England’s councils are spending at least £125 million a year placing some of the country’s most vulnerable children in unregistered homes. The scandal is not confined to rogue providers. Public authorities charged with enforcing safeguarding standards have become customers of a shadow care market operating beyond the ordinary protections of regulation.
A child is taken into the protection of the state because the ordinary structures of family life have broken down, become unsafe or proved unable to protect him. The state then places that same child in accommodation operating outside the regulatory system designed for his protection. That is not a theoretical possibility. It is happening across England on a scale now measurable in hundreds of millions of pounds.
A joint investigation by the Bureau of Investigative Journalism and The Guardian found that English local authorities spent about £255 million over two years on approximately 1,800 placements involving more than 480 private companies operating or staffing unregistered children’s homes. That is more than £125 million a year. The figure is likely to be considerably higher: nearly half of English local authorities failed to respond to the freedom of information requests from which the investigation assembled its data.¹
Precision is necessary here because the distinction is legally important. Not every form of accommodation for a looked-after child is a children’s home. Supported accommodation for some sixteen- and seventeen-year-olds operates under a separate Ofsted regime, while other limited exemptions exist. But where an establishment falls within the legal definition of a children’s home, it must be registered. Carrying on or managing such a home without registration is a criminal offence. Ofsted has been explicit that children living in provision which should be registered but is not are being housed unlawfully and may be looked after by people who have not undergone the regulatory scrutiny expected inside registered care.²
Registration is hardly an administrative nicety. It is the means by which requirements governing suitability, staffing, management, premises, record-keeping, safeguarding and inspection are imposed and enforced. Once a home sits outside that structure, ordinary independent oversight disappears with it. Councils may conduct visits. They may perform their own checks. They may demand assurances from providers. None of that makes the purchaser of a service an adequate substitute for the independent regulator of the service it has purchased.
The money involved suggests something more troubling than isolated improvisation. More than £40 million was traced to operators or agencies connected with identified care failings. At least eight councils spent more than £1 million in connection with a single placement. One London staffing agency, Prospero Health and Social Care, received at least £7.6 million from fourteen councils for staffing 86 unregistered placements over two years. Seven councils reported safeguarding complaints involving Prospero workers. Investigators identified at least 44 allegations between January 2024 and April 2026 that staff had harmed or posed a risk to children; sixteen were upheld, four were found unfounded, and the remainder were pending or their outcomes were unclear. Prospero says it supplies staff rather than accommodation, that workers undergo enhanced criminal-record checks and safeguarding training, that an upheld concern does not itself prove a child was harmed, and that no council has ended its relationship with the company because of such concerns.³
Those qualifications should be recorded. They do not resolve the more basic difficulty. A system responsible for exceptionally vulnerable children has created arrangements in which the council, the accommodation provider and the staffing agency may each occupy different parts of the safeguarding chain while responsibility for the whole becomes harder to locate. That ambiguity is itself dangerous.
The human consequences are visible in the case of a teenage girl reviewed after Peterborough City Council moved her through thirteen unregistered placements. Hotels, Airbnbs and properties described as “barren and inhospitable” formed part of the sequence. She was already vulnerable to criminal and sexual exploitation. Her placements repeatedly failed to meet her needs, and her distress and self-harming behaviour escalated. Peterborough has said that unregistered settings were used only when regulated alternatives could not be found and that the arrangements were monitored.⁴
One can understand how officials arrive at such decisions. That does not make the result defensible.
This is not a crisis discovered last Tuesday. Parliament already knew how deep the problem had become. In January, the Public Accounts Committee reported that in September 2024 almost 800 children — around one in ten of those living in residential care — were in illegal homes. The average stay was about six months. The Committee concluded that the residential care system was “not working” and that there could be no confidence that children in illegal settings were receiving safe or good-quality care. Nearly half of children in residential care were living more than twenty miles from their original homes.⁵
Ofsted’s subsequent figures are worse. During 2025–26 it opened 850 cases involving potentially unregistered children’s homes or supported-accommodation settings. It concluded that 710 — 84 per cent — should have been registered. In 2020 the equivalent number of illegal children’s homes identified was 144.⁶ What was once treated as exceptional provision has become a sizeable shadow market running alongside the regulated system.
The enforcement history makes grim reading. Only last month did Ofsted secure its first successful prosecution of an illegal children’s-home provider. Catalyst Care Limited and its directors were fined a total of £92,400 for operating three unregistered homes in Kent between October 2022 and April 2025. Nine children had been accommodated in them. Local authorities had paid the company more than £1.7 million despite repeated warnings from Ofsted. The directors were disqualified from carrying on, managing or holding a financial interest in a children’s home.⁷
That prosecution matters. It also demonstrates how far enforcement has lagged behind the problem. Hundreds of settings have been identified; the first successful prosecution arrived in August 2026.
