Title: Councils Paying Up to £2m Annually for Illegal Children’s Placements

The exterior of a certain bungalow offers little indication that it serves as a children’s home. Outside, a sheet of privacy film is peeling off a window, improperly installed. The interior tells a similar story of neglect: peeling wallpaper, worn carpets, and broken doors characterize the space. Despite being unregistered and therefore illegal, the operator is billing a council in a different part of the country £13,000 weekly to house a vulnerable teenage girl. The child requires support from three full-time staff members, yet the room contains no books, toys, or games.

Just a few miles away, another illegal operation is taking place within a council house. A tenant is subletting the property to a firm that is simultaneously charging a separate local authority thousands of pounds each week for care.

Five years ago, my investigative reports into these practices directly contributed to a government prohibition on the use of unregulated children’s homes in England. My findings revealed that children as young as 11 were being housed in facilities unregistered with and uninspected by Ofsted. These locations ranged from squalid flats and narrowboats to tents and caravans. One residence was even under police surveillance due to suspected gang activity. I also uncovered cases where a girl was trafficked directly from her home and sexually abused, and a boy was kidnapped from a placement to participate in drug sales. A Newsnight investigation further highlighted that teenagers were being left vulnerable to organized crime.

Although the 2021 ban on housing under-16s in such settings was intended to eradicate the issue, the reality is that councils, facing accommodation shortages, are placing more children than ever before in illegal homes, incurring massive costs for taxpayers. I have since discovered unregistered placements costing as much as £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 to "the culmination of 10 years of systemic failure to develop specialist provision for our most vulnerable children." While most children are placed in foster care, adoptions, or legal residential homes, local authorities have struggled to secure placements for those with the most complex needs, who are often the most costly to support. According to the Public Accounts Committee, councils in England have resorted to unregistered homes in approximately 800 cases, despite the existing ban.

This raises critical questions: Why are English councils continuing 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 doubled from 2,209 to 4,455 over eight years, according to Ofsted. This surge in capacity has occurred despite only a 9% increase in the number of children in care during the same period. Sources indicate that this expansion was driven by a flood of new market entrants, including private equity firms and property investors. Many of these providers lack prior care experience, yet prices have skyrocketed.

Expenditure by English councils on children’s residential care has doubled in the last four years and tripled over eight years. Four years ago, I identified some companies generating profits of 40%. For instance, Staffordshire council paid £2.6 million last year for the care of a teenage girl in a registered placement who required up to five staff members. The council cited a national shortage of specialist homes, noting that the NHS covers half the cost. Even the average placement in a registered home now costs £6,100 per week, totaling £318,000 annually.

However, it is the unregistered homes—so openly operated that Ofsted maintains a count of them—that generate the greatest concern. Having visited numerous such locations, I remain shocked by the conditions in which children, many of whom have suffered severe abuse and neglect prior to entering care, are placed.

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