Select committee: Public Accounts Committee
Recommendation 4
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)
To reduce the demand for children’s residential care, the Department is relying on there being more foster carers, but it has yet to address the significant challenges to increase numbers. The Department sees reducing demand for residential care as key to reducing costs. To do so, it plans to work with children at an earlier stage so they do not need to be looked after by a local authority, and then also increase foster carer household numbers. However, between March 2020 and March 2024, the number fell by 9%, when excluding fostering with friends and family. The Department has initiatives to increase foster care numbers but lacks clear evidence that they are working, with its evaluations too early yet for clear results. It has also launched hubs to co-ordinate recruitment and improve the support foster carers receive. However, it is unclear how this will address the underlying barriers to increasing foster care, such as the cost of living, issues finding spaces in homes, and foster carer’s pay and fees. Some local authorities have used their discretion to adopt initiatives, such as council tax reductions for foster carers. However, the Department does not systematically encourage and direct these initiatives and is waiting for progress on wider initiatives. recommendation Drawing on what local authorities are doing, and its own analysis, the Department should set out how it will address the barriers to increasing the number of foster carers, with a clear timeframe and milestones.
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.