Councils point to the shortage of suitable residential provision. On this, they are right. England does not possess enough appropriate placements for children with the most complex behavioural, psychiatric and therapeutic needs. The number of registered homes has risen sharply — by March 2026 there were about 4,800 children’s homes of all types offering roughly 17,500 registered places — but raw numbers conceal the difficulty. New homes tend to be small. They are not always located where need is greatest. Providers may refuse children whose needs are unusually complex. Foster care has also contracted while workforce shortages and housing costs have added further pressure.⁸
A social worker trying to place a deeply distressed child at short notice may therefore be confronted with no suitable registered option at all. The temptation to find somewhere — anywhere — becomes overwhelming. It would be both inaccurate and unjust to reduce this scandal to individual practitioners casually disregarding the law.
The shortage itself, however, does not fall from the sky.
Local authorities are subject to a statutory sufficiency duty. Section 22G of the Children Act 1989 requires them, so far as reasonably practicable, to secure enough accommodation within their area to meet the needs of the children they look after.⁹ They are not passive consumers wandering through a market they did nothing to create. They commission services, shape demand, plan provision, contract with providers and exercise public authority over the system within which these children must live.
They are also the children’s corporate parents.
The Children and Social Work Act 2017 requires local authorities to act with regard to the best interests of children in their care, to promote their health and wellbeing, to secure the best possible outcomes and to provide safety and stability in their home lives.¹⁰ “Corporate parenting” is the sort of phrase bureaucracy invents and then repeats until its moral meaning is almost lost. Its meaning here is simple enough. The child has nobody else able to discharge the ordinary parental duty of protection. The council has assumed that responsibility. A greater duty follows from that, not a lesser one.
The contradiction is severe because councils sit at the centre of England’s safeguarding machinery. They investigate allegations of significant harm. They are statutory safeguarding partners with police and health bodies. They oversee Local Authority Designated Officer arrangements for allegations against adults working with children. They issue guidance, commission services, impose contractual requirements and expect schools, charities, families and professionals to demonstrate that policies have been followed and risks properly managed. Section 11 of the Children Act 2004 requires local authorities themselves to exercise their functions with regard to the need to safeguard and promote children’s welfare.¹¹
There is nothing objectionable about demanding high safeguarding standards from other institutions. The difficulty begins when public authority treats those standards as negotiable when complying with them becomes expensive or inconvenient.
A school faced with a safeguarding failure would not be allowed to explain that lawful provision was unavailable. A charity could not answer serious regulatory deficiencies by saying it had done its best in a difficult market. Parents accused of neglect would find little sympathy in the claim that proper supervision had become too costly. Councils cannot indefinitely hold everybody else to standards from which their own commissioning arrangements have become exempt.
Nuntiatoria has raised the same problem in another setting during its reporting on the WellBN safeguarding controversies in Brighton. The facts there are different, but the principle is familiar. Safeguarding collapses when responsibility can be passed from one agency to another until nobody is answerable for the outcome. In A Mandate Is Not an Answer, we argued that administrative authority and procedural language cannot discharge an unanswered safeguarding duty. The present scandal applies that principle to children already wholly dependent upon the state.¹²
Private providers deserve equally close scrutiny. The Competition and Markets Authority warned in 2022 that the children’s social-care placement market was dysfunctional. Councils struggled to secure appropriate placements, prices were high, and some large providers were earning profits above what would ordinarily be expected in a properly functioning competitive market.¹³ Scarcity changes bargaining power. Councils desperate to place children begin competing against one another. The most complex children become the hardest to place and, at the same time, potentially the most profitable to accommodate at emergency rates.
A market can absorb almost any amount of public money when the purchaser has no realistic ability to walk away.
Government has begun to respond. The Children’s Wellbeing and Schools Act 2026 strengthens Ofsted’s enforcement powers, including financial penalties against those operating provision without the required registration and new oversight arrangements for provider groups. It also creates powers intended to curb excessive profits in parts of children’s social care. Five further Regional Care Cooperatives were announced in July in an attempt to improve forecasting, specialist commissioning and collaboration between councils. Ofsted has also proposed that illegal provision should have a direct bearing on the inspection judgement awarded to a local authority’s children’s services.¹⁴
All of that is overdue. Its value will be measurable in a single direction: whether fewer children are living in settings which ought by law to be registered and are not.
Catholic social teaching places this question within a still larger order. The state is not the natural parent of the child. The family precedes it. Pius XI, in Divini Illius Magistri, insisted upon the prior rights and duties of the family in the education and formation of children.¹⁵ Civil authority does not acquire some superior parental competence merely because it possesses statutory power.
