Josh MacAlister needs to base public policy concerning children's homes on better evidence than this

If there’s a problem out there with the way government gets something done then appointing someone to have a look into the problem seems rational enough. But it does, obviously enough, depend upon who is appointed. Someone who believes mutually contradictory things before breakfast might not be the best choice. As with Josh MacAlister and this investigation into the provision of children’s home places:

Josh MacAlister, the head of the government’s review of children’s social care, will warn children’s homes bosses they must cut “indefensible” profits and improve the experience of young people in care or run the risk of intervention.

Rising levels of wealth are being made off the back of soaring children’s home fees and people are rightly concerned that private homes are making an estimated £250m a year in profits from the care of vulnerable children, MacAlister will say in a speech to the Independent Children’s Home Association on Thursday morning.

That is possible, we agree. Whether it’s true or not is another thing but it’s certainly possible.

MacAlister, who has welcomed the Competition and Markets Authority’s investigation into the children’s care market announced in March, is concerned that some heavily debt-laden private children’s care companies are at risk of collapse, with dire consequences for children in care and the local authorities that fund them.

That is also possible, that the providers of these homes are so laden with debt they’re about to go bust. Again, whether it’s true or not is another matter but it’s possible.

What’s not possible is to believe both things. It is not possible that the operators are making super, lovely, excessive, profits and also that they’re about to go bust. Someone needs to have a word in Mr. MacAlister’s shell-like to point this out. At least try to be internally consistent in your analysis perhaps?

As to where this idiocy comes from that’s simple enough, as one of us has pointed out before. It’s a report from Revolution Consulting which looks at the operating profits, not net profits, of the care home providers. That is, it looks at the excess of revenue over cost before accounting for mortgages, interest upon them, depreciation or maintenance of buildings and so on. You know, things that are a considerable portion of costs concerning anything with the word “home” in it. By using Ebitda as the measure it, in effect, looks only at the current account, not the capital. Which is, as a measure of profitability, absurd.

We’re fine with reports looking into problems with the way government does things. We do think it would help if those appointed were competent.