Almost every council placing vulnerable children into illegal care homes

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A shortage of beds has led to almost every local authority in the country using care facilities that are not registered with Ofsted, the Guardian and the Bureau of Investigative Journalism found.

It is a criminal offence to operate a children’s home that is not registered with the regulator.

But the analysis of local authority payment records shows that more than 480 private companies have been paid £250m for 1,800 unlawful placements of children over the past two years.

The figures were obtained under freedom of information laws and also show more than £40m of public money has been paid to operators linked to care failures.

These include those involved in the care of a teenage girl harmed in a succession of illegal placements in hotels, Airbnbs and other properties.

Rachel de Souza, the children’s commissioner for England, said: “For too long, illegal children’s homes have been allowed to operate in the shadows, where children are treated as a business opportunity, and huge amounts of public money are spent on placements that are not properly registered or inspected.”

Ofsted said that agencies could be responsible for managing the home if their staff were on site day-to-day without council personnel present.

Local authorities may also be liable if they book or rent unregistered accommodation where a child is living. The watchdog insisted that it has the power to prosecute anyone running an unregistered home, whether they come from an agency or not.