Councils are spending extraordinary sums finding homes for children in their care, while shortages leave some social workers scrambling for somewhere safe to put them. The government admits the market is not working. Now a new North East Regional Care Cooperative could offer the Tees Valley a way out.
Lack of placements
Imagine being a social worker with three young boys in your care and nowhere for them to sleep.
That is the account given to North East Bylines by the mother of a social worker, who says her daughter struggled to find a suitable placement for three young boys and ultimately stayed with them in a hotel.
Across England, councils are struggling to find the right homes for some of the country’s most vulnerable children. The problem has become so serious that children have ended up in hotels, Airbnbs, holiday accommodation and other makeshift settings when suitable registered provision cannot be found. You can read more about this here.
Recent reporting by the Teesside Lead has also exposed millions of pounds being spent by Teesside councils on placements linked to unregistered settings. But those extraordinary bills are only one symptom of a much older problem; councils still carry responsibility for children in care while increasingly relying on a market they do not control.
It would be tempting to describe this as a shortage of money. It isn’t. England is spending billions on this. The question is what on earth are we actually buying with it?
The council has the duty. Someone else owns the bed
Local authorities have a legal responsibility for children in their care, but increasingly they do not control the homes in which those children live.
The shift towards private provision has been dramatic. In 1996, around 76% of children’s homes in England were run by local authorities and just 18% privately. A decade later, private providers had become the majority. By 2025, 84% of children’s homes were privately owned.
There was no single moment when England’s children’s homes were privatised. Instead, over three decades, councils gradually moved from providing most residential care to buying it from a market.
A slow decline
That left councils with the same responsibility to find children somewhere safe to live, but increasingly dependent on somebody else having the right place available. And when councils have to buy what they cannot provide themselves, the strength of that market is paramount. But unfortunately, this one wasn’t working particularly well.
The Competition and Markets Authority (CMA) investigated children’s social care in 2022. Among the children’s-home providers it examined, average operating profit margins were 22.6% between 2016 and 2020.
In a properly functioning market, the CMA reasoned, high profits should attract investment and competition, increasing supply and eventually pushing prices and profits down.
The unacceptable face of capitalism
That wasn’t happening. Instead, it found a shortage of appropriate placements and described the market as “dysfunctional”.
Three years later, the National Audit Office (NAO) found council spending on residential care for looked-after children had risen 96% between 2019/20 and 2023/24, reaching £3.1bn. But the number of children in residential care had risen by just 10%.
Over the same period, average spending on a children’s home placement rose in real terms from around £4,600 to £6,100 per child per week. The NAO identified shortages, particularly for children with complex needs, as a major factor driving costs as councils competed for places in a largely private market.
In other words, we haven’t run out of money. We have run short of the right places to spend it.
Middlesbrough has seen the bill
The economics become less abstract when we come back to Teesside. In January 2024, Middlesbrough council had 97 children in residential placements. Of these, 76 were externally placed because almost all of the council’s own provision was already being used.
At the time, Middlesbrough council calculated that its own residential homes cost an average £3,300 a week to operate, compared with £5,600 for an external residential placement. Those 76 external placements were forecast to cost £14.4mn in 2023/24 after health and education contributions.
The council consequently began increasing its own residential and supported accommodation, explicitly seeking to reduce reliance on external placements.
Eye-popping costs
The pressure has not disappeared. In January this year, councillors were told that 49 children were in externally registered children’s homes at an average £6,628 a week. Five children requiring specialist solo residential placements were costing an average £16,731 each, every week.
There are legitimate reasons why some placements are exceptionally expensive. Children may have extraordinarily complex needs requiring specialist staffing and support, and the cheapest bed is emphatically not necessarily the right bed.
But the numbers illustrate what happens when councils need something they cannot provide themselves. They have to buy it at a premium.
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The price of scarcity
Cross the boundary into Stockton and the same pressures appear. In September 2025, 71 children were in external residential provision. And 16 of those placements cost more than £8,000 a week, with the most expensive costing £16,000. Most of those 16 high-cost placements were unregulated, according to the council, and were often outside the area.
Stockton concluded that providing more residential care locally would support better outcomes for its children.
A child placed miles away does not leave their life behind because somebody found a vacancy. Their school, friends, siblings and family relationships may remain here.
Tough nut to crack
That does not mean every child should remain locally. Specialist expertise may not exist here and some children need to move for their own safety. Nor are more children’s homes necessarily the whole answer.
A regional review found that just over 30% of North East children in residential placements could potentially have been placed in foster care if sufficient foster placements had existed.
The shortage, in other words, is not simply beds. It is the right kind of home for the right child.
Somebody has finally noticed
Here is where this story becomes rather less hopeless. The government does actually know this isn’t working.
In May it published Delivering the children’s social care reset, with reforms intended to move councils away from “reactive and competitive commissioning” towards more collaborative planning.
Pooling resources
Regional Care Cooperatives (RCCs) are a central part of that. The name is thoroughly bureaucratic but the idea is rather more interesting.
Instead of councils separately trying to predict demand, find homes and negotiate with providers, neighbouring authorities pool their knowledge and resources. The government envisages RCCs acting collectively as both a “single customer and provider”.
And the North East is getting one. In July, the government confirmed the North East as one of five new RCC areas. The cooperative will bring councils together with health, youth justice and other partners to plan and commission care for looked-after children.
It costs how much?
The scale of the challenge is considerable. A regional review cited by Middlesbrough Council found the North East spent around £540mn on placements in 2023/24, including roughly £300mn on residential placements.
Redcar and Cleveland Borough Council has identified greater collective buying power, finding gaps in provision and developing the services the region actually needs among the potential benefits. Its anticipated timetable suggested the new arrangement could go live around April 2027. For now, though, this is a promise rather than a result.
From desperate customers to strategic providers
The opportunity is bigger than getting councils a better deal from private providers. The five Tees Valley councils, working with the rest of the North East, can improve forecasts of what kinds of homes children are likely to need and identify shortages before Friday afternoon arrives and a child desperately needs a bed.
Crucially, an RCC need not merely become a bigger customer with better bargaining power. Government policy envisages regions becoming providers too.
That creates the real possibility of rebuilding public capacity. Developing homes where shortages exist, expanding fostering, commissioning specialist provision strategically and using private or voluntary providers where they genuinely offer something needed, rather than simply because there is no alternative.
The right people
There are no guarantees. A new regional organisation could become another layer of bureaucracy. Children’s homes require skilled staff, good leadership and careful matching, while some private and charitable providers offer excellent specialist care. Public ownership alone guarantees neither quality nor value.
The test is not whether the North East can produce another strategy, partnership or impressive-sounding acronym. We have quite enough of those.
It is whether children get the right home, in the right place, when they need it. Whether social workers spend less time desperately searching for somewhere, anywhere, safe. And whether more of the extraordinary sums already being spent actually go into caring for children rather than paying the premium for a system that has run out of viable options.
Because if a council can find £16,000 for one week when everything has gone wrong, surely we can find the money to stop everything going wrong in the first place.
Home, sweet home
The North East Regional Care Cooperative is an opportunity to do something rather more sensible: work out what our children need, build more of it and stop waiting until a child needs a bed tonight.
After decades of increasingly complicated ways of finding children somewhere to live, perhaps success can be measured rather simply. When a child needs somewhere safe to call home, is there one?
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