Select committee: Public Accounts Committee
Conclusion 16
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 ↗
Conclusion (the committee's words)
Homes require qualified staff to operate, including a registered manager, with staffing a significant issue for residential care providers.39 The Children’s Homes Association told us that staffing costs make up 60-80% of operating costs.40 The Children’s Commissioner told us that some providers react to taking children with complex needs by increasing staff numbers without evidence that it leads to better outcomes.41 In 2024, 13% of homes with unoccupied beds felt issues recruiting and retaining staff led to places being unfilled. At March 2025, 19% of children’s homes in England that were active or suspended did not have a registered manager in post.42 The Department acknowledged the challenge and the need for better training and skills, despite the residential care workforce growing from 39,000 in May 2023 to 46,000 in September 2024.43
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.