Hundreds of vulnerable children are being “regularly put at risk” with prolonged placements in unregistered homes, an influential committee of MPs has warned.
The Public Accounts Committee (PAC) Financial Sustainability of Children’s Homes report finds that in September 2024 nearly 800 children in care – around one in 10 of those in residential settings – were living in accommodation that was not registered with Ofsted.
While local authorities are permitted to use unregistered provision in emergencies when no suitable registered placements are available, evidence points to over-reliance and longer stays.
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Children’s Commissioner for England Dame Rachel de Souza gave evidence to the committee that children placed in these settings in 2024 stayed for an average of around six months, rather than for short periods.
Such homes cannot be routinely inspected, leading PAC to raise serious concerns about children’s safety and the quality of care they receive.
The practice is particularly common for children whose liberty has been restricted by the courts through Deprivation of Liberty Orders (DoLs) – with 1,280 children subject to DoLs in 2024, according to the MPs
The Department for Education (DfE) has committed to reducing the number of children in unregistered homes but it expects improvements to the system will take two years to take effect.
The PAC highlights a 9% decline in the number of foster carer households, excluding friends and family carers, between March 2020 and March 2024.
The MPs also point to major regional disparities in provision, with almost half of children in residential care placed more than 20 miles from their family home.
In addition, there are currently no secure children’s home places in London.
Long distances make it harder for social workers to spend time with children and understand local support, the report warns.
Meanwhile, the report highlights a dysfunctional market, with placement shortages leading to profiteering by some private providers and concerns that the government’s “vision for reform remains unclear”.
Public spending on residential care in England has almost doubled over five years to £3.1 billion in 2023/24.
In 2022, the 15 largest providers made average profit margins of 22.6%, according to the Competition and Markets Authority, with prices rising above inflation.
Among the report’s recommendations for tackling the issue are for the DfE to bring an end to the use of unregistered homes, and to set out specific steps to achieve zero use of these by the end of 2027.
The DfE should also increase the right types of homes in the right places, firstly by addressing barriers to creating new residential places, including inconsistent funding, delays in Ofsted registration, planning permission issues and staff shortages, and prioritise provision where it is most needed, says the report.
PAC chair Sir Geoffrey Clifton-Brown said: “For the hundreds of children highlighted in our report living for months in illegally unregistered homes, a lack of oversight means we cannot know whether their circumstances are indeed safe, stable, or loving.
“A dysfunctional system is forcing local authorities to routinely reach for solutions which will see our nation’s children regularly put at risk.
“Our most vulnerable children are a sector of our society often without the ability to easily make their voices heard, but it is clear from our committee’s scrutiny that they are currently being failed.”
Responding to a report, Cllr Amanda Hopgood, chair of the Local Government Association’s Children, Young People and Families Committee, said: “No council wants to place a child in an unregistered setting, and it is extremely concerning that in many cases, a lack of choice means provision is not fully meeting children’s needs.
“The astronomical cost of care placements also means there is less money available for councils to spend on earlier support for children and families. It is absolutely vital that the entire sector works together to ensure that we have enough homes that can meet children’s needs. This includes central and local government, Ofsted, the NHS and providers in all sectors.”
Mark Kerr, chief executive of the Children’s Homes Association (CHA), said: “Illegal children’s homes are local authorities purchasing danger at high costs because we have not developed the right regulated capacity for children with high risk profiles and complex lives.
“Over the last five years, CHA has developed evidence-based solutions to the sufficiency crisis affecting this cohort of children, with repeated requests to the government to take small but significant actions to remove the barriers for expert providers to develop the appropriate provision.”
