Local authorities in England and Wales have lifted spending on the largest children’s care providers by 20 percent above inflation over the past two years, driving a 37 percent jump to £3.7 billion. The rise reflects higher prices, rising autism diagnoses and a market dominated by private‑equity owners.

Revenue growth left EBITDA margins for the top 20 providers hovering around 17 percent in the year to March 2025, down slightly from 17.8 percent in 2023. Witherslack Group posted a 26 percent margin and £44 million profit, while Polaris and Keys Group reported 15‑20 percent margins under Capvest and G Square ownership.

Despite soaring costs, the National Audit Office warned that the average placement in a children’s home cost £318,400 in 2023‑24, yet many homes fail to meet children’s needs. The sector’s profitability has attracted scrutiny, prompting the Children’s Wellbeing and Schools Act to introduce stricter reporting and potential profit caps.

Local Government Association chair Amanda Hopgood urged a profit cap, arguing that large providers are earning excessive returns while money should flow into child support. Meanwhile, the government’s call for regional care co‑operatives aims to leverage bulk purchasing power, though its effectiveness in curbing prices remains uncertain.