Fixing the children’s social care market: Available placements do not meet the needs of children in care

It is widely acknowledged – by local authorities, the Department for Education (DfE), the National Audit Office (NAO) and the Competition and Markets Authority (CMA) – that many children live in care placements that do not meet their needs. ¹ Comptroller and Auditor General, Managing Children’s Residential Care, Session 2024–26, HC 1290, National Audit Office, 2025, www.nao.org.uk/wp-content/uploads/2025/09/Managing-childrens-residential-care.pdf; Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf

Decisions about where a child is placed too often reflect a shortage of suitable local placements, rather than what is best for the child. At the root of this problem is a mismatch between the demand for care and its supply. There are not enough placements of the right type, in the right places, to meet children’s needs.

There are not enough placements of the right type

The Children’s Social Care National Framework is clear that children should, wherever possible, be raised in family environments.^{*, 2} Department for Education, Children’s Social Care National Framework, GOV.UK, 2023, https://assets.publishing.service.gov.uk/media/657c538495bf650010719097/Children_s_Social_Care_National_Framework_December_2023.pdf  This reflects well-established evidence that these settings offer the best outcomes for most children. But the shrinking supply of foster placements – the main route to family-based care for children who cannot remain with their own families – is making this principle increasingly difficult to realise.

The number of households choosing to foster in England has declined overall since 2018, falling every year since 2021 and reaching 42,200 in 2025 – its lowest point in more than a decade. ⁸⁸ Ofsted, ‘Fostering in England 1 April 2024 to 31 March 2025’, GOV.UK, 26 November 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/fostering-in-england-1-april-2024-to-31-march-2025  But during the same decade, the number of children in care continued to grow. There were 6,400 more children in care in 2025 than there were in 2018, ⁸⁹ Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025  but 1,300 fewer fostering households. ⁹⁰ Ofsted, ‘Fostering in England 1 April 2024 to 31 March 2025’, GOV.UK, 26 November 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/fostering-in-england-1-april-2024-to-31-march-2025  We discuss the reasons for this shortage below.

As a result, the number of approved foster places per child in care dropped by more than a tenth (13%) over the same period. In other words, there is a growing gap between the number of children in care and the supply of foster placements.

_{*    Indeed, local authorities are legally obliged to give preference to placements that enable children to be raised by their families or family networks, where they are available, over other types of placements.}

_{**    As of 31 March 2025, 84% of the 339 independent fostering providers in England were private providers.}

The gap becomes particularly pronounced once we account for the changing composition of foster carers. While the total number of fostering households has fallen by 3% since 2018, the number of family and friends fostering households has increased, and by a substantial 44%. ⁶ Dellar A, Performance Tracker 2025, ‘Children’s social care’, Institute for Government, 15 October 2025, retrieved 18 March 2026, www.instituteforgovernment.org.uk/publication/performance-tracker-2025/local-services/children-social-care  This is a positive development that allows more children to remain within their family networks. But as a result, the headline 3% drop masks a far steeper fall in the supply of foster places for children without kinship care arrangements. Excluding kinship care, the number of fostering households dropped by 11% between 2018 and 2025, and the number of approved foster places per child in care fell by nearly a fifth (18%).

This gap in the supply of foster placements has contributed to a decline in their use, with 67% of children in care living in foster homes in 2025, down from 73% in 2018. ⁷ Ibid.; Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025

Instead, some children who would have been better served in foster care have ended up in residential settings ⁸ Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf  – as the DfE has acknowledged. ¹⁰⁷ House of Commons Committee of Public Accounts, Financial Sustainability of Children’s Care Homes: Sixty-first report of session 2024–26, HC 1233, The Stationery Office, 2025, https://committees.parliament.uk/publications/51065/documents/283185/default  Ofsted looked at a small sample of 111 children living in residential homes in 2019 and found that a third of them originally had foster care on their care plan. ¹⁰⁸ Ofsted, ‘Why do children go into children’s homes?’, GOV.UK, 13 April 2022, retrieved 26 September 2025, www.gov.uk/government/publications/why-do-children-go-into-childrens-homes/why-do-children-go-into-childrens-homes  In 2024, research commissioned by the DfE estimated that 20–30% of residential placements were the result of failing to find a suitable foster placement. ¹⁰⁹ Mutual Ventures, Forecasting, Commissioning and Market Shaping, Department for Education, 2024, https://dd1cc44c-4889-4662-b8d7-7b18bc37a2da.filesusr.com/ugd/f0c288_e542122a234e42afb93cdc9aaf7583c9.pdf

