISA, we do not have to give you information which is already reasonably accessible to you. If, however, you do not have internet access to obtain this information from the website listed, then please contact me again and I will send you a paper copy.
Question One: Does the Scottish Government have a current policy position on the use of for-profit and private equity-owned providers in children’s residential care and foster care?
Yes - The Scottish Government’s policy position is set out in the Children (Care, Care Experience and Services Planning) (Scotland) Act's supporting Policy Memorandum (see paragraphs 96-103 (residential care) and paragraphs 108-113 (foster care)).
In relation to foster care, the Act includes provision requiring all independent fostering agencies operating in Scotland to become registered charities. In relation to residential care, the Act includes measures intended to improve financial transparency and support further action to limit profit from the care of children. We will continue to shape these proposals based on feedback from our consultation and ongoing engagement with stakeholders as the work progresses.
We will also work closely with independent fostering agencies, the Care Inspectorate and the Office of the Scottish Charity Regulator (OSCR) to support the transition of all independent fostering agencies to becoming charities.
In residential care, defining 'profit' is a complex task and we are therefore keen to continue work with the sector to improve our understanding of this issue through increased financial transparency.
When making any changes in this area, it is of vital importance that the needs and safety of the children involved are put first.
By initially introducing greater financial transparency and monitoring we are taking an incremental approach that allows us to continue to assess what action is required and place children’s wellbeing at the centre of any changes.
Question Two: Has the Scottish Government conducted, commissioned, or received any reviews, analysis, or reports into the growth or impact of for-profit or private equity ownership of children’s homes since 2018?
Yes.
The Financial transparency and profit limitation in children's residential care consultation closed on 6 October 2025. This was supplemented by a series of meetings with key stakeholders, including providers, local authorities and public bodies. External analysts produced a consultation report which was published in December 2025.
The Competition and Markets Authority also published its report and recommendations arising from its market study into children’s social care in England, Scotland and Wales on 10 March 2022. This report was shared with the Scottish Government. The study was launched in March 2021 in response to two major concerns that had been raised with them about how the placements market was operating. First, that local authorities were too often unable to access appropriate placements to meet the needs of children in their care. Second, that the prices paid by local authorities were high and this, combined with growing numbers of looked-after children, was placing significant strain on local authority budgets, limiting their scope to fund other important activities in children’s services and beyond.
In June 2023, Common Weal published their policy paper titled ‘The Crisis In Foster Care In Scotland’ in response to the Scottish Government’s consultation on the future of foster care. In it they raised concerns that some IFAs may be transferring funds to parent companies through mechanisms such as unsecured loans, undermining Scotland’s not-for-profit principle.
In November 2025, Common Weal also published a report into the private provision of children’s residential care. This report discussed the extraction of profits and recommended the Scottish Government take action to prevent this.
Question Three: What is the Scottish Government’s current strategy for ensuring sufficient high-quality placements for children in care? Please include any targets, plans, or work underway to increase not-for-profit or local authority provision.
We are working to better understand the current landscape of residential childcare, including capacity, commissioning and workforce challenges, with a view to informing a new strategic approach.
As part of this, we intend to engage with key partners through the establishment of the Residential Care Reference Group to connect strategic policy challenges to practice so that we can ensure that the needs of children and young people in Scotland are considered fully.
Through the Future of Foster Care Consultation, we sought views from foster carers, third sector organisations, children and young people and stakeholders on a vision for the future of foster care which prioritises children’s experiences, meets their many and varied needs, and builds on the unique skills and qualities of foster carers in a changing sector and society. The consultation was developed after an extensive 2-year period of engagement with the fostering sector and has brought forward recommendations for change to help ensure that children and young people who are looked after away from their own homes are provided with caring and loving foster families. We are using the findings from the consultation as a basis for next steps. Its findings have already informed the provision within the Children (Care, Care Experience and Services Planning) (Scotland) Act 2026 requiring independent fostering agencies to be registered charities.
The Scottish Government is also progressing implementation of the Children (Care, Care Experience and Services Planning) (Scotland) Act 2026, including provisions relating to independent fostering agencies, alongside wider work on foster carer recruitment, retention and support.
In May 2025, the Scottish Government also launched a national recruitment campaign to help recruit more local authority foster carers in Scotland.
Question Four: Has the Scottish Government assessed or analysed the impact of for-profit provision on placement costs, quality of care, or outcomes for children?
The Scottish Government has not undertaken a formal assessment specifically examining the impact of for-profit provision on placement costs, quality of care or outcomes for children. However, in developing policy in this area, the Scottish Government has considered available evidence, including analysis of Care Inspectorate data, data from Companies House, information from Scotland Excel, consultation responses and external reports.
The Care Inspectorate hold up to date information on providers by type in their Datastore. This also includes information on the quality gradings of these providers.
An analysis of Care Inspectorate inspection data for residential services (Oct 2025) indicated that voluntary/not-for-profit providers deliver the highest quality of care, with 59.6% achieving a grade of 5 or higher. This compares to 56.1% of private providers and 46.9% of local authority providers.
At the lower end of the scale, private residential care providers have the highest proportion of low-rated scores, with 5.2% receiving a grade of 2 or below in contrast to 1.2% of voluntary/not-for-profit providers and 0.9% of local authorities.
Overall, results indicate that 87.5% of residential care providers achieving a score of 4 or above, a level considered indicative of quality care.
In foster care, Care Inspectorate inspection data indicated that independent fostering services deliver the highest quality of care, with 81% receiving a grade of ‘good or better’ for all assessed key questions. This compares to 53% of local authority fostering services.
At the lower end of the scale, no independent fostering services were graded ‘less than adequate’ for at least one key question, compared to 9% of local authority services.
Overall, results indicated that 96% of all independent fostering services achieved a score of ‘adequate or better’ for all assessed key questions, in comparison to 91% of local authority services.
Question Five: What information, if any, does the Scottish Government hold on the proportion of children’s residential care placements that are provided by for-profit or private equity-backed providers?
The Scottish Government does not hold live data on children’s residential care data. The Care Inspectorate hold up to date information on providers by type in their Datastore. This also includes information on the quality gradings of these providers.
The Scottish Government also publishes annual Children's Social Work Statistics. This provides a breakdown of placements by provider type for the previous financial year. Private providers now make up 49% of residential care providers in comparison to 41.5% in 2020.
Question 6: Has the Scottish Government issued any guidance, expectations, or communications to local authorities regarding the commissioning of children’s residential care from for-profit or private equity-backed providers since 2018?
No, the Scottish Government has not issued guidance to local authorities in relation to commissioning residential childcare from private providers.
About FOI
The Scottish Government is committed to publishing all information released in response to Freedom of Information requests. View all FOI responses at https://www.gov.scot/foi-responses.
Contact Please quote the FOI reference Central Correspondence Unit Email: contactus@gov.scot Phone: 0300 244 4000 The Scottish Government St Andrew's House Regent Road Edinburgh EH1 3DG
Detected exemption language
Under section 25(1) of FOISA, we do not have to give you information which is already reasonably accessible to you.
Attachments
No attachments found.