The residential childcare sector is known to have insufficient capacity to meet the needs of the children coming into care. However, the available figures belie this fact suggesting that we have an excess of up to 3,000 places unoccupied at any one time. This paper by the ICHA looks at why this situation has arisen.

It finds that there is no one cause but an interplay of factors. Furthermore, the situation was almost inevitable due to the regulations that govern and have shaped the sector, the increasingly complex needs of the children and, to a lesser extent, the way that places are commissioned.

This short paper written by ICHA’s deputy CEO, Elizabeth Cooper, is being shared in the hope of it stimulating further discussion between all parties looking to improve the sufficiency of care placements for children.

According to Ofsted’s latest figures and the CMA’s  ‘Children’s Social Care Market Study’ March 2021 between 9,700 and 9,989 places are available in ‘active’ residential children’s homes in England (March 31 2020). These homes are provided by the Local Authority (21%), private providers (70%), and the third sector (9%). The DFE suggest that 6,780 children were placed in registered children’s homes on the same date, potentially leaving up to 3,000 places empty. Yet there is a nationally recognised sufficiency issue requiring the use of alternate, often unregistered accommodation.

The ICHA 7th State of the Sector report 2020 reflects that occupancy in homes was reported at an average of 80-85% across the membership. Scaled up to reflect all children’s homes, this accounts for most, but perhaps not all of the discrepancy. (20% of  9900 is 1980). This is supported by the ICHA vacancy portal consistently showing vacancies of over 200 at any one time. We know that not all providers are using the portal and therefore that not all vacancies are reflected. This is especially true for those who do not wish to, or currently could not – due to circumstances in the homes – fill their vacancies.

This paper attempts to explore the reasons for this deficiency and why, in a sector considered to be profiteering, homes do not run at optimum capacity. We chose to focus on our ICHA member homes and explore why there are so many vacancies not currently being filled.

Problems with the available data

  • The figures available on Ofsted’s website are inaccurate due to the fluid nature of the sector. Homes open and close and are taken over regularly but the available figures provide a snapshot in time only. Ofsted’s 31st March 2020 data for example, included at least 12 homes listed as active and counted in the overall figures that were reported to be closed once the reports were accessed. Whilst some of these may have continued operating under alternate ownership, this was not made clear. Similarly, there will be some homes reflected in the data that have closed since the report was published. Whilst this is a relatively small figure in the overall numbers, it demonstrates that exact numbers are inaccurate.
  • Homes where conditions and restrictions have been placed on the registration are not reflected in the published figures as this situation is considered to be temporary, whilst the home makes improvements. Whilst the percentage of homes with these restrictions is unknown, it undoubtably impacts on sufficiency.

Operational Considerations

  • Providers spoke about having homes registered to accept a certain number of children but deciding not to fill all the beds. This was generally in multi-occupancy group homes of 4 or 5 beds or more. The major reason given for this was the difficulty in appropriately matching that number of children’s needs. However, providers also choose not to deregister the final bed as it provided them with a degree of flexibility.
  • Generally, multi-occupancy homes therefore look to accept less risky children or specialise in a particular client group to mitigate against these business risks, and keep beds viable.
  • The level of staffing required per child can make a difference to whether beds are left unoccupied. Providers commented that having too many children on 1:1 or 2:1 contracts, makes it difficult to comfortably accommodate all the staff and children in the home. This is especially true when staff also sleep on the premises.
  • Homes retain vacancies when a local authority commissions all the beds in a home to maintain a solo placement in a multi-occupancy setting. This is almost invariably due to the presenting needs of the child and the lack of an alternative solo home. These are often the high-cost placements quoted in the media.
  • Complexity of need was cited by many as an inhibiting factor. A high number of children have been through multiple placement breakdowns and may display highly challenging behaviour such as fire setting, assaults with weapons etc. Others may have severe mental health problems or require specialist interventions that many homes cannot provide. These children can also often not access local support services due to cost or sufficiency implications. Most providers will not feel able to accept these children, regardless of any vacancies.
  • ‘Bed Blocking’. Sometimes providers do not have a choice about having unfilled vacancies. They are unable to fill beds because of the behaviours and needs of a current occupant making it impossible to move others in. Providers also spoke about local authorities often refusing to pay for the increased staffing required to maintain these placements with little acknowledgement of the effects on the home’s capacity. Unfortunately, these children will frequently face multiple moves as providers cannot remain viable in these circumstances.
  • The area in which a home is located is a factor in not accepting referrals. There is a drive towards more local placements, but some areas have very little provision. Equally, some children cannot be placed safely near to home or within specific areas due to CCE/CSE and gang concerns.
  • Operational fragility was cited by a few providers. They gave examples of staff recruitment issues, staff instability and the effects on staff’s resilience and confidence when working with particularly challenging children. Another provider stated, “You want the people in your homes on board so need to place children they can work with”.
  • The pandemic was a consideration for a small number of providers, “We chose not to fill beds during the lockdown due to potential staffing issues”.
  • Provider size and service provision was also identified. Companies with larger capacity and specialist onsite services were more able to accommodate children with more complex needs than most smaller competitors. Larger companies, especially those with financial backing are also more able to ‘take a risk’ on children who may block beds.

Respondents regularly cited regulatory requirements as reasons why placements were not accepted.