Residential care has therefore become more common, accommodating 21% of children in care by 2025, compared to 15% in 2016. ¹¹⁰ Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025  The number of children in residential settings rose by 60% over those nine years, from 10,600 in 2016 to 17,000 in 2025. Since 2020 – when the data first allows us to separate types of residential care – this increase has mostly been driven by a greater use of children’s homes, which rose from 9% in 2020 to 12% in 2025, rather than a greater use of supported accommodation, which rose from 8% to 9%. ¹¹¹ Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025

However, the rising reliance on residential settings is not entirely the result of the shortage of foster care. Shifting demographics in the care population – increases in the numbers of UASC, older children and the complexity of need – also play a role, as these groups are more likely to live in residential settings than other children in care, as noted earlier. In particular, the increases in older children and UASC in the care population between 2020 and 2025 can more than explain the small national rise in reliance on supported accommodation over this time period.^* They cannot, however, explain the larger rise in the use of children’s homes.^**,***

Beyond the general shortage of foster carers, there are also gaps in provision for specific children, especially those with the most complex needs. In the foster system, there is a lack of carers with the willingness, specialist skills or facilities to look after certain groups of children. Fostering services report particular challenges finding foster homes for teenagers, sibling groups, children with disabilities or complex needs and UASC ¹¹² Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf; The Fostering Network, ‘Recruitment targets’, (no date), retrieved 18 March 2026, www.thefosteringnetwork.org.uk/about-fostering/for-fostering-services/recruitment-and-retention/fostering-recruitment-targets  – some of which make up a growing share of the care population. It is therefore unsurprising that, in a survey run by the Fostering Network in 2024, 91% of fostering services said they were experiencing a shortage of foster carers for children with particular needs, up from 82% in 2021. ¹¹³ The Fostering Network, State of the Nations’ Foster Care: Full report 2024, 2025, www.thefosteringnetwork.org.uk/media/fbldiwhh/sotn24-full-report.pdf

A similar shortage of placements for children with the most complex needs exists in residential care, particularly for children who have been deprived of their liberty. ¹¹⁴ Dellar A, Performance Tracker 2025, ‘Children’s social care’, Institute for Government, 15 October 2025, retrieved 18 March 2026, www.instituteforgovernment.org.uk/publication/performance-tracker-2025/local-services/children-social-care  To be deprived of liberty is to be confined for a significant period of time by the state, without valid consent. ¹¹⁵ Parker C, Deprivation of Liberty: Legal mechanisms, Nuffield Family Justice Observatory, 2022, www.nuffieldfjo.org.uk/wp-content/uploads/2022/02/nfjo_briefing_DoL_final_20220203.pdf  For children in receipt of social care, this usually arises when they are judged at risk – of criminal or sexual exploitation, or of harming themselves or others.

The number of secure children’s homes has more than halved since 2002, falling from 31 to 14 in 2025. ¹¹⁶ Department for Education, personal communication to the author, 26 September 2025; Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025  Providers’ frequent reluctance to accept referrals for children with the most complex needs is further squeezing capacity. ¹¹⁷ Ofsted, ‘How local authorities plan for sufficiency of accommodation that meets the needs of children in care and care leavers’, GOV.UK, 18 November 2022, retrieved 26 September 2025, www.gov.uk/government/publications/how-local-authorities-plan-for-sufficiency-children-in-care-and-care-leavers/how-local-authorities-plan-for-suffic…  In some instances, this is justifiable: homes may lack the staff or specialist facilities required, or worry about unsettling other children already living there. ¹¹⁸ Ofsted, ‘How local authorities plan for sufficiency of accommodation that meets the needs of children in care and care leavers’, GOV.UK, 18 November 2022, retrieved 26 September 2025, www.gov.uk/government/publications/how-local-authorities-plan-for-sufficiency-children-in-care-and-care-leavers/how-local-authorities-plan-for-suffic…  But in other cases, providers purportedly ‘cherry-pick’ the children they take into their care, since they know other referrals will soon come along. ¹¹⁹ Ofsted, ‘How local authorities plan for sufficiency of accommodation that meets the needs of children in care and care leavers’, GOV.UK, 18 November 2022, retrieved 26 September 2025, www.gov.uk/government/publications/how-local-authorities-plan-for-sufficiency-children-in-care-and-care-leavers/how-local-authorities-plan-for-suffic…  Concerns among providers that taking on more challenging children may negatively affect their Ofsted ratings are partly driving this behaviour. ¹²⁰ Ofsted, ‘How local authorities plan for sufficiency of accommodation that meets the needs of children in care and care leavers’, GOV.UK, 18 November 2022, retrieved 26 September 2025, www.gov.uk/government/publications/how-local-authorities-plan-for-sufficiency-children-in-care-and-care-leavers/how-local-authorities-plan-for-suffic…

