Councils across England continue funding placements in unregistered children's homes despite a ban designed to eliminate the practice, according to BBC reporting. These illegal facilities receive payments of up to £2 million per child annually from local authorities desperate to find accommodation for vulnerable young people.
The ban, introduced to protect children in unregulated settings, has failed to stop councils from using these homes as a workaround when registered placements run out. Local authorities argue they face a crisis of insufficient regulated bed space, forcing them to rely on illegal operators to meet statutory duties to house children in care.
Unregistered homes operate without Ofsted oversight, meaning children lack basic safeguards around staffing ratios, training requirements, and inspections. The facilities often house the most challenging cases, including teenagers with complex needs and behavioral issues that registered providers refuse to accept.
The payments reveal a system under strain. Councils spend significantly more on illegal placements than regulated alternatives, yet continue the practice because options remain limited. Some unregistered providers have expanded rapidly, operating multiple homes across regions while avoiding regulatory scrutiny.
Child protection experts warn the arrangement creates dangerous conditions. Without registration requirements, these homes face no minimum standards for supervision, record-keeping, or accountability. Children in unregistered settings experience higher rates of harm, exploitation, and abuse compared to those in regulated facilities.
The government previously pledged to eliminate illegal placements, but enforcement remains weak. Councils admit continuing use of unregistered homes despite the ban because the alternative, leaving children without accommodation, poses greater immediate risk.
Local authority leaders argue the crisis demands systemic reform. Investing in more registered provision would cost less long-term than current arrangements, yet budget constraints limit expansion. The illegal home network persists because councils lack leverage to refuse payments when legitimate options disappear.