Cost of unregistered children's care homes a 'national scandal' - Ofsted

Nine in 10 councils across England are placing children in unregistered homes which can charge up to £30,000 a week per child.

The findings, published in Ofsted's annual report, describe how local authorities often cannot find places in registered homes to cater for children's needs, despite the number of care homes being at a record high.

Ofsted chief inspector Sir Martyn Oliver described the situation as an "ongoing national scandal".

The Children's Homes Association (CHA), which represents residential childcare providers, said there is no clear national plan and that it is up to the government to "fix the system".

There were 4,010 registered children's care homes across England in 2024/25 - a 15 per cent rise since the year before and the highest on record.

But Ofsted said there is an "ongoing imbalance" as some providers choose to open care homes where houses are cheaper, regardless of the local demand.

Twenty six per cent of children's homes are in the north west of England, but only 18 per cent of looked-after children live in the region.

Sir Martyn says this "strong profit motive... bends the system out of shape".

"The rapid growth in the number of homes masks very significant problems with location, affordability and suitability," he added.

According to Ofsted, the lack of available places in legitimate settings has led to a shadow market of illegal care homes which charge "exorbitant fees".

In the past year, Ofsted launched 870 investigations into these settings, with 680 found to be unregistered.

It is a criminal offence for providers to operate a home without registration.

Currently, Ofsted can only issue warning letters and does not have the power to issues fines.

However, this is expected to change under new legislation as part of the Children's Wellbeing and Schools Bill.

Councils' overall spend on children in care homes has risen from £3.9bn in 2015-16 to £8.1bn in 2023-24.

Sir Martyn described this as "a crisis", with council budgets unable to keep pace with the "spiralling costs" of children in care.

"The government must work with local authorities to drive out all use of unregistered children's homes," he said.

A Local Government Association spokesperson said the "astronomical cost" of children's homes means there is less money to help children before they reach care.

"It is extremely concerning that in many cases, a lack of choice means provision is not fully meeting children's needs," it added.

"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."

CHA chief executive Dr Mark Kerr said unregistered homes are the result of a failed system and wants more government help for children with the most complex and high-risk needs.

"Those 'exorbitant fees' are the crash-landing of a system that hasn't been planned or funded properly," he said.

"If ministers want homes in different places, they need to change the planning rules, fix registration delays and set out a credible regional plan. At the moment, geography follows bureaucracy, not children's needs."