Select committee: Public Accounts Committee
Conclusion 17
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)
The Association of Directors of Children’s Services described inconsistencies in capital funding, and competition between local authorities for funding, as barriers to creating homes where they are needed. Where one local authority might be delighted to win several million pounds to develop in-house provision, another will have lost out. It told us that it would be in the shared interests of local authorities to have consistency of funding, 33 Q 4 34 Cambian (CCH0006) 35 C&AG’s Report, para 2.13 36 Qq 2-4 37 Qq 4, 20 38 Qq 81-83 39 C&AG’s Report, para 2.14 40 Q 18 41 Q 19 42 C&AG’s Report, para 2.14 43 Qq 85-91 12 assured over multiple years.44 The Department told us that its capital programme has focused on areas with significantly fewer residential places or with specialist needs, and that it is engaging with local authorities and potential social investors to develop its approach.45 It lacks a national picture of capacity to tell whether the places created are where they are most needed.46 44 Qq 15-16 45 Qq 84, 92 46 C&AG’s Report, paras 9, 13 13 2 Addressing pressures on the residential care system Barriers to increasing foster care
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.