Councils Spent £125m on Illegal Care Homes for Vulnerable Children 2026

Councils are paying more than £125m a year to place vulnerable children in illegal care homes across England, an investigation has revealed. This urgent issue demands attention from policymakers and the public alike.

The Scale of the Illegal Care Home Crisis

According to a joint investigation by The Guardian and the Bureau of Investigative Journalism (TBIJ), local authorities have spent over £250m on 1,800 unlawful placements of children in the past two years. More than 480 private companies have been involved in this booming industry, profiting from a severe shortage of Ofsted-registered beds for the most at-risk children.

Why Are Illegal Care Homes Being Used?

The primary driver is a chronic lack of suitable accommodation for older children with complex needs, including those whose behaviour poses risks to themselves or others. Councils argue they have no alternative but to use these unregistered settings, even though it is a criminal offence to operate a children's home without Ofsted registration.

Regulators have historically been reluctant to shut down illegal settings, fearing that doing so would leave children with nowhere to go. However, growing concerns about criminal activity and safeguarding failures have prompted a tougher stance, with Ofsted securing its first conviction last month.

Financial Impact on Taxpayers

The investigation uncovered that over £40m of public money has been paid to operators linked to care failures, including those involved in the care of a teenage girl harmed in a succession of illegal placements in hotels, Airbnbs, and other unregulated settings.

The Human Cost of Illegal Placements

Behind these figures are real children, many of whom have already experienced trauma and neglect. Illegal care homes often lack proper safeguarding measures, qualified staff, and adequate oversight, putting vulnerable children at greater risk of harm. The investigation highlighted cases of children being placed in unsuitable environments, including unregulated hotels and Airbnbs, where they were exposed to potential dangers.

What Needs to Change?

Experts argue that the solution requires a multi-faceted approach, including increased funding for registered care homes, better support for foster care, and more robust enforcement of existing regulations. However, without immediate action, the crisis is likely to worsen, leaving more children in unsafe conditions.

Key Takeaways

• Councils are spending over £125m annually on illegal care homes due to a shortage of registered beds.
• More than 480 private companies are profiting from these unlawful placements.
• Ofsted has begun taking legal action, securing its first conviction last month.
• Children in illegal settings face increased risks of harm and lack proper safeguarding.
• Systemic changes are needed to address the root causes of this crisis.

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