Why illegal children's homes are being paid up to £2m per child by councils

# Summary

Councils across the UK continue paying millions to unregulated children's homes despite a government ban on the practice, new reporting reveals. Some illegal facilities receive up to £2 million per child annually from local authorities desperate to find placements.

The situation stems from a severe shortage of regulated care spaces. Children's services are overwhelmed, and councils face legal obligations to house vulnerable children. When licensed providers cannot accommodate them, some local authorities resort to paying unregulated operators, circumventing rules designed to protect vulnerable minors.

These illegal homes operate without the oversight that regulated facilities must follow. Staff receive no mandatory training in safeguarding. Facilities undergo no inspections. Children in these settings face heightened risks of abuse, exploitation, and inadequate care. The financial incentive is substantial, making illegal operation profitable despite regulatory prohibitions.

Local authority officials argue they have limited options. With waiting lists stretching months and the regulated sector running at capacity, they face an impossible choice: breach regulations or leave children without shelter. Some councils defend paying for illegal placements as a temporary measure while they work to expand regulated capacity.

The practice reflects systemic failures in child protection infrastructure. The government's ban lacks enforcement mechanisms, and penalties remain minimal compared to the sums councils pay operators. Watchdog bodies have raised alarms, noting that children end up in precisely the unmonitored environments safeguarding rules were created to prevent.

Regulators and child protection advocates call for immediate action. They emphasize that temporary workarounds create permanent harm. Expanding licensed capacity requires sustained funding and policy reform. Until then, the financial incentives and desperate shortages will continue driving councils toward illegal arrangements that leave vulnerable children at risk.