England now has more registered children’s homes than ever before, but Ofsted warns that profit, not children’s needs, is increasingly shaping where new homes are opened. In its annual report, the watchdog said the expansion is driven largely by providers targeting areas with cheaper housing, distorting the care system and failing vulnerable children.
Sir Martyn Oliver, Ofsted’s chief inspector, called the situation “an ongoing national scandal,” saying the system is being reshaped by commercial interests. “The most vulnerable children deserve loving, stable homes. Instead, the profit motive is dictating the location and ownership of homes. As a society, we are failing these children,” he said.
Regional Gaps
By March, England had 4,010 registered children’s homes, a 15% rise on the previous year. But Ofsted said that this growth is not aligned with need. The North West saw 160 new homes in one year, giving the region more than a quarter of all children’s homes despite hosting only 18% of looked-after children. London, meanwhile, has far stronger quality ratings: 88% of councils were judged good or outstanding, compared with just 46% in the North West.
Oliver warned that clustering homes in already stretched areas “bends the system out of shape,” piling pressure on regions struggling with demand.
Rising Costs
Spending on looked-after children has more than doubled since 2015–16, jumping from £3.9bn to £8.1bn by 2023–24. The average annual cost per child is now £97,200. With registered places scarce, unregistered homes are charging extreme fees—up to £30,000 per week in some cases.
Ofsted launched nearly 900 investigations into potential unregistered homes in the past year. Almost nine in 10 councils said they had no choice but to place children in unregistered accommodation because suitable registered placements were unavailable.
The watchdog called this a “crisis for children and councils,” warning that budgets cannot keep pace with spiralling costs.
Private Control
Private companies now operate 84% of children’s homes in England. The top ten providers alone control nearly a fifth of the sector, raising concerns that financial instability in any single company could disrupt placements nationwide.
Child protection concerns also rose, reaching 510 cases in the latest year compared with 364 previously. Ofsted said the increase reflects the growing number of homes, but it remains a serious indicator of strain.
Government Steps
The government has pledged to curb profiteering in the sector and has proposed a “backstop” profit-limiting law if providers do not voluntarily change course. But councils continue to report shortages, high costs and difficulty finding placements that meet children’s needs.
