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Ofsted promises to penalise councils using illegal children’s homes

Published July 9, 2026 · Updated July 9, 2026 · By Sandra Garcia

Ofsted Pledges to Penalise Councils for Using Unregistered Children's Homes

Ofsted promises to penalise councils using - Ofsted has announced a major policy shift, promising to penalise councils that continue to rely on unregistered children's homes for placing vulnerable children in care. This decision comes from Sir Martyn Oliver, the chief inspector, who has highlighted the urgent need to hold local authorities accountable for their use of such facilities. The new measures aim to enforce stricter standards by introducing consequences for councils that fail to ensure proper registration of children's homes, which have long been a source of controversy and criticism.

The initiative follows a decade of challenges in addressing the use of unregistered homes, where children are placed in care without meeting the required legal and safety standards. With the rising number of cases involving child exploitation and abuse, Ofsted’s approach signals a stronger enforcement strategy. Councils that use these homes will now face potential downgrades in their overall performance ratings, alongside financial penalties, to discourage their continued reliance on these unregistered placements.

Scandal of Unregistered Placements

Sir Martyn Oliver has described the use of unregistered homes by private providers as a "scandal," stressing that the lack of oversight has allowed unsafe environments to thrive. His comments during a BBC interview underscored the need for action, stating that councils should not be able to overlook the risks associated with these homes. The policy change means that not only will providers be fined, but councils that depend on them will also be marked for urgent improvement in their Children's Services departments, adding pressure to reform their systems.

"It's simply unacceptable. It's a scandal. It needs to end, and we're going to play our part in it,"

Oliver said during an interview with the BBC's Today programme. His remarks reflect a growing concern about the systemic issues in child care, where some councils have been accused of prioritising cost efficiency over child welfare. The scandal has sparked debates about whether the current system adequately protects children’s rights and well-being.

Regulatory Gaps and Escalating Costs

The reliance on unregistered children's homes has been exacerbated by regulatory gaps that have allowed providers to operate with minimal scrutiny. Since the 2021 government ban, which followed BBC investigations revealing severe cases of exploitation, the number of illegal placements has steadily increased. One child was trafficked and sexually abused, while another was kidnapped to sell drugs, with some children as young as ten frequently moved between caravans and narrow boats in unsafe conditions.

Local authorities had argued that they were forced to use unregistered homes due to a shortage of registered placements, which have been slow to expand. However, the supply of unregistered homes has more than doubled in the past eight years, driven by private equity and property investors seeking profit. Despite this increase, the cost of these placements has surged, with councils now spending significant sums on maintaining children in such facilities. This financial burden has raised concerns about transparency and the long-term sustainability of the system.

Financial Impact on Councils

The BBC recently revealed that three English local authorities spent over £2 million each on placements in illegal homes for a single child in the previous year. This highlights the economic pressure driving councils to use unregistered facilities, even when alternatives are available. Providers, on the other hand, claim they are compelled to operate without registration to avoid bankruptcy, citing the high initial costs of securing premises and hiring essential staff as a key barrier to compliance.

"If fines are aimed only at limited companies, rather than the individual directors behind them, there is a real risk that poor operators will simply close one company and reopen under another name,"

said Dr. Mark Kerr, CEO of the Children's Homes Association. His comments point to a broader issue: the need for Ofsted to not only penalise councils but also target the individuals responsible for overseeing these placements. This could help break the cycle of accountability and ensure that the root causes of the problem are addressed.

Addressing Registration Delays

Ofsted has faced criticism for its slow registration process, which can take up to 18 months, leaving many