Vulnerable children in care 'regularly put at risk' as hundreds placed in unregistered homes

The Commons spending watchdog branded it "unacceptable" that data showed some 800 children had been placed in such homes for an average of six months each.

Public Accounts Committee (PAC) chairman Sir Geoffrey Clifton-Brown said the nature of such placements and lack of oversight meant it was not possible to know whether they were being cared for in a safe, stable, or loving environment.

The report, published on Friday, comes after a separate report from the inspectorate Ofsted in December warned fees for places in unregistered homes have been known to be as high as £30,000 a week per child.

Ofsted said it had begun nearly 900 investigations during the 12 months to March 2025 into potential unregistered homes, "which often charge exorbitant fees to local authorities that have run out of options".

Its report stated: "This shadow market only exists because there aren't enough of the right kinds of places in legitimate registered homes to take the children who most need specialist support."

The PAC referenced data showing that in September 2024 nearly 800 children in England were in unregistered, and therefore illegal, accommodation.

This equated to around one in 10 of all children in residential care at that time, it said.

MPs warned that instead of such accommodation being used in short-term emergency circumstances only, children stayed an average of around six months.

The committee blamed delays in Ofsted registering new homes for contributing to the issue, and noted the education watchdog having introduced targets to register homes within 18 months.

Among their recommendations, MPs urged the Department for Education (DfE) to "reaffirm its commitment to reducing the number of children in unregistered homes to zero and set out the specific actions it will take to do so".

The committee also noted that almost half (49%) of children in care in England were being placed in homes more than 20 miles away from their original family home, with negative impacts as a result.

MPs said their report uncovers a system where children are being placed in homes that do not meet their needs, with disparities in the number of places available in different areas of the country.

They warned that while the DfE was "relying" on a rise in foster carer numbers to help reduce demand for children's residential care, "it has yet to address the significant challenges to increase numbers".

Committee chairman Sir Geoffrey said: "The stated purpose of the children's social care system is 'to provide care for those who need it so that they grow up and thrive with safety, stability and love'.

"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. This utterly unacceptable situation has become normalised, but there is nothing normal about this unsustainable state of affairs."

In September, a report by the National Audit Office (NAO) found children's residential care home costs in England had soared to almost double what they were four years previously amid what it called a "market failure".

The NAO said local authority spending on children in residential care rose from £1.6 billion in the year ending March 2020 to £3.1 billion in the year to March 2024.

Sir Geoffrey described oversight of the children's social care system as "fraught, with the Government not possessing clear line of sight into the financial circumstances of the majority of providers".

He added: "Without a good understanding of the motivations, debt, and potentially excessive profits of private providers, Government cannot effectively oversee a market with players within it who could very well be over-leveraged with debt.

"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. We desperately hope, in those children's interests, that this report sees the Government urgently bring fundamental change to this broken system."

The Department for Education has been contacted for comment. The Local Government Association (LGA), which represents local authorities, 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".

It branded the costs of some care placements as "astronomical", and said it can often mean less money is available for councils to spend on earlier support.

The LGA said: "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, 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."

The association said while the committee was correct to focus on value for money, "we cannot pretend this is a simple story of 'public good, private bad'".

It added: "When emotive and ideological debate is removed, the evidence is clear that independent children's homes provide care at a lower cost than local authorities and can help remove the illegal market entirely by developing the right homes, in the right places, with the right practice."