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

The exterior of a certain bungalow gives little indication that it serves as a children’s residence. A window is obscured by a sheet of privacy film that has been incorrectly installed and is now peeling away. The interior reflects a similar state of neglect: peeling wallpaper, worn-out carpets, and broken doors characterize the space. Despite being unregistered and thus operating illegally, the provider is billing a council in a different part of the country £13,000 per week to care for a vulnerable teenage girl. Her care requires three full-time staff members, yet the home contains no books, toys, or games.

Just a few miles away, another illegal operation is functioning out of a council-owned property. The tenant is subletting the home to a company that is simultaneously charging a separate local authority thousands of pounds weekly.

Five years ago, my investigations into these types of placements directly contributed to the government implementing a ban on the use of unregulated children’s homes in England. At that time, I discovered that children as young as 11 were being housed in facilities that lacked Ofsted registration or inspection. These accommodations ranged from squalid flats and tents to narrowboats and caravans. One location was under police surveillance due to suspected gang activity. My reporting also revealed severe abuses, including a girl trafficked directly from her home to face sexual abuse, and a boy kidnapped from a placement to be used for drug selling. A Newsnight investigation further highlighted that teenagers were being left vulnerable to organized crime.

Although the 2021 ban on housing under-16s in such homes was intended to eradicate the practice, the reality is that councils, facing difficulties in accommodating children, are placing more youngsters than ever before into now-illegal homes, at a significant cost to taxpayers. I have recently 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.” He attributes this chaos to “10 years of systemic failure to develop specialist provision for our most vulnerable children.”

While most children in care are placed in foster homes, adoptive families, or registered children’s homes, local authorities have encountered significant challenges in finding suitable placements for children with complex needs. These cases are often the most expensive to manage. According to the Public Accounts Committee, councils in England have resorted to unregistered homes in approximately 800 instances, despite the existing prohibition.

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

The Scale of the Issue

Paradoxically, as the use of illegal children’s homes has risen, the number of registered homes has also doubled over eight years, increasing from 2,209 to 4,455, according to Ofsted. This surge occurred despite only a 9% rise in the total number of children in care during the same period.

Sources indicate that this expansion was driven by a rush of new providers entering the market. Alongside private equity firms, property investors have also poured capital into the sector. Many of these new providers lack prior experience in care, yet prices have skyrocketed. Consequently, the amount councils in England spend on residential children’s homes has doubled in the last four years and tripled over the last eight.

Four years ago, I found that some companies were generating profits of 40%. For example, Staffordshire council paid £2.6 million last year for a registered placement of a teenage girl who required up to five staff members. The council cited a national shortage of specialist homes, noting that the NHS covers half the cost. The average placement in a registered home now costs £6,100 a week, totaling £318,000 per year.

However, it is the unregistered homes—so openly operated that Ofsted even maintains a count of them—that raise the greatest concern. Having visited numerous such facilities, I remain shocked by the environments in which children, many of whom suffered severe abuse and neglect before entering care, are placed.

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