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Children’s social care is going through the most significant policy change in a generation. Here is what I am watching, with sources so you can check it yourself, alongside longer essays and broadcast commentary.
01The changing landscape
What I am watching.
Six developments shaping children’s residential care right now. Each one links to its source.
- 01The Children's Wellbeing and Schools Act 2026
A new law has given Ofsted the power to fine failing providers, and put a profit cap on the table.
The Children's Wellbeing and Schools Act 2026 received Royal Assent on 29 April 2026. The Department for Education published its implementation plan, Delivering the Children's Social Care Reset, on 21 May 2026. Between them they introduce regional cooperation arrangements for looked after children's accommodation, a new provider oversight scheme allowing Ofsted to demand improvement plans and issue fines, enhanced financial transparency for the largest providers, and a stated intention to cap excessive profits, subject to consultation. A new category of accommodation for children whose liberty is restricted for treatment and care is due to commence from autumn 2027.
Source: UK Parliament, Children's Wellbeing and Schools Act 2026
- 02Regional Care Cooperatives
Commissioning power is shifting to regional bodies, and smaller specialist providers may be squeezed out first.
From summer 2026 the Secretary of State gained powers to direct two or more local authorities into regional cooperation arrangements. Pathfinder Regional Care Cooperatives are already running in Greater Manchester and the South East, with more sought during 2026. The direction of travel is clear: commissioning power is moving from individual local authorities to mandated regional bodies. Smaller and specialist providers, the ones actually building solo and small cluster capacity, are widely reported to be at risk of being squeezed out by larger operators with the scale to win regional contracts. That is a concern I hear directly from providers, not a hypothetical one.
Source: DfE, Delivering the Children's Social Care Reset, 2026
- 03Local government reorganisation
Who commissions children's placements and how they do it are both being rebuilt at the same time.
Large parts of England are going through local government reorganisation, restructuring the very authorities that commission children's placements. Reorganising who commissions is happening at the same time as reorganising how commissioning works. Providers and investors need to understand both, not just one.
Source: House of Commons Library, Local government reorganisation 2026
- 04Illegal and unregistered placements
775 children in illegal homes on a single day, at a cost of £439 million a year. Some placements top £1 million each.
Unregistered does not mean cheap. On a single day in September 2024, 775 children were placed in illegal, unregistered homes, at an estimated annual cost to the taxpayer of more than £439 million. 33 of those placements cost more than £1 million each. These are children with nowhere else to go, in provision nobody has inspected, at a price nobody would choose if the right option existed.
Source: Children's Commissioner for England, 16 December 2024
- 05Market fragility
Private equity is moving in at 11% returns. The last care sector this happened to collapsed under the debt.
A growing share of the market is owned by highly leveraged, private equity backed groups. The Competition and Markets Authority found in 2022 that children's homes providers were earning average returns of around 11%, against a normal expected range of 3% to 6%, with some fostering agencies earning margins closer to 20%. Southern Cross, once the UK's largest care home operator, collapsed in 2011 under exactly this kind of structure, high rents owed to landlords following years of aggressive expansion, affecting around 31,000 residents in a different part of the care market. The parallel is not exact, but the underlying risk, debt funded growth chasing government fee income, is the same one worth watching here.
Source: Competition and Markets Authority, children's social care market study, March 2022
- 06Foster care capacity
65% of foster carers are over 50. Every one lost pushes another child toward residential care instead.
Foster care is the other side of this. Ofsted data has shown 65% of foster carers are aged over 50, and a quarter over 60, a profile that means natural retirement will keep shrinking capacity while new applications are already falling. Every foster placement that cannot be found or sustained is a child who may end up in residential care instead, often at the complex end where specialist provision is already scarce. It is part of why I am also developing new models to address the foster care shortage directly. More on that when it is ready to share.
Source: GOV.UK and Ofsted, Capacity in foster care stalling despite rising demand
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