UK Inquiry Tracker

Financial sustainability of children’s care homes

Public Accounts Committee Open Inquiry

Opened: 10 Jul 2025 Parliament page

The numbers of looked after children increased by 19% to 83,360 between 2015-16 and 2023-24. Around 16% of looked after children are accommodated in children’s homes. Over the same period, local authority spending on children’s homes has increased rapidly, from £10.7bn to £14.6bn, with a 35% increase (to £97,326) in … Read more The numbers of looked after children increased by 19% to 83,360 between 2015-16 and 2023-24. Around 16% of looked after children are accommodated in children’s homes. Over the same period, local authority spending on children’s homes has increased rapidly, from £10.7bn to £14.6bn, with a 35% increase (to £97,326) in the average annual cost to look after each child. Costs are projected to increase further without reform. The Department for Education (DfE) recognises the challenges, and has proposed changes including greater financial oversight and transparency over private providers, and profit caps. The PAC held an inquiry into children’s services in 2019 , reporting that children deserved better than slow progress on social care. The delivery date for government's programme of reforms had then slipped from 2020 to 2022, and the report called on DfE to improve the quality and cost-effectiveness of care in measurable ways. It also recommended that DfE should set out how it would understand and reduce cost variations. With significant concerns reported with the children’s homes market by local authorities and stakeholders, the National Audit Office reports in 2025 on monitoring and managing the children’s homes market . The NAO’s study examines DfE’s oversight of the market in the wider context of children’s social care. Following the NAO’s report, the PAC will take evidence from senior DfE officials and others. Likely topics for scrutiny include drivers of rising costs, suitability of settings for children, and how DfE is working to ensure the financial sustainability of the sector. If you have evidence on these issues, please submit here by 23:59 on Monday 3 November 2025. Please look at the requirements for written evidence submissions and note that the Committee cannot accept material as evidence that is published elsewhere. You can request anonymity or confidentiality when you send evidence, but it is the Committee which decides what information to publish and how. It may treat submissions confidentially, even where you have not requested this. Please note that the Committee’s inquiry cannot assist with individual cases. If you need help with an individual problem you are having, you may wish to read the information on Parliament’s website about who you can contact with different issues . Show less

6 Recommendations

23 Conclusions

1 Report

1 Oral session

4 Letters

1 Event

Activity timeline 8 events

27 Apr
2026

Correspondence

Letter to the Permanent Secretary to the Department for Education relating to Treasury Minute response - Financial sustainability of child…

1 Apr
2026

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Sixty-first report from Session 2024-26

16 Jan
2026

Report published

61st Report - Financial sustainability of children’s care homes

12 Jan
2026

Correspondence

Letter from the Chief Executive Officer of IESE CIC relating to the written evidence submitted by the Children’s Homes Association to the C…

8 Jan
2026

Correspondence

Letter from the Chief Executive Officer at the Children’s Homes Association relating to the Committee’s evidence session on 17 November 202…

8 Dec
2025

Correspondence

Letter from the President of the Association of Directors of Children’s Services relating to the Committee’s evidence session on Financial …

17 Nov
2025

Oral evidence

Oral evidence session

17 Nov
2025

Formal meeting (oral evidence session) · The Grimond Room, Portcullis House

Committee event

Oral evidence sessions 1 session

17 Nov 2025

View on parliament.uk

Dr Mark Kerr · Children’s Homes Association Gila Sacks · Department for Education Isabelle Trowler CBE · Department for Education Joe Lane · Citizens Advice Rachael Wardell OBE · Association of Directors of Children’s Services Susan Acland-Hood · The Department for Education

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
61st Report - Financial sustainability of children’s care homes	HC 1233	16 Jan 2026	29	Responded

Recommendations & Conclusions

29 results

2 Recommendation Rejected

61st Report - Financial sustainabi…

Reaffirm commitment to reducing children in unregistered homes to zero by 2027 and detail specific actions.

It is unacceptable that children are placed in illegal settings that are not inspected, increasing safety risks and offering no assurance over the quality of care. Over the last five years, local authorities have reported placing more and more children … Read more

Government Response

The government rejects the recommendation to reaffirm a commitment to zero children in unregistered homes by 2027, stating that a fixed deadline does not reflect the complexity. However, it outlines actions to tackle the issue, including £560 million capital funding, new secure placements opening between 2026-2031, new enforcement powers for Ofsted (from Summer 2026), and Ofsted reforms to increase focus on sufficiency.

HM Treasury

Financial sustainability of children’s care homes

Activity timeline 8 events

Oral evidence sessions 1 session

Reports 1 report · click to expand

Recommendations & Conclusions

Reaffirm commitment to reducing children in unregistered homes to zero by 2027 and detail specific actions.

Detail plans to address barriers creating children's home places, including funding and staffing.

Set out how to address barriers to increasing foster carer numbers with clear timeframe and milestones.

Set out how to understand private provider finances and proactively address market risks.

Clarify principles of collaborative regional approach, national implementation timeline, and interim local authority support.

Committee took evidence on sustainability of children's residential care.

Local authority discretion in children's social care; national support rollout awaits Ministerial decisions.

Department lacks up-to-date information on children's care provision, demand, and available places.

High number of care leaver deaths highlights poor transition coordination to adult services.

Significant rise in children placed in unregistered homes with lengthy placement durations.

Lack of oversight leaves children in illegal unregistered homes at significant risk.

Local authorities resort to unregistered homes as last resort due to placement scarcity.

Ofsted faces significant delays registering supported accommodation providers, impacting the use of illegal provision.

Significant geographical disparities in children's home availability lead to unsuitable placements and poor outcomes.

Barriers and lack of incentives hinder the creation of children's homes matching children's needs.

Staffing shortages and lack of qualified managers hinder residential children's homes operation and capacity.

Inconsistent capital funding and local authority competition impede creating children's homes where needed.

Foster care households and placements have significantly decreased despite the Department's reduction goals.

Departmental fostering recruitment hubs show limited immediate impact on increasing foster carer numbers.

Insufficient fees, home adaptation needs, and societal shifts create barriers to increasing foster care.

Department lacks systematic encouragement or direction for local authorities in supporting foster carers.

Private providers significantly dominate the residential care market, owning 84% of all settings.

Lack of transparency hinders understanding of reasonable prices for children's residential care.

Some private providers of children's social care achieve unacceptably high profit margins.

Proposed profit cap and oversight scheme for children's care lacks robustness to address private equity.

Competition among local authorities for children's home places drives up costs significantly.

Department accepts recommendations for regional commissioning to improve children's residential care provision.

Regional commissioning pilots delayed and limited, with national rollout potentially taking ten years.

Full regional commissioning model remains untested, raising concerns over scope and accountability.

Government Response AI assessment · 26 of 6 classified

Correspondence 4 letters