  • “We’d happily take more risks, but you’re penalised for it.”
  • The overwhelming reason for vacancies is the need to ‘placement match’. Ofsted properly  require that homes do Impact Risk Assessments on all referrals against the needs and behaviours of the children already living there to establish potential risks, to ascertain whether the children would live well together, and whether the home can meet their needs. Ofsted subsequently assess the suitability of placements and the efficacy of the matching, and this can impact on home’s grades.
  • In this regard, providers unanimously spoke about the needs of current children being paramount.  “We took a risk recently. It turned the house upside down. We had to give immediate notice and the other children regressed. They had been there 8 months and it took months to settle the children and re-establish boundaries. The Ofsted Inspector then rang and was critical instead of supportive”.
  • Many found the grading system unhelpful. They felt that the process of ascribing grades to homes has led to commissioning decisions based upon one word. This has been highlighted by the pandemic where homes have remained on those grades for upwards of 18 months regardless of any improvements and have struggled to attract placements. Local authorities have largely ignored Ofsted’s call to read reports and ignore the grade especially in relation to Assurance visits and Monitoring visits carried out during the pandemic.  These visits were designed to ‘provide assurance’ to placing authorities and families that homes were offering acceptable levels of care. The lack of grading appeared to result in the reports being largely ignored by some commissioners.
  • One of the barriers to increasing sufficiency is that the cost and intricacies of setting up a home are largely prohibitive for many people and the registration process is not designed to help and support providers.
  • A conservative sum of between £500,000-£1,000,000 is estimated to be needed to open a home, and this is often excluding the cost of the premises. To become registered, homes must theoretically be fully staffed and have all polices, fixtures, fittings etc in place before an application is submitted. Ofsted can then take up to (and sometimes over) 16 weeks to process the application-with no guarantee of success at the end of it.
  • Many providers have spoken about lost applications, poor information sharing between the registration team, inspectors and providers and a lack of tolerance for application errors or omissions. As a result, many new providers secure consultants to help them through the process at significant additional cost.
  • However, the largest cost to any provider is staff. Prospective homes must have a staff team in place as part of the registration process. There is an expectation from Ofsted that some of this cohort will be experienced in the case of a new provider or new team. They therefore cost more and may have very little to do for their pay until the home is opened. Whilst larger providers may have a pool of staff to call on, new providers do not have this luxury. New homes must also have a manager in place. Many providers need to use agencies to attract them, and good candidates often cost between £30-£50,000. Again, larger providers often have the advantage of ‘home grown’ staff who can step up and will be gainfully employed until registration is through.
  • Following this, the home may attract placements if the provider is established and known to commissioners. However, new entrants will find the vagaries of the sector hard to negotiate, and it may be some time before any revenue comes in. This process does not make residential childcare an appealing prospect to new prospective providers.


  • Local authorities have ever decreasing budgets, but the number of children with care needs continues to increase. Commissioners attempt to address this partly through frameworks, aiming to control the market, set costs and meet their sufficiency requirements. However, framework terms are seen by some providers as unfavourable and the tendering process expensive to complete and as a result, many providers now fill their placements through ‘spot purchasing’.
  • One provider said that ‘frameworks are not worth the paper they’re written on’.  They felt that there was too much inconsistency of application of the terms. They gave an example that, when they had previously accepted a child on specific terms, they have been billed using the standard framework figures and the local authority subsequently refused to acknowledge the agreed terms. As the home had a primary commitment to the child, the service then ran at a loss.
  • The home’s grade can exclude some providers from commissioning frameworks and spot placements. Some providers talked about being excluded from any consideration as their home was graded as ‘Requires Improvement to Be Good’ or ‘Inadequate’. This has been compounded by the Covid pandemic as Ofsted have not graded homes since March 2019. Some of these homes are now coming up to 2 years without their grade being reassessed even though their original shortfalls may now be overcome. Some commissioners are using alternative unregulated accommodation that has no external oversight, or newly registered, unassessed homes, instead of doing their own due diligence with established providers.
  • Some providers refuse to work with specific local authorities due to a lack of trust or a bad experience with their case management. Some respondents said that they would rather leave the bed empty. “We wouldn’t work with……. They’re useless. We looked after a child where they gave inaccurate information, and it broke down another child’s placement. They lied about the child and tried to blame us about the breakdown of the placement”.
  • Decisions made by local authorities to move a child on financial grounds that the home feels will negatively affect the child’s welfare were raised by some respondents as a reason why they may stop working with an authority.
  • Some providers spoke about inaccurate referrals that do not identify the child’s most challenging behaviours, and accessing additional information can be difficult, especially when this is a first placement. These children are then ethically and practically very hard to move as other providers do not want to accept them, and Local authorities struggle to identify alternative placements (hence the inaccurate information originally provided). This was generally felt to be unsafe and unethical practice by our respondents.
  • Providers spoke about feeling they have a duty of care towards children who are in this position. However, this can be financially very damaging-especially if the Local Authorities refuse to recognise the situation and pay an appropriate rate for the unused beds and extra staff. One provider estimated that they lost over £250,000 as a result of this.

Overall, we found that there was no one reason for the sufficiency problem, but that unwitting decisions to meet one need often led to bigger issues further on. Government funding, internal competition for funding in local authority departments, procurement requirements and a media blame culture are all contributing to a broken care system for our children.

It would appear that all parties in the sector need to work more closely to address the issues that are ultimately harming our children and perhaps this mandate needs to come from government instead of leaving it to commissioners and providers.

Local authorities generally fail to measure historical levels of need or impact which is vital for effective sufficiency planning.  Some people in the sector are starting to explore options, but this is generally being led by larger providers, who are increasingly looking at such models as the Child and Adolescent Needs and Strengths model introduced into the UK by Dr Mark Kerr. Implementation of such a model nationally by both local authorities and providers would supply rich data enabling needs to be forecast and providers to make a business case for growing their business in a particular direction.

Indeed, until we start to think differently about the children we need to help and how to go about doing it, the current situation will continue and probably become much, much worse.

about the author

Elizabeth Cooper
DCEO at the ICHA