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

6 results

15 Conclusion Not Addressed

61st Report - Financial sustainabi…

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

Local authorities and private providers face barriers and lack incentives to open homes and create places matching children’s needs at the scale required.35 The Association of Directors of Children’s Services told us that the distribution of residential provision is based … Read more

Government Response

The response simply restates the committee's conclusion from a different section.

HM Treasury

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16 Conclusion Not Addressed

61st Report - Financial sustainabi…

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

Homes require qualified staff to operate, including a registered manager, with staffing a significant issue for residential care providers.39 The Children’s Homes Association told us that staffing costs make up 60-80% of operating costs.40 The Children’s Commissioner told us that … Read more

Government Response

The response simply restates the committee's conclusion from a different section.

HM Treasury

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17 Conclusion Not Addressed

61st Report - Financial sustainabi…

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

The Association of Directors of Children’s Services described inconsistencies in capital funding, and competition between local authorities for funding, as barriers to creating homes where they are needed. Where one local authority might be delighted to win several million pounds … Read more

Government Response

The Committee noted that the Association of Directors of Children’s Services described inconsistencies in capital funding as barriers to creating homes where they are needed. The government's response discusses providers of children’s homes not offering the places needed locally, but doesn't specifically address the funding inconsistencies.

HM Treasury

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20 Conclusion Not Addressed

61st Report - Financial sustainabi…

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

The Association for Directors of Children’s Services explained that there are barriers to increasing foster care numbers. This includes insufficient fees and allowances for foster carers, the need for foster carers to adapt their 47 Qq 26, 59 48 C&AG’s … Read more

Government Response

The response simply restates the committee's conclusion.

HM Treasury

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21 Conclusion Not Addressed

61st Report - Financial sustainabi…

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

We asked the Department how it intended to overcome these barriers, and those of the cost of living, given these would not be addressed through the fostering hub. It told us that local authorities have a lot of discretion over … Read more

Government Response

The response simply restates the committee's conclusion.

HM Treasury

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24 Conclusion Not Addressed

61st Report - Financial sustainabi…

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

We raised concerns about the high levels of profits of some private providers.64 The Competition and Markets Authority found in 2022 that the fifteen largest providers of children’s social care had average profit rates of 22.6% for children’s homes, and … Read more

Government Response

The Committee raised concerns about the high levels of profits of some private providers. The government's response notes that despite private providers providing most care home places, the Department does not fully understand their financial position.

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