England's children's care system is in a state of crisis, with a record number of homes now registered but many located based on cheap property rather than the needs of vulnerable young people, the watchdog Ofsted has warned.
A Surge Driven by Profit, Not Need
The number of children's homes in England has reached an all-time high. By the end of March this year, 4,100 homes of all types were registered with Ofsted, marking a sharp 15% increase from the previous year.
However, Ofsted's chief inspector, Sir Martyn Oliver, stated that this rapid growth "masks very significant problems with location, affordability and suitability." He warned of a "strong profit motive" driving providers to open homes where housing is cheapest, not necessarily where children require support.
This comes as local authority spending on looked-after children has more than doubled, rising from £3.9 billion in 2015/16 to £8.1 billion in 2023/24. The average annual cost for each child in care now stands at a staggering £97,200.
The Dire Reality of Unregistered and Unsuitable Placements
Faced with a "significant shortage of appropriate accommodation," councils are being forced into desperate measures. Ofsted launched nearly 900 investigations into potentially unregistered homes in the year to March, which often charge "exorbitant fees" to authorities with no other options.
Fees for these unregulated placements can reach an astonishing £30,000 per child per week. Inspectors report that children, particularly those aged 10 to 17 who make up a growing share of new entries to care, are being placed in settings that lack:
- Trained staff
- Proper safeguarding oversight
- The stability they urgently need
Sir Martyn Oliver emphasised that vulnerable teenagers are being left in "deeply unsafe and inappropriate situations" due to a sheer lack of suitable alternatives.
Systemic Failure and the Call for Urgent Action
The report makes clear this is not the fault of a few councils but a systemic national failure. The sharp rise in unregistered arrangements is a symptom of a broken system, not deliberate rule-breaking.
The crisis extends beyond care homes, with the report also noting that 172,400 children were homeless and living in temporary accommodation as of June 2025. Children in such unstable situations face greater risks of exploitation, mental health decline, and are less likely to attend school or access consistent support.
Ofsted is calling for urgent national action, demanding the government work with councils to eliminate the use of all unregistered children's homes. Sir Martyn Oliver concluded: "As a society, we are failing these children. We can and must do better." The watchdog insists that the most vulnerable in society deserve loving, stable homes, not placements dictated by profit margins.