That makes its duty more solemn when intervention genuinely becomes necessary. A child taken into care is already living through the failure, absence or incapacity of the ordinary structures upon which children ought to depend. His vulnerability has increased precisely because the state has had to intervene. To place him thereafter in arrangements which would be unlawful if openly operated as a children’s home compounds the original deprivation.
These children are often the easiest people in public life to speak about and the hardest to hear. They do not command pressure groups with large memberships. Many have histories which make them difficult to place and difficult to manage. Their behaviour may be violent, self-destructive, chaotic or frightening. Some will run away. Some will reject the people trying to help them. Some carry wounds that no placement can quickly heal.
None of that diminishes their claim upon us.
Our Lord’s warning concerning scandal given to the “little ones” does not cease to apply when the responsible adult happens to possess a council email address.¹⁶ Society reveals something of its real moral order by what it permits to happen to children whose interests are expensive, inconvenient and politically obscure.
Closing every unregistered setting tomorrow would create its own dangers. A child moved suddenly from an unlawful placement may simply be moved into another unstable arrangement. Ofsted has acknowledged the dilemma. Nor should social workers be sacrificed as convenient defendants for a failure created by commissioning structures, market shortages and political decisions far above them.
Accountability belongs where the power to change the system belongs: with directors of children’s services, chief executives, elected councillors, Ofsted, provider organisations and the Department for Education.
Every authority using such provision should be required to disclose how many children it has placed there, how long they remained, what each placement cost, who authorised it, what safeguarding concerns arose, what registered alternatives were sought and why those alternatives failed. Repeated dependence upon unregistered homes should trigger consequences for the authority itself. A safeguarding regime worthy of the name cannot treat unlawful provision as an indefinitely renewable emergency measure.
England does not suffer from a shortage of safeguarding language. Policies, frameworks, partnerships, designated officers, statutory guidance and compliance structures proliferate.
The shortage is of something much simpler: a willingness to apply the rules most rigorously when the state itself is responsible.
The most vulnerable children in the country should not discover that the protections surrounding them become optional precisely when the state becomes their parent.
- Tom Wall, “Revealed: the vast scale of England’s £255m illegal care industry”, Bureau of Investigative Journalism, 8 September 2026; Tom Wall, “Councils pay more than £125m a year placing vulnerable children in illegal care homes in England”, The Guardian, 8 September 2026.
- Ofsted, “Children’s homes registration policy”, updated 10 July 2026; Ofsted, “Ofsted outlines plans to tackle sharp growth in unregistered children’s homes”, 2 July 2026.
- Tom Wall, “Revealed: the vast scale of England’s £255m illegal care industry”, Bureau of Investigative Journalism, 8 September 2026.
- Tom Wall, “Princess’s story: the case that highlights scourge of illegal care provision”, The Guardian, 8 September 2026; Bureau of Investigative Journalism, investigation cited above.
- House of Commons Committee of Public Accounts, “Financial sustainability of children’s care homes”, Sixty-First Report of Session 2024–26, HC 1233, 16 January 2026.
- Ofsted, “Regulatory activity in all types of children’s homes and supported accommodation providers between 1 April 2025 and 31 March 2026”, updated 18 August 2026.
- Ofsted, “Ofsted wins first successful prosecution of illegal children’s home provider”, 5 August 2026.
- Ofsted, “Main findings: children’s social care in England 2026”; Department for Education/Ofsted, “Understanding children’s social care sufficiency in England”, July 2026.
- Department for Education, “Securing sufficient accommodation for looked-after children”, statutory guidance concerning section 22G of the Children Act 1989.
- Children and Social Work Act 2017, “Section 1: Corporate parenting principles — Explanatory Notes”; Department for Education, “Applying corporate parenting principles to looked-after children and care leavers”.
- Local Government Association, “Must know: Safeguarding children”; Ofsted, “Protocol between Ofsted and services managed by local authorities: children’s social care providers”.
- Nuntiatoria, “A Mandate Is Not an Answer”, 26 June 2026; see also “The WellBN Question: Law, Consent, and the Medicalisation of Minors in the NHS”, 15 May 2026.
- Competition and Markets Authority, “Children’s social care market study final report”, 10 March 2022.
- Children’s Wellbeing and Schools Act 2026, “Explanatory Notes — Regulation of children’s homes, fostering agencies etc.”; Department for Education, “Crackdown on profiteers through children’s social care shake-up”, 8 July 2026; Ofsted, “Ofsted outlines plans to tackle sharp growth in unregistered children’s homes”, cited above.
- Pope Pius XI, Divini Illius Magistri, 31 December 1929, particularly the treatment of the family’s priority in the order established by nature.
- Matthew 18:5–6, Douay-Rheims.
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