Select committee: Public Accounts Committee
Conclusion 25
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 Department described the significant levels of profit for some suppliers as the reason it introduced provisions in the Children’s Wellbeing and Schools Bill for a profit cap.69 The Bill will also introduce a financial oversight scheme covering those providers deemed hardest to replace. The Department acknowledged that how it will use the scheme will be covered in further regulation.70 The Children’s Homes Association told us that the scheme would provide an early warning system that providers might fail, but that it did not consider the scheme robust enough to reduce the numbers of private-equity-owned providers.71 One existing model for such an oversight scheme is that operated in the adult social care market by the Care Quality Commission, which has a dedicated financial sustainability function which oversees around 65 of the largest and most significant care providers across England, representing around 30% of its overall care market.72 62 Qq 18, 50, 74 63 Qq 75-76 64 Qq 50, 74 65 C&AG’s Report, para 2.3 66 Qq 2, 22; C&AG’s Report, para 2.4. 67 Q 18 68 Q 50 69 Q 50 70 Q 74 71 Q 22 72 C&AG’s Report, The adult social care market in England, 25 March 2021, para 2.22 16 Co-operation between local authorities
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.