Increased regulatory powers to fine unregistered children’s home providers could risk harming the most vulnerable children by pushing the practice further out of sight, researchers are warning.
In a report, Hidden Children, by Commonweal Housing Trust, the housing justice charity argues that while the government has outlined several promising measures to reform the sector, treating the problem of illegal homes as a compliance issue “misses the wider context”.
-
Analysis: PAC children’s home report raises questions for DfE
-
Analysis: Key takeaways from PAC hearing on children’s home sustainability
The government plans to empower Ofsted to fine providers, which is considered a speedier and more direct civil option than the criminal court system currently offers.
However, the report also warns that penalties may be ineffective if they are lower than the income providers can generate.
The charity said its researchers “detected an uneasy professional climate” among those involved in commissioning and placements while compiling the report, adding that many expressed “considerable uncertainty” about the legality of, and the legal responsibility for, these practices.
“This, matched with profound systemic pressures, has created a perverse situation in which well-meaning practitioners engage in potentially harmful commissioning about which they cannot speak with frankness and transparently,” the report states.
Instead, the organisation urges ministers and regulators to be “constructive and empathetic”, adding that “assigning blame for individual decisions taken under extreme pressure is neither practical nor – ultimately – in the best interests of children”.
Lasting reform will depend on expanding suitable provision, improving data and fostering a more open, problem-solving culture across the sector, it argues.
Other changes it is calling for include requiring directors of children’s services to justify unregistered placements to Ofsted.
Separating provider and location registration would allow approved care providers to operate across multiple sites without needing each property to be registered individually, enabling faster, more flexible placements while maintaining oversight, the researchers claim
The report also recommends strengthening regional commissioning, and encouraging partnerships with housing associations to expand safe emergency accommodation capacity.
The report highlights how hundreds of children in England are currently living in unregistered children’s homes – placements that provide both care and accommodation but operate outside the official regulatory system.
According to the report, these settings are “technically illegal” and exist beyond the oversight of Ofsted, leaving significant gaps in monitoring and accountability.
The research finds that such placements are rarely used for routine cases. Instead, they are “overwhelmingly used for children most in need”, including those at risk of exploitation, serious violence or acute mental health crises.
The report highlights how despite their illegality, their use has risen sharply. Confirmed cases increased by more than 372% between 2020/21 and 2024/25, although the report warns that official data likely underestimates the true scale due to underreporting.
It says the quality of unregistered homes varies widely, from well-intentioned emergency arrangements to highly unsuitable settings such as hotels or holiday lets staffed by untrained workers, adding that in some cases, placements can last months and cost up to £40,000 per week per child.
Responding to the report, Dheeraj Chibber, chair of the health, care & commissioning policy network at the Association of Directors of Children’s Services, said the research “reflects the reality of the placement market and the situations directors of children’s services, and the children in our care, find ourselves in”.
Chibber added: “A rise of more than 370% in unregistered placements, with spiralling costs, is not a failure of individual decision-making, but is what happens when a secure supply of regulated placements has not been established to meet the needs of the most vulnerable children in our care.
“ADCS has long called for a national placements strategy that takes sufficiency seriously, so we have the right placements, in the right places, at the right time, backed by genuine investment in not-for-profit, locally led provision.
“The Children’s Wellbeing and Schools Bill offers an important opportunity to rebalance a market that has for too long allowed too many providers to put profit before care. The report compounds how urgent this issue is, children at the centre of the report cannot wait.”
Source: CYPNow, Joanne Parkes.
