Title: Councils Paying Up to £2m Annually for Unregistered Children’s Homes

To the casual observer, the unassuming bungalow appears nothing like a facility for vulnerable youth. Privacy film is peeling incorrectly from a window, interior wallpaper is crumbling, carpets are worn thin, and several doors are broken. Despite being unregistered and therefore operating illegally, the provider based in this property is billing a distant council £13,000 weekly to house a teenage girl with complex needs. Her care requires three full-time staff members, yet the home lacks even basic items like books, toys, or games.

Not far away, another illegal operation is functioning out of a council-owned house. The tenant is subletting the property to a company that is simultaneously charging a separate local authority thousands of pounds each week.

Five years ago, my investigative reports on these placements directly influenced the government’s decision to ban the use of unregulated children’s homes in England. At that time, I uncovered cases where children as young as 11 were living in spaces unregistered and uninspected by Ofsted. These conditions ranged from squalid flats and narrowboats to tents and caravans. One home was under police surveillance due to suspected gang activity. The investigation also revealed severe criminal exploitation: one girl was trafficked from her home and sexually abused, while a boy was kidnapped from a placement to facilitate drug sales. A concurrent Newsnight report highlighted that teenagers were being left vulnerable to organized crime.

The 2021 prohibition on housing under-16s in such settings was intended to eradicate the practice. However, councils facing accommodation shortages are placing more children than ever into these illegal homes, incurring massive costs for taxpayers. I have now identified unregistered placements costing up to £2 million per child annually.

Dr. Mark Kerr, chief executive of the Children’s Homes Association, describes the sector as a "Wild West." He attributes this chaos to a decade of systemic failure to create specialized provisions for the most vulnerable children. While most children are placed in foster care, adoption, or legal homes, local authorities are struggling to accommodate those with the most complex requirements—placements that are typically the most costly. According to the Public Accounts Committee, councils in England have utilized unregistered homes in approximately 800 instances, despite the existing ban.

This raises critical questions: Why do English councils continue to place children in illegal, unregistered homes, and how can the system be reformed to stop this trend?

Paradoxically, as the reliance on illegal placements has grown, the number of registered children’s homes has doubled over the past eight years, rising from 2,209 to 4,455, according to Ofsted. This surge in infrastructure has occurred alongside only a 9% increase in the total number of children in care. Industry sources suggest this expansion was driven by a wave of new market entrants, including property investors and private equity firms, many of whom lacked prior care experience. Consequently, prices have skyrocketed.

Council expenditure on children’s residential homes in England has tripled over the last eight years and doubled in the last four. Four years ago, I reported that some companies were achieving profit margins of 40%. For example, last year, Staffordshire council paid £2.6 million for a registered placement of a teenage girl who required up to five staff members; the council notes that the NHS covers half this cost due to a national shortage of specialist homes. Currently, the average cost for a placement in a registered home is £6,100 per week, or £318,000 per year.

However, the most alarming issue remains the unregistered homes—so openly operated that Ofsted maintains a specific tally of them. Having visited numerous such facilities, I remain shocked by the environments in which children, many of whom have endured severe abuse and neglect before entering care, are currently living.

Source: BBC News Generated at: 2026-05-20 23:10:10 UTC