Ministers must get to grips with the \u201cnational scandal\u201d of England\u2019s shadow child social care system, the children\u2019s commissioner has warned, as a report reveals the number of children in unregulated settings has increased by more than 370% in five years.<\/p>\n
Some of the most vulnerable children in England are being temporarily placed in unregulated caravans, Airbnbs and holiday camps, which risk the \u201caccumulation of increasing levels of harm for children who have already faced enough distress for several lifetimes\u201d, according to the report<\/a>.<\/p>\n Analysis of Ofsted data has shown that cases of unregistered homes in England increased from 144 in 2020-21 to 680 in 2024-25, which experts say is likely to be an underestimation of the true figure, according to the policy analysts at Public First, who conducted the research<\/a> for the charity Commonweal Housing. The Care Standards Act 2000<\/a> legally requires all children\u2019s homes to be registered with Ofsted.<\/p>\n Private companies have been accused of charging local governments \u201cexorbitant\u201d fees to look after children in unsuitable settings when a bed in an Ofsted-inspected children\u2019s home or fostering placement cannot be found. According to the report, it was not unusual for for-profit providers, which operate more than 80%<\/a> of child residential homes in England, to charge \u00a320,000-\u00a340,000 a week for each child.<\/p>\n Social workers and child social care leaders have told the Guardian that they have been given the \u201cHobson\u2019s choice\u201d of placing a child \u2013 often with the most complex needs \u2013 in a last-minute uninspected setting or leaving them at a police station or on the street. Senior practitioners told the report\u2019s authors that unregistered placements had changed from something they might see \u201conce every six months\u201d to something that crosses their desk \u201cat least once a week\u201d.<\/p>\n The report\u2019s author, Gil Richards from Public First, said not every unregistered placement was poor but because of the nature of the shadow system the \u201cstate just doesn\u2019t know what is happening to these children\u201d. Some registered providers feared taking high-risk children would damage their Ofsted ratings and would rather leave beds empty than accept a child linked to gangs, who repeatedly went missing, or who displayed extreme behaviour.<\/p>\n One social worker said the youngest child she had placed in an illegal setting was just five; another said they had been forced to place a child in a caravan. A former director of children\u2019s services at a local authority said senior figures were aware they were behaving unlawfully but had to act \u201cwhen there was no other solution\u201d.<\/p>\n The use of illegal care homes was a \u201cnational scandal\u201d, said the children\u2019s commissioner, Dame Rachel de Souza, who published a report in January which found that 669 children were in unregistered homes<\/a> on 1 September 2025.<\/p>\n \u201cI have been warning about this practice for years, and I need leaders at every level to grip it urgently,\u201d she said. \u201cHundreds of children with complex needs each year are in placements operating without regulation or safeguards because there are simply not enough good, safe options to give them the quality of care they need.\u201d<\/p>\n The children\u2019s minister, Josh MacAlister, said those running illegal settings \u201cmust be registered with Ofsted or face serious consequences\u201d. He added: \u201cWe are cracking down on the scourge of illegal homes through new laws that give Ofsted the power to issue unlimited fines and shut down illegal homes.\u201d<\/p>\n Ashley Horsey, the chief executive of Commonweal Housing, said the report was \u201cvery worrying\u201d, adding: \u201cIt tells us that hundreds of children are finding themselves at the sharpest end of a failure of policy and a failure of regulation, when local authorities have no other option but to place them in unregulated settings.\u201d<\/p>\n The extreme risk such settings exposed vulnerable children to was demonstrated by the recent case of an at-risk teen who was put in an unregistered home, plied with alcohol and sexually assaulted by the two ex-soldiers being paid by a private firm to care for her. The 15-year-old had been moved 300 miles to escape sexual exploitation, LBC and the Bureau of Investigative Journalism first reported<\/a>.<\/p>\n The report from the children\u2019s commissioner<\/a> found that 44% of children in unregistered placements were in an illegal children\u2019s home and 7% were in AirbnBs, holiday camps or activity centres. The average placement lasted six months, but 89 children (13% of the total) had been there for more than a year. One child had been in a \u201choliday camp\/activity centre\u201d for almost nine months. The weekly cost of such illegal placements was \u00a310,500; 36 of the children looked at were in placements that had each cost in total more than \u00a31m.<\/p>\n In January, the public accounts committee, described the children\u2019s residential care market<\/a> in England as \u201cdysfunctional\u201d, with one in 10 children in an illegal, unregistered home. No unregistered provider has been prosecuted for running an unlawful setting.<\/p>\n Ofsted told the Guardian it had started several prosecutions but as they were going through the courts it could not comment further. \u201cToo many children are being placed in unlawful settings where they\u2019re at risk of harm. The use of these placements must stop,\u201d said a spokesperson. \u201cOfsted is working hard to investigate unregistered children\u2019s homes and compel them to either register or close.\u201d<\/p>\n Prosecuting was a \u201clengthy and expensive process\u201d, it said, but added that measures in the children\u2019s wellbeing and schools bill would \u201callow us to act more quickly\u201d.<\/p>\n Government sources said ministers had made \u201chuge progress in a short space of time on an area of government that has been ignored for far too long\u201d, pointing to an \u00a388m drive<\/a> to create 10,000 new foster care places.<\/p>\n Get in touch<\/p>\n Contact us about this story<\/p>\n The best public interest journalism relies on first-hand accounts from people in the know. 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