Title: Councils Pump Millions Into Illegal Children’s Homes Despite Government Ban

To the casual observer, the bungalow in question appears unremarkable. A sheet of privacy film, improperly installed, is peeling away from a window. Inside, the condition is poor: wallpaper is peeling, carpets are worn, and doors are damaged. Yet, this unregistered—and therefore illegal—facility is charging a council in a different part of the country £13,000 per week to care for a vulnerable teenage girl. The child requires support from three full-time staff members, yet the home lacks basic comforts like books, toys, or games.

Just a few miles away, another illicit operation is underway. A tenant in a council house is subletting the property to a firm that is billing a separate local authority thousands of pounds each week.

Five years ago, my investigations into these practices directly contributed to the government’s decision to ban the use of unregulated children’s homes in England. My reports revealed that children as young as 11 were being housed in settings without Ofsted registration or inspection. These locations ranged from squalid flats and tents to narrowboats and caravans. In one instance, a home was under police surveillance due to suspected gang activity. I also documented severe abuses, including a girl who was trafficked from her home and sexually abused, and a boy who was kidnapped from a placement to be used in drug trafficking. A Newsnight investigation further highlighted that teenagers were being left vulnerable to organized crime.

The 2021 prohibition on housing under-16s in such facilities was intended to eradicate these practices. However, councils facing acute difficulties in accommodating children are placing more youngsters than ever into these now-illegal homes, at a massive cost to taxpayers. I have now uncovered 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.” “This is the culmination of 10 years of systemic failure to develop specialist provision for our most vulnerable children,” he states.

While most children are placed in foster care, adoption, or legal residential homes, local authorities have struggled to secure placements for those with complex needs, who are often the most costly to support. According to the Public Accounts Committee, councils in England have utilized unregistered homes in approximately 800 cases, despite the existing ban.

This raises critical questions: Why do English councils continue to place children in illegal, unregistered homes? How can the system be reformed to prevent this from persisting?

Counter-intuitively, as the use of illegal homes has risen, the number of registered children’s homes has also surged. Ofsted data shows that registered homes have doubled from 2,209 to 4,455 over eight years, despite only a 9% increase in the number of children in care. Industry sources attribute this boom to a rush of new providers entering the market, including private equity firms and property investors. Many of these new operators lack prior experience in care, yet prices have skyrocketed.

Council spending on children’s residential care in England has doubled in the last four years and tripled over the last eight. Four years ago, I discovered that some companies were generating profits of 40%. For example, Staffordshire council spent £2.6 million last year on a single registered placement for a teenage girl who required up to five staff members; the NHS covers half of this cost. Currently, the average placement in a registered home costs £6,100 a week, totaling £318,000 per year.

However, it is the unregistered homes—so openly operated that Ofsted maintains a specific tally of them—that generate the most alarm. Having visited numerous such facilities, I remain shocked by the conditions in which children, many of whom have suffered severe abuse and neglect prior to entering care, are being kept.

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