Source · Select Committees · Public Accounts Committee
61st Report - Financial sustainability of children’s care homes
Public Accounts Committee
HC 1233
Published 16 January 2026
Recommendations
3
Accepted
Detail plans to address barriers creating children's home places, including funding and staffing.
Recommendation
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 …
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Government Response Summary
The government agrees and is providing £560 million capital funding to LAs for 2026-2030, has supported Ofsted to update registration prioritisation criteria for new homes, is working with the Ministry of Housing to reform planning processes, and will commission an expert review of professional development for the residential workforce by Summer 2026.
HM Treasury
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4
Accepted
Set out how to address barriers to increasing foster carer numbers with clear timeframe and milestones.
Recommendation
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 …
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Government Response Summary
The government accepted the recommendation, noting it published an action plan, 'Renewing fostering: homes for 10,000 more children,' in February 2026. This plan details a comprehensive approach to increase foster care places, including national recruitment, digital tools, capital investment, and support for existing and prospective carers.
HM Treasury
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5
Accepted
Set out how to understand private provider finances and proactively address market risks.
Recommendation
Despite private providers providing most care home places, the Department does not fully understand their financial position. Private sector providers are responsible for 84% of children’s homes and 74% of places for children in England. Seven of the ten largest …
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Government Response Summary
The government accepted the recommendation, explaining that the Financial Oversight Scheme, established through the Children’s Wellbeing and Schools Bill, will increase financial transparency and allow real-time assessment of financial risk and debt positions for "difficult to replace" providers. The scheme will also require contingency plans and use data to monitor profit levels across the market.
HM Treasury
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6
Accepted
Clarify principles of collaborative regional approach, national implementation timeline, and interim local authority support.
Recommendation
The Department has failed to address the problem of local authorities competing for places and the effect that has on driving up costs. A mismatch between the availability and demand for residential home places means local authorities compete for places, …
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Government Response Summary
The government agrees, outlining that Regional Care Cooperatives (RCCs) will transform children's social care through collective buying power and pooled resources. Following positive evaluations of 2025 pathfinders, the department intends to accelerate the national rollout, aiming for every local authority to be part of an RCC.
HM Treasury
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28
Accepted
Regional commissioning pilots delayed and limited, with national rollout potentially taking ten years.
Recommendation
The MacAlister review envisaged regional organisations operating fully from early 2025, to address sufficiency challenges by 2027. The Department decided against immediately rolling out regional commissioning nationally given insufficient evidence on potential benefits, instead opting for pilots in two regions, …
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Government Response Summary
The government agrees with the recommendation to clarify the principles behind the collaborative regional approach and expects to implement its model nationally by Spring 2029, including launching an expression of interest backed by over £10 million of funding to support the setup of up to six new RCCs in 2026.
HM Treasury
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