English councils paying up to £2m per child for illegal unregistered children's homes
A BBC investigation published on May 20 found that English councils are placing around 800 of the most vulnerable children in unregistered — and therefore illegal — children's homes, with bills running as high as £2 million per child per year in extreme cases. Despite a 2021 ban on such homes for under-16s introduced after earlier BBC reporting, the practice has expanded as registered placements for children with complex needs collapse, private providers proliferate, and Ofsted's registration backlog stretches to 18 months. Spending on residential care has doubled in four years and tripled in eight, while 84% of England's children's homes are now privately run; Ofsted has yet to successfully prosecute a single illegal provider.
An investigation by the BBC published on May 20 found that English councils are placing some 800 vulnerable children in unregistered children's homes that have been illegal since 2021 — with extreme cases now costing up to £2 million per child per year. The findings came from a Public Accounts Committee count, fresh BBC FOI requests to local authorities, and visits to homes in Lancashire, Portsmouth and elsewhere by reporter Noel Titheradge, whose earlier reporting prompted the 2021 ban on housing under-16s in unregulated settings.
The homes are often shabby and ill-equipped. In one bungalow, peeling privacy film and broken doors framed a teenage girl being cared for by three full-time staff in a placement billed at £13,000 a week; the home had no books, toys or games. Elsewhere, a council tenant was subletting a council house to a company that resold it to a different local authority. Titheradge has previously documented children housed in tents, caravans, narrowboats and a flat above a shop where a 14-year-old was known to be at risk of jumping out of windows; one child was trafficked directly from a placement and sexually abused, another kidnapped to sell drugs.
The shadow market has expanded even as the registered sector has grown rapidly. Ofsted's count of registered children's homes has roughly doubled, from 2,209 to 4,455 in eight years, while the number of children in care has risen only 9%. Council spending on residential care has doubled in four years and tripled in eight; average registered placements cost £6,100 a week, or £318,000 a year. Staffordshire Council confirmed paying £2.6 million last year for a single teenage girl needing up to five staff, with the NHS covering half. Cornwall has been paying £63,000 a week for one child in a secure unit. Dr Mark Kerr, chief executive of the Children's Homes Association, called the wider sector "the culmination of 10 years of systemic failure to develop specialist provision for our most vulnerable children" and likened the situation to "removing the sickest patients from hospitals and placing them in backstreet clinics," echoing Anders Bach-Mortensen of Roskilde University and Oxford.
Multiple operators told the BBC that Ofsted's registration system is "broken," with the regulator's backlog stretching up to 18 months and pushing some operators to open illegally rather than face financial ruin. Registered providers say they prefer leaving beds empty to accepting violent or absconding placements for fees of £30,000–£40,000 a week, citing the long shadow of the Hesley Group case in Doncaster, where children with learning disabilities were "punched, hit with a dog lead and left outside overnight in winter" across 106 placements before the homes finally closed in 2021 after more than 100 safeguarding notifications. One in five children in care now lives at least 20 miles from where they grew up, according to Clare Bracey of the charity Become. Some providers have begun separately invoicing local authorities for accommodation and staffing through different companies to disguise the fact that they are running a children's home; Ofsted said the split-billing would not change the illegality of the provision.
Ofsted has yet to successfully prosecute a single illegal provider, though it told the BBC there were active cases and that newly passed powers will allow it to impose unlimited fines. The Westminster government is pinning its response on the recently passed Children's Wellbeing and Schools Bill, a plan for 10,000 additional foster places, and £53 million for new homes. Children's homes minister Josh MacAlister said in February he wanted to cap providers' profits if profiteering continued, but the Department for Education declined to confirm whether that is now policy. In contrast, Wales is requiring all new providers to be not-for-profit from last month, and Scotland is exploring similar steps. England's market sits at 84% privately run, against 17% in Denmark, with the non-profit share at 4% in the UK versus 29% in Denmark. Ofsted said it prioritises urgent registrations and is "very concerned" about the profit motives of some providers.