As the number of children with complex needs grows, the most vulnerable increasingly have nowhere to go. In 2024, Ofsted reported that around 50 children were waiting for a secure children’s home place on any given day. ¹²¹ Ofsted, ‘How local authorities plan for sufficiency of accommodation that meets the needs of children in care and care leavers’, GOV.UK, 18 November 2022, retrieved 26 September 2025, www.gov.uk/government/publications/how-local-authorities-plan-for-sufficiency-children-in-care-and-care-leavers/how-local-authorities-plan-for-suffic…  There were only 240 places in England in March 2025. ¹²² Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025

_{*    See M1 in the Methodology, found as a PDF on this report’s webpage, for details of the regression.}

_{**    See M2 in the Methodology for details of the regression.}

_{*** We cannot assess how far changes in the complexity of children’s needs contribute to this trend as the data does not contain a robust measure.}

There are not enough placements in the right places

The problem is not just which placements exist, but also where they are located. Local authorities are legally required, where practicable, to provide accommodation within the local area so children in their care can live near home. ¹²⁸ Legislation.gov.uk, Children Act 1989, c. 41, p. 3, s. 22C, retrieved 13 April 2026, www.legislation.gov.uk/ukpga/1989/41/section/22C  In reality, many cannot meet this duty because of local shortages in provision. ¹²⁹ Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf  While distant placements are sometimes considered necessary to separate a child from negative influences or to meet certain specialist needs, too many children in care are living far from home simply because there are not enough options nearby. ¹³⁰ Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf

This geographic mismatch is starkest in children’s homes and secure children’s homes, which are often located far from the children they serve. In March 2025, more than a third of councils (52) were using more children’s home places than existed within their boundaries. ¹³¹ Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025; Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025  Altogether, these councils contain 1,846 children’s home places – 961 (or 34%) short of the demand from children in their care, with many therefore living outside their local areas. The London boroughs of Southwark, Lambeth, Westminster, and Kensington and Chelsea contained no active children’s homes at all, despite placing a total of 99 children in these settings. ¹³² Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025; Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025

A vast oversupply of children’s home places elsewhere in England shows the other side of the same coin. Five local authorities – Redbridge, Lancashire, Wolverhampton, West Berkshire, and Westmorland and Furness – host more than five times as many children’s home places than they use themselves. ¹³⁹ Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025; Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025  The London borough of Redbridge provides the most striking example, with 20 times as many children’s home places within its boundaries as it uses for children in its care. Lancashire (excluded from Figure 6 because its 1,010 places would distort the scale) is close behind, with local supply 17 times greater than local demand.

Yet even oversupplied local authorities cannot always access their local children’s homes due to children from elsewhere occupying them. ¹⁴⁰ Bach-Mortensen AM, Murray H, Goodair B, Carter E, Briggs E and O’Higgins A, Are Local Authorities Achieving Effective Market Stewardship for Children’s Social Care Services?, What Works for Children’s Social Care, 2022, https://webarchive.nationalarchives.gov.uk/ukgwa/20230308122151mp_/https://whatworks-csc.org.uk/wp-content/uploads/WWCSC_sufficiency_report_Final_Mar…  This suggests that, even where placements are available locally, they are not always allocated in a way that best meets children’s needs.

Children’s homes are so geographically concentrated at least in part because most of them (84%) are privately owned. ¹⁴¹ Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025  Private providers tend to create capacity where the housing and labour market is cheapest to reduce their operating costs, meeting national instead of local demand for care placements. ¹⁴² MacAlister J, The Independent Review of Children’s Social Care, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/640a17f28fa8f5560820da4b/Independent_review_of_children_s_social_care_-_Final_report.pdf  There are also practical advantages to clustering provision in one place – for example, providers will know the local market and can rotate staff between settings. ¹⁴³ Institute for Government interview.

