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

14 results

1 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department) on the sustainability of children’s residential care.2 We also took evidence from the Children’s Commissioner, the Association of … Read more

Government Response

The government agrees with the committee's introductory statement and outlines its ongoing decisive actions to address issues in the children's social care market, including £2.4 billion for early intervention, investment in fostering, creating over 600 specialist placements, and rolling out Regional Care Co-operatives. Further information will be provided to the Committee in six months.

HM Treasury

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10 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

In recent years, the number of children reported to Ofsted as being placed in unregistered homes at some point each year rose significantly, from 147 during 2020–21 to 982 during 2023–24.20 More recently, the Children’s Commissioner found that as at … Read more

Government Response

Acknowledges that placing children in illegal settings that are not inspected is unacceptable.

HM Treasury

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11 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

Ofsted cannot routinely inspect unregistered homes and local authorities are not obliged to inform Ofsted when they place children in unregistered care, even though it is illegal for providers to operate such homes.22 In such cases there are no formal … Read more

Government Response

Acknowledges that placing children in illegal settings that are not inspected is unacceptable.

HM Treasury

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12 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

We asked the Association of Directors of Children’s Services how it could possibly be right for any local authority to place children in homes that are not inspected. It described this as a consequence of local authorities having an absolute … Read more

Government Response

Acknowledges that placing children in illegal settings that are not inspected is unacceptable.

HM Treasury

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13 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

The Department described the delays in Ofsted registering providers, and how this impacted the use of illegal provision. Changes to the law requiring the registration of those providing supported accommodation for 16 and 17-year-olds, strengthening oversight, led to a significant … Read more

Government Response

Acknowledges that delays in Ofsted registering providers impacts the use of illegal provision.

HM Treasury

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14 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

There are disparities in the number and types of children’s home available in different areas across the country, particularly for children with more complex needs.29 For example, there are no secure homes across all of London, while South West England … Read more

Government Response

Acknowledges that providers of children’s homes are not offering the places needed locally, leading to children being placed in homes that do not meet their needs.

HM Treasury

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18 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

The Department told us that it sees reducing the need for residential care as key to addressing some of the drivers behind the increased cost. It plans to reduce the need by preventing children becoming looked after by a local … Read more

Government Response

Acknowledges the Department is relying on there being more foster carers, but it has yet to address the significant challenges to increase numbers.

HM Treasury

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19 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

The Department has initiatives to increase foster carer numbers. It described, for example, launching 10 fostering recruitment hubs by 2024, covering around two thirds of local authorities.50 It explained that these hubs are boosting co-ordinated recruitment of foster carers between … Read more

Government Response

Acknowledges the Department is relying on there being more foster carers, but it has yet to address the significant challenges to increase numbers.

HM Treasury

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22 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

In 2024–25, 84% of residential care settings registered with Ofsted, including supported accommodation and children’s homes, were owned by private providers.57 The Department told us this accounts for 74% of residential care places, because privately-owned homes tend to offer fewer … Read more

Government Response

Acknowledges that the Department does not fully understand the financial position of private providers.

HM Treasury

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23 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

As local authorities manage all provider contracts, the Department does not have direct visibility of contract and financial information. It does not fully understand what constitutes a reasonable price for residential care.59 The Department acknowledged that there is room to … Read more

Government Response

Acknowledges that the Department does not fully understand the financial position of private providers.

HM Treasury

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25 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

The Department described the significant levels of profit for some suppliers as the reason it introduced provisions in the Children’s Wellbeing and Schools Bill for a profit cap.69 The Bill will also introduce a financial oversight scheme covering those providers … Read more

Government Response

The Committee noted that the Department introduced provisions in the Children’s Wellbeing and Schools Bill for a profit cap and a financial oversight scheme. The government explains that the Financial Oversight Scheme will be established and will increase financial and corporate transparency among the most "difficult to replace" providers.

HM Treasury

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26 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

When finding children’s homes places, local authorities must often look outside of their own area, putting them in competition with each other. Local authorities also often rely on finding places just at the time children need to be housed, rather … Read more

Government Response

The Committee noted that local authorities often compete for available beds which increases prices. The government states it agrees with the Committee's recommendation and aims to implement the model nationally by Spring 2029, 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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27 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

The Department accepted recommendations to introduce regional commissioning made by the Competition and Markets Authority and Josh MacAlister in 2022. The MacAlister review recommended that local authorities should group together in regional organisations, taking collective responsibility for running public-sector residential … Read more

Government Response

The Committee noted the Department accepted recommendations to introduce regional commissioning. The government states it agrees with the Committee's recommendation and aims to implement the model nationally by Spring 2029, 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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29 Conclusion Acknowledged

61st Report - Financial sustainabi…

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

The Department has not confirmed how it will test the full commissioning model, and stakeholders have highlighted the scale of change and the need for a strong evidence base.80 The Children’s Homes Association told us that it was unclear how … Read more

Government Response

The Committee noted concerns about testing the commissioning model and highlighted barriers related to property prices, planning permission and the workforce. The government states it agrees with the Committee's recommendation and aims to implement the model nationally by Spring 2029, 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 · 26 of 6 classified

Accepted 5

Acknowledged 14

Not Addressed 6

Rejected 1

Total 6 recs + 23 conclusions

Correspondence 4 letters

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

Parliament page