England has never had more registered children's homes. The sector grew by around 15% in 2025 to just over 4,000 homes, and Ofsted's most recent figures show a record 20% rise, the fastest expansion since records began. On paper, this should be a story about a sufficiency problem being solved.
It is not. Ofsted itself describes a "serious mismatch" between what is on offer and what children actually need. Available placements now outnumber the children requiring them, and yet local authorities still ring dozens of providers to place a single child, and children with the most complex needs still wait longest.
Why? Because sufficiency is not a national number. It is a local, needs-specific question, and the market has grown where property is cheap rather than where children live. More than a quarter of England's children's homes are now in the North West, which is home to fewer than a fifth of the country's looked-after children. The East of England sits on the other side of that imbalance: fewer beds per child in need, and children exported out of county as a consequence.
The National Audit Office has put a cost on this dysfunction. Local authority spending on residential care rose from £1.6bn in the year to March 2020 to £3.1bn in the year to March 2024 (near enough doubling), while the number of children in these settings rose by only 10%, to around 16,150. The NAO's conclusion was blunt: this is a market failure, in which supply and demand are mismatched by geography, by needs profile, and by price.
The uncomfortable question for all of us who run homes is this: does each new registration add capacity where it is needed, for the children who need it? Or does it add another bed to a region that already has too many, for a needs profile that is already well served?
For commissioners, the corollary question is just as pointed: if your sufficiency statement identifies a shortage of local, small-group, therapeutic provision (and most in our region do), what mechanism actually exists to bring that provision into being where you need it?
Growth alone will not fix this market. Alignment will. Which raises a challenge the sector has largely avoided: should new registrations be shaped by regional need at all, and if so, by whom?