As a result, when comparing areas with similar levels of local demand, children’s home places are more common where housing is cheaper and wages are lower.^* Take Rochdale in the North West and Bath and North East Somerset in the South West, which both place a similar rate of children in children’s homes (9.3 per 10,000 children). Children’s home places are more than 20 times as common in Rochdale than in Bath and North East Somerset (18.9 versus 0.8 per 10,000 children), with Rochdale also having 11% lower median hourly pay and 48% lower median house prices. Ofsted’s chief inspector, Sir Martyn Oliver, has said that this “strong profit motive… bends the system out of shape”. ¹⁴⁴ Ofsted, The Annual Report of His Majesty’s Chief Inspector of Education, Children’s Services and Skills 2024/25, HC 1474, The Stationery Office, 2025, p. 13, https://assets.publishing.service.gov.uk/media/6929d2b9a245b0985f0342ed/Ofsted_Annual_Report_2024-25.pdf

_{*    See M3, M4 and M5 in the Methodology, found as a PDF on this report’s webpage, for details of the regressions.}

It is unsurprising, then, that while 10% (940) of children in children’s homes are from London, only 7% (1,033) of children’s home places are located there.^{*, 151} Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025; Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025  The South West is in a similar position, responsible for 9% of children in children’s homes but containing only 6% of the supply (820 versus 833). ¹⁵² Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025; Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025  In comparison, the North West and East Midlands have substantial excess capacity, hosting 22% and 13% of places but contributing 17% and 10% of demand, respectively. ¹⁵³ Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025; Department for Education, ‘Children looked after in England including adoptions’, GOV.UK, 26 November 2025, retrieved 23 January 2026, https://explore-education-statistics.service.gov.uk/find-statistics/children-looked-after-in-england-including-adoptions/2025

These imbalances have likely become more pronounced over time. In 2022, the CMA found that new capacity was disproportionately being added in areas that were already oversupplied, with 30% of new places being added in the North East but only 4% in London and 4% in the South East. ¹⁵⁴ Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf

Places in children’s homes and secure children’s homes have become increasingly outsourced in recent years, with 64% of places run by private providers in 2018, compared to 76% in 2025. ¹⁵⁵ Ofsted, ‘Children’s social care data in England 2018’, GOV.UK, 19 July 2018, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-data-in-england-2018; Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025  This is a faster rate of outsourcing than we have seen in mainstream foster care, where independently provided placements still increased,^** but from 43% to 47%, over the same time period. ¹⁵⁶ Ofsted, ‘Fostering in England 1 April 2024 to 31 March 2025’, GOV.UK, 26 November 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/fostering-in-england-1-april-2024-to-31-march-2025

_{*    For each region of England, the number of children’s home places within its borders exceeds the number of children the constituent local authorities have placed in children’s homes.}

_{**    This includes provision from the voluntary sector, although primarily consists of private provision.}

Growing numbers of private children’s homes, rather than the closures of public ones, have almost entirely driven this trend of outsourcing. Local authorities provided a similar number of children’s home places in 2018 (2,600) as they did in 2025 (2,500). ¹⁶⁰ Ofsted, ‘Children’s social care in England 2018’, GOV.UK, 19 July 2018, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-data-in-england-2018; Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025  Meanwhile, the number of privately run children’s home places rose sharply from 7,600 to 12,000 – an increase of 58%. ¹⁶¹ Ofsted, ‘Children’s social care in England 2018’, GOV.UK, 19 July 2018, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-data-in-england-2018; Ofsted, ‘Children’s social care in England 2025’, GOV.UK, 16 July 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/childrens-social-care-in-england-2025  Local authorities have suggested that concerns over reputational risk arising from a number of scandals, along with financial constraints limiting their ability to invest in their own provision, may help to explain the growth in private children’s homes. ¹⁶² Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf

There may also be geographic imbalances between the availability of foster placements and demand, but these are difficult to measure. Around two fifths of foster placements are provided by independent fostering agencies (IFAs) that can operate across multiple local authorities, ¹⁶⁵ Ofsted, ‘Fostering in England 1 April 2024 to 31 March 2025’, GOV.UK, 26 November 2025, retrieved 23 January 2026, www.gov.uk/government/statistics/fostering-in-england-1-april-2024-to-31-march-2025  so it is more meaningful to assess whether supply meets demand at the national, rather than local, level.

What we can say is that the places facing the biggest foster carer recruitment challenges are not always the ones with the fewest children in care. For example, it is harder to recruit foster carers in areas where fewer adults have the resources and space in their homes. ¹⁶⁶ Institute for Government interviews; Competition and Markets Authority, Children’s Social Care Market Study: Final report, GOV.UK, 2022, https://assets.publishing.service.gov.uk/media/6228726cd3bf7f158c844f65/Final_report.pdf; Association of Directors of Children’s Services, ADCS Safeguarding Pressures Research – Phase 9, 2025, www.adcs.org.uk/wp-content/uploads/2025/01/ADCS_Safeguarding_Pressures_Phase9_FINALv1.pdf  But poorer areas tend to have more children in care per 10,000 children. The most deprived fifth of local authority areas has almost double the rate of children in care as the least deprived fifth, at 92 versus 48 children per 10,000.