Changing our approach to unregistered children's homes
Yvette Stanley, National Director, Regulation and Social Care, on Ofsted’s latest work to prevent children being placed in unregistered homes.
Vulnerable children in danger
‘The days of our most vulnerable young people being forced into dangerous accommodation must and will end’, the Secretary of State for Education said this April. She argued that local authorities need to stop using unregistered children’s homes.
On any day, we know several hundred children are living in unregistered homes. These children get none of the essential regulatory or independent safeguards needed to make sure they’re being cared for well and safely. Many of them are highly vulnerable, with complex needs. And the people providing their care are too often unsuitable and motivated by the wrong reasons.
There have been some horrendous incidents that have occurred in unregistered children’s homes that must never happen again. And on top of this, we’ve heard shocking allegations:
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that individuals are setting up, or are involved in running, illegal children’s homes to facilitate criminal operations
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that these individuals have links to drug smuggling and money laundering, as well as to county lines gangs
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that they may also be involved in funding and/or running registered children’s homes, with ‘legitimate’ managers put in place to front operations
Ofsted is the inspectorate of local authority children’s social care services, the regulator of registered children’s homes and social care provision, and the prosecutor of illegal children’s homes. So it’s essential that we do everything we can to put this to an end.
Currently, after hearing allegations about homes, we review the information and take action accordingly. But we want to go further and reduce the incentives for local authorities to commission unregistered homes in the first place, as well as tackling those already operating.
The scale of the problem
Worryingly, we do not know how many unregistered children’s homes there are.
Ofsted was made aware of over 900 unregistered children’s homes in 2024 (latest available data). Parliament’s Public Accounts Committee estimated that, in a given month in 2024, around 1 in 10 children in residential care were living in an unregistered children’s home.
As well as the number of these homes, we are concerned about the cost. Our latest annual report highlighted a ‘shadow market’ of illegal children’s homes, in which some providers charge up to £30,000 a week per child. The Office of the Children’s Commissioner estimates the total cost of unregistered children’s homes placements to the taxpayer is £353 million. But the real cost is to the children and families involved.
We fear these homes put children at risk of being looked after by unvetted and unsuitable people. They may also be masking criminality and fuelling profiteering.
The Merseyside County Lines and Serious Violence Unit, the Merseyside Violence Reduction Unit and the Liverpool Missing Persons Unit have publicly voiced their concerns. They say that criminal gangs are coercing young people on the edge of care to enter local authority care with the explicit aim of using their placement as cover to work in county lines. They also suggest that criminal groups may be exploiting unregistered children’s homes for money laundering and profiteering.
We’re already taking action to stop this, but we will do more.
Our new powers and team
The Children’s Wellbeing and Schools Act 2026 became law this April. Through this, the government has introduced new powers for Ofsted. It allows us to issue civil penalties (fines) against any person ‘carrying on’ (operating and/or managing) an unregistered children’s home.
We’re also grateful to the Department for Education for helping to fund a new Ofsted team. Our expanded unregistered social care team will bring all our unregistered investigative work into one place. They will have much more capacity to carry out investigations, as well as dedicated legal and policy support.
With this new power and team, we’re considering how to revamp our approach to investigating unregistered children’s homes.
Cracking down on unregistered children’s homes
Our priority has always been that children are safe. Previously, we’ve asked local authorities placing a child in an unregistered home to either move them or require the home to register. And we’ve targeted our investigative resources on the worst cases as they’re most likely to meet the threshold for prosecution.
However, there’s been a recent sharp growth in the use of unregistered children’s homes. And we’re hearing more frequent and substantial allegations of criminal involvement. So, we’re shifting our approach.
Now, when we have concerns about the safety of children in an unregistered home, we’ll take actions that include:
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beginning a criminal investigation
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visiting the home as soon as possible
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gathering evidence and subsequently prosecuting those responsible for operating and/or managing the home
If we do find safeguarding concerns or evidence of other criminal activity, we’ll then immediately bring in partners such as the local authority or the police. Together, we’ll take immediate action to safeguard the children.
We have close relationships with safeguarding agencies and police across the country. We always encourage these partner organisations to share information with us that may help our investigations and inspections, especially if this includes any safeguarding concerns. In turn, we also share any information if it means putting the safety of children first. We’ve recently worked well with West Yorkshire Police and local councils to root out potential criminal links of applicants looking to set up children’s homes in their region.
