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 …
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6
Recommendations
23
Conclusions
1
Report
1
Oral session
5
Letters
1
Event
Activity timeline 8 events
8 Jun
2026
2026
27 Apr
2026
2026
1 Apr
2026
2026
16 Jan
2026
2026
Report published
12 Jan
2026
2026
8 Jan
2026
2026
8 Dec
2025
2025
17 Nov
2025
2025
Oral evidence
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
7 results
3
Recommendation
Accepted
61st Report - Financial sustainabi…
Detail plans to address barriers creating children's home places, including funding and staffing.
Providers of children’s homes, including local authorities, are not offering the places needed locally, leading to children being placed in homes that do not meet their needs. There are disparities in the places available across the country, particularly for children …
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Government Response
The government agrees and is providing £560 million capital funding to LAs for 2026-2030, has supported Ofsted to update registration prioritisation criteria for new homes, is working with the Ministry of Housing to reform planning processes, and will commission an expert review of professional development for the residential workforce by Summer 2026.
HM Treasury
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4
Recommendation
Accepted
61st Report - Financial sustainabi…
Set out how to address barriers to increasing foster carer numbers with clear timeframe and milestones.
To reduce the demand for children’s residential care, the Department is relying on there being more foster carers, but it has yet to address the significant challenges to increase numbers. The Department sees reducing demand for residential care as key …
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Government Response
The government accepted the recommendation, noting it published an action plan, 'Renewing fostering: homes for 10,000 more children,' in February 2026. This plan details a comprehensive approach to increase foster care places, including national recruitment, digital tools, capital investment, and support for existing and prospective carers.
HM Treasury
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5
Recommendation
Accepted
61st Report - Financial sustainabi…
Set out how to understand private provider finances and proactively address market risks.
Despite private providers providing most care home places, the Department does not fully understand their financial position. Private sector providers are responsible for 84% of children’s homes and 74% of places for children in England. Seven of the ten largest …
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Government Response
The government accepted the recommendation, explaining that the Financial Oversight Scheme, established through the Children’s Wellbeing and Schools Bill, will increase financial transparency and allow real-time assessment of financial risk and debt positions for "difficult to replace" providers. The scheme will also require contingency plans and use data to monitor profit levels across the market.
HM Treasury
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6
Recommendation
Accepted
61st Report - Financial sustainabi…
Clarify principles of collaborative regional approach, national implementation timeline, and interim local authority support.
The Department has failed to address the problem of local authorities competing for places and the effect that has on driving up costs. A mismatch between the availability and demand for residential home places means local authorities compete for places, …
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Government Response
The government agrees, outlining that Regional Care Cooperatives (RCCs) will transform children's social care through collective buying power and pooled resources. Following positive evaluations of 2025 pathfinders, the department intends to accelerate the national rollout, aiming for every local authority to be part of an RCC.
HM Treasury
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7
Conclusion
Accepted
61st Report - Financial sustainabi…
Local authority discretion in children's social care; national support rollout awaits Ministerial decisions.
The Department told us that local authorities have a lot of discretion to make decisions impacting children’s social care provision. It described how, for example, some local authorities provided foster carers with capital grants to convert and increase the space …
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Government Response
The government agrees with the committee's implicit recommendation, rolling out Regional Care Co-operatives (RCCs) with over £10 million funding to support their setup by 2026. They are also removing barriers for providers and supported updated Ofsted registration criteria in September 2025.
HM Treasury
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8
Conclusion
Accepted
61st Report - Financial sustainabi…
Department lacks up-to-date information on children's care provision, demand, and available places.
The Children’s Commissioner told us that there needs to be a much tighter grip on the amount and type of provision needed and where.13 The Department lacks up-to-date information on the support children need, the demand for places and places …
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Government Response
The government accepts the committee's observation as an implicit recommendation, detailing concrete steps to improve the sufficiency and appropriateness of children's social care placements. These include rolling out Regional Care Co-operatives to analyze accommodation needs and commission places, supporting Ofsted in prioritizing specialist care applications by September 2025, and providing over £10 million funding for new RCCs in 2026.
HM Treasury
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28
Recommendation
Accepted
61st Report - Financial sustainabi…
Regional commissioning pilots delayed and limited, with national rollout potentially taking ten years.
The MacAlister review envisaged regional organisations operating fully from early 2025, to address sufficiency challenges by 2027. The Department decided against immediately rolling out regional commissioning nationally given insufficient evidence on potential benefits, instead opting for pilots in two regions, …
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Government Response
The government agrees with the recommendation to clarify the principles behind the collaborative regional approach and expects to implement its model nationally by Spring 2029, including launching an expression of interest backed by over £10 million of funding to support the setup of up to six new RCCs in 2026.
HM Treasury
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Government Response AI assessment · 28 of 6 classified
Accepted
7
Acknowledged
14
Rejected
1
Total
6 recs + 23 conclusions
Correspondence 5 letters
8 Jun 2026
To committee
Letter from the Permanent Secretary at the Department of Education relating to Treasury Minute response: Financial sustainability of children's care homes, 26 May 2026
Parliament page
27 Apr 2026
From committee
Letter to the Permanent Secretary to the Department for Education relating to Treasury Minute response - Financial sustainability of children's care homes, 27 April 2026
Parliament page
12 Jan 2026
To committee
Letter from the Chief Executive Officer of IESE CIC relating to the written evidence submitted by the Children’s Homes Association to the Committee’s inquiry into Financial sustainability of children’s care homes, 23 December 2025
Parliament page
8 Jan 2026
To committee
Letter from the Chief Executive Officer at the Children’s Homes Association relating to the Committee’s evidence session on 17 November 2025 on Financial sustainability of children’s care homes, 22 December 2025
Parliament page
8 Dec 2025
To committee
Letter from the President of the Association of Directors of Children’s Services relating to the Committee’s evidence session on Financial sustainability of children’s care homes on 17 November 2025, 28 November 2025
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