Select committee: Public Accounts Committee
Recommendation 3
61st Report - Financial sustainability of children’s care homes
Published 16 Jan 2026
Addressed to HM Treasury
Public Accounts Committee Financial sustainability of children’s care homes All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
Providers of children’s homes, including local authorities, are not offering the places needed locally, leading to children being placed in homes that do not meet their needs. There are disparities in the places available across the country, particularly for children with more complex needs. For example, there are currently no secure home places for children in London, and 49% of children in England are placed in homes more than 20 miles from their family homes. With long distances and travel involved, social workers find it harder to understand the support available locally and to then spend time with children, which negatively impacts outcomes for those children. Private providers are not incentivised to open homes where they are needed, with local authorities also facing challenges accessing capital support to open their own homes. There are no incentives to help prioritise homes where they are most needed and barriers to creating places remain. This includes difficulties getting reliable capital funding to build new homes, shortages of qualified staff to run and work in residential homes, and difficulties in gaining planning permission for children’s homes. recommendation The Department should detail how it will better understand and address barriers to creating the places needed and set out how it will: provide local authorities more consistent funding and support to create new places; work with Ofsted to resolve delays registering new homes; address challenges in providers receiving planning permission where homes are needed; and ensure providers are better able to secure the qualified staff needed. 4
From: Public Accounts Committee, 61st Report - Financial sustainability of children’s care homes (HC 1233), 16 January 2026
Government response
The government responded to the whole report on 1 April 2026 (deadline 16 March 2026).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government agrees with the Committee's recommendations on five of the six areas it addresses (it states agreement for recommendations 1, 3, 4, 5 and 6), but disagrees with the recommendation to commit to reducing unregistered placements to zero by the end of 2027.
- On unregistered homes, the government disagrees with the recommendation and says it "has, however, not made a commitment" to reduce the number to zero by the end of 2027, because "Setting a fixed deadline does not sufficiently reflect the complexity of the issue."
- From summer 2026 "(subject to Royal Assent)", Ofsted will be able to issue uncapped fines to providers operating unregistered settings, and Ofsted will also consult on reforms to the inspection of local authority children's services.
- On regional collaboration, the government agrees with the recommendation, with a target implementation date of Spring 2029. Its "vision is for every LA to be part of an RCC" (Regional Care Co-operative), with an Expression of Interest in Spring backed by over £10 million to support up to six new RCCs in 2026.
- On private providers' finances, the government agrees and will establish a Financial Oversight Scheme through the Children's Wellbeing and Schools Bill, with timings "subject to Royal Assent", expected to cover about 40 providers.