We want to build on this work to develop a swift, lawful and consistent method for the police, Ofsted and local authorities to share information when there is potential criminal involvement in children’s homes. The National Police Chiefs Council share our aspiration, so we’re working together to set this up.
Putting local authorities off commissioning unregistered homes
We understand that the causes of these problems are complex and entrenched. There are no quick or easy fixes.
Local authorities are faced with difficult dilemmas. There are often no ‘ideal’ options available to them when it comes to placing children in care. This only incentivises nefarious operators to take advantage.
From speaking to people throughout the children’s social care sector, we know how deep their concerns are about how vulnerable children may be exploited for criminality and profit. The Local Government Association has said:
‘No council wants to place a child in an unregistered setting, and it is extremely concerning that in many cases, a lack of choice means provision is not fully meeting children’s needs.’
This is why we’ll act decisively but constructively. We’ll start by tackling the funding and commissioning of illegal children’s homes.
In our upcoming consultation on improving how we inspect local authority children’s services, we’re making a specific proposal to deal with this. We’re proposing that if a local authority is using illegal provision, it would not be meeting the ‘expected standard’ for sufficiency. ‘Sufficiency’ is local authorities’ responsibility to have enough suitable homes for looked-after children. This would be part of the ‘impact of leaders’ evaluation area in inspections.
We know this will not be welcomed by all local authorities. But we need to consider that:
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the Children’s Act 1989 does not allow for a child under 16 to be placed in an unregistered children’s home
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the Care Planning, Placement and Case Review (England) Regulations 2010 prohibit placing children under 16 in unregulated accommodation, subject to limited exceptions
We do fully recognise the pressures local authorities face. But when they commission a placement in an unregistered home, they’re usually breaching their legal duties. As the inspectorate for children’s services, we cannot ignore this. The standards we expect local authorities to meet need to reflect their existing legal obligations.
A focus on ‘sufficiency’ and what we’d like to see
It’s been good to see that several local authorities we’ve recently inspected do not use unregistered provision at all, or do so extremely rarely and with really strong local oversight.
These are the local authorities that have taken a broad approach to sufficiency. They tend to:
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be incorporating early intervention and prevention
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have strong ‘edge of care’ services
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use family networks and support for kinship carers really well
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have well-run fostering services, effective commissioning, and investment in in-house provision
This is what we want to see if our proposal to focus more on sufficiency through inspecting local authority children’s services (ILACS) is agreed.
We also expect local authorities to try to reduce their existing use of unregistered homes. We want them to encourage those homes to register, and to monitor the progress of their applications. They should also have robust senior and frontline oversight of any placements.
The government is taking steps to steer the children’s homes sector to be smaller, more purposeful, and focused on high-quality care over profit-making by private providers.
Improving our approach to registration
At Ofsted, we need to strike the right balance between approving new homes, tackling illegal unregistered homes, and making sure our regulatory work and inspections are fair, nuanced and proportionate.
The government is investing £88 million to work with the sector to create 10,000 new foster care places. This will help reduce the demand for unregistered, crisis-driven placements.
We’ll rethink how we approach registering and regulating children’s homes. And we’ll work with the Department for Education to get the balance right.
We already make assessments to check whether the person named as the registered manager is suitable. This includes doing background checks to make sure they’re a fit and proper person to run a children’s home.
The Children’s Homes (England) Regulations 2015 are clear that:
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‘a person may only manage a children’s home if the person is of integrity and good character’
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‘the registered person must recruit staff using recruitment procedures that are designed to ensure children’s safety’
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staff must be ‘of integrity and good character’
We want to extend our checks on the named directors involved in the company running the children’s home. We also want to ask questions about anyone with a financial interest in a children’s home.
Conclusion
There is no one easy way to stop local authorities using unregistered children’s homes. But we’ll not shy away from doing everything we can do to prevent children being placed in illegal homes that put their welfare and safety at risk. We must root out criminality from the children’s social care sector.
Although some of our conversations with the sector may continue to be challenging, we believe we all share this goal. We can work together to make real progress towards it.