Ofsted annual report warns against ‘profiteering’ in children’s homes sector
Source: gov.uk (2025-12-02)

Annual report sees great work being done by education and care professionals but there are concerns about the rapid growth in children’s homes, and outcomes for disadvantaged and vulnerable children remain poorer than their peers.

- Rapid growth in the number of children’s homes registered with Ofsted – up 15% in the last year – masks very significant problems with location, affordability and suitability.
- Concentration of children’s homes in areas where housing is cheaper suggests strong profit motive in the market, which can bend the system out of shape.
- Lack of homes in the right places for children who most need specialist support has created shadow market of unregistered children’s homes.
This year’s Ofsted annual report looks across the early years, schools, children’s social care and further education and skills sectors and sees fantastic, transformative work being done by committed professionals up and down the country. But while most children experience a relatively smooth path to adulthood, for those with a less fortunate start in life that path can be strewn with obstacles. This is particularly true for children growing up in care.

Many children known to social care are able to succeed and thrive because of the great support they receive. But today’s report points to a lack of coordinated support across education, care and wider services, which sees outcomes for young people growing up in care remain far poorer than those of their peers. Much more needs to be done to help these children.

The most intractable issue in children’s social care is the supply of children’s homes. In the last year, there has been a 15% increase in registrations with Ofsted, meaning the total number of children’s homes in England now tops 4,000 – up more than 500 from the previous year and the highest number on record. However, this rapid growth masks very significant problems with the location, affordability and suitability of homes available. For example, more than a quarter of all children’s homes in England are found in the North West – a region that accounts for just 18% of looked-after children.

Today’s report also raises concerns that the proliferation of children’s homes in areas where housing is cheaper suggests some operators are being motivated by profit, rather than the needs of children, which is bending the entire system out of shape.

Read the Ofsted annual report 2024/25: education, children’s services and skills (https://www.gov.uk/government/publications/ofsted-annual-report-202425-education-childrens-services-and-skills).

Commenting ahead of his second annual report as His Majesty’s Chief Inspector, Sir Martyn Oliver said:

The most vulnerable children in our society deserve loving and stable homes. Instead, profit motive is increasingly dictating the location and ownership of children’s homes. As a society, we are failing these children. We can and must do better.

Despite the growing number of new children’s homes, local authorities continue to find it hard to place children in registered homes – particularly children with complex needs. This challenge is exacerbating the problem of unregistered children’s homes. This year alone, Ofsted started nearly 900 investigations into potential unregistered homes, which often charge exorbitant fees to local authorities that have run out of options. This shadow market exists because there aren’t enough of the right kinds of places in legitimate, registered homes to take children who most need specialist support.

Education

This year’s annual report also finds disparities in outcomes for disadvantaged and vulnerable children across the education system. This begins with a lack of access to good quality early education and care in more deprived areas, which has a lasting impact on entire communities. In schools, the attainment gap between disadvantaged and non-disadvantaged children remains stubborn, with poorer pupils lagging months behind their peers.

Absence also remains an endemic problem across the school system. Severe absence – when children miss half or more of their schooling – is almost 3 times higher than before the pandemic. In the latest data, some 166,000 pupils were severely absent, with vulnerable and disadvantaged children over-represented among them.

Linked to attendance is the problem of poor behaviour. Today’s report says that too many children are spending too long out of school and falling out of step with the expectations of school life – which makes them more likely to challenge teachers and disrupt the learning of others. The influence of social media and smartphones is also partly responsible for poor behaviour, through its effect on pupils’ attention spans and by promoting disrespectful attitudes.

Increasingly, commentary suggests the impact of poor behaviour is playing a part in driving teachers out of the profession.

Even where schools take all the right steps to tackle poor behaviour, including making use of suspensions and – as a last resort – permanent exclusions, the prevalence of low-level disruption remains a significant issue. In 2023/24, permanent exclusion rates were the highest on record, and suspensions were up by a fifth – approaching one million. Four out of 10 permanent exclusions and 5 out of 10 suspensions resulted from persistent disruptive behaviour. Disadvantaged pupils are 5 times more likely to be permanently excluded.

Under Ofsted’s renewed education inspection framework, which came into effect in November this year, inspectors will use the new focus on inclusion to look at how all of a provider’s policies and practices are working for different groups of children, particularly those who face the greatest barriers to success – such as economically disadvantaged children, those with special educational needs and/or disabilities (SEND) and those known to children’s social care.

In his annual report, Sir Martyn Oliver concludes:

Inclusion matters. It matters because addressing the needs of the most vulnerable and disadvantaged children demands a rigour and attention to detail that ultimately benefits all the children, pupils or learners in that setting – from those facing the greatest barriers, to those whose path to adulthood is more straightforward.

As a country, we should measure our successes in education, children’s services and skills, both by how well we support the most economically disadvantaged and vulnerable, and by how much further we can push forward the boundaries of knowledge through higher learning. We have a duty to improve the lives and life chances of every child and every learner.

The dedicated staff working in education and children’s social care are helping children and older learners achieve their potential – day by day and week by week. I would like to thank them all.

Notes to editors
- The annual report covers the academic year from September 2024 to August 2025.
- In September 2025, Ofsted set out a revised model for inspecting and grading (https://www.gov.uk/government/consultations/improving-the-way-ofsted-inspects-education/outcome/improving-the-way-ofsted-inspects-education-report-on-the-responses-to-the-consultation) education providers. These reforms came into effect in November 2025. The first report cards from inspections carried out under the renewed framework will be published in the new year.
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