Councils in England continue to place vulnerable children in illegal, unregistered children’s homes despite a government ban intended to stop the practice. These placements can cost up to £2 million per child annually, raising serious concerns about the quality of care and the misuse of public funds.
Why this matters
The use of illegal children’s homes exposes vulnerable children to unsafe and unregulated environments. These homes are not inspected by Ofsted, the official regulator, and often lack basic facilities and proper staffing. The high costs of these placements also strain public resources, limiting funding for preventive and supportive services that could reduce the need for care.
Background
In 2021, a ban was introduced to prohibit the placement of children under 16 in unregistered children’s homes. This followed investigations revealing children living in squalid conditions such as tents, caravans, and flats, some linked to criminal activity and abuse. Despite the ban, councils struggling to find suitable placements for children with complex needs continue to use illegal homes.
The number of registered children’s homes has doubled over eight years, from 2,209 to 4,455, even though the number of children in care increased by only 9%. This growth is largely due to new providers entering the market, including private equity and property investors, which has driven up costs.
Current situation
- Councils have placed around 800 children in illegal homes, according to the Public Accounts Committee.
- Some illegal placements cost councils over £2 million per child per year.
- Registered placements also carry high costs, with averages around £6,100 per week.
- Illegal homes often operate in poor conditions, such as council houses, caravans, or flats with minimal facilities.
- Children placed in these homes frequently have complex needs, including histories of abuse, mental health issues, and sometimes require restraint or secure care.
Examples include a teenage girl requiring three full-time staff being cared for in an unregistered bungalow with peeling wallpaper and broken doors, and a 12-year-old boy placed in a caravan or narrowboat. Some children are moved frequently between placements, causing instability and distress.
Challenges and causes
The main challenge is the shortage of specialist, registered children’s homes equipped to care for children with complex and high-risk needs. Secure children’s units, which provide locked care, have limited availability and are expensive, sometimes costing councils over £60,000 per week.
Providers of registered homes often refuse to accept children with challenging behaviours due to the risk of damage, staff safety concerns, and the regulatory scrutiny following past abuse scandals. The failure to safeguard children in some homes has led to increased inspections and a reluctance to take high-risk placements.
Meanwhile, some providers open homes illegally because Ofsted’s registration process can take up to 18 months, and the financial pressures of rent and start-up costs make waiting untenable. Some providers also use complex billing arrangements to disguise illegal operations.
Market dynamics
The children’s home sector has attracted property investors and private equity firms, leading to a surge in the number of homes and increased prices. Some landlords convert rental properties into children’s homes, encouraged by online advice and marketing promising guaranteed income with minimal management.
This has created a “Wild West” environment, with some providers prioritising profit over care quality. The Local Government Association warns that rising placement costs reduce funding available for early intervention services that might prevent children entering care.
Regulatory and legal issues
Ofsted has not successfully prosecuted any illegal children’s home providers, although it has ongoing proceedings and new powers to issue unlimited fines. The regulator prioritises urgent registration applications but struggles with the volume.
Unlike other sectors, there is no strong legal accountability for local authorities or directors who place children in illegal homes. This regulatory gap allows the practice to continue despite the ban.
Conclusion
The persistence of illegal children’s homes highlights systemic failures in the care system for vulnerable children with complex needs. Despite increased numbers of registered homes, shortages and risk aversion leave councils turning to illegal providers at great cost and risk to children’s welfare. Addressing this issue requires improving specialist provision, streamlining regulation, and enforcing accountability to protect children and public funds.
Recommended reading
For more context, see related Peack News coverage and explainers linked below.
