Hi there - resending March’s issue for the new joiners - welcome!

The gold rush, the 2am test, and what the data actually says

Applications to register new children's homes nearly doubled last year. Experienced providers can't fill beds. Both of these things are true at the same time, and nobody in the sector is connecting them.

I sit inside this data every day. I build referral management technology for children's care providers. That means we become aware of the patterns, the needs profiles, the placement requests that social workers write when they are running out of options.

Over the last few months, we've taken a small sample (702) of those referrals to perform analysis on. The patterns are not what most people in this sector expect.

But first, let me tell you what the gold rush actually looks like from inside the system.

In 2012, there were just under 2,000 children's homes in England. By September 2025, there were 4,366. Applications surged 26% in 2024. By 2025, Ofsted reported receiving "nearly double" the year before. Dr Mark Kerr, CEO of the Children's Homes Association, asked it bluntly: "What do children's homes and Bitcoin have in common? Both attracted a kind of gold rush."

He's not wrong. Bal Dhanoa MBE, CEO of Progress Care Group, identified what's driving it: "The sector appears to be attractive to so many commercial landlords who are looking for C2 approvals on their properties and opening homes. Most of these landlords lack skills or experience in the sector."

Meanwhile, Jacqui Graham of Grahams Consultants is tracking providers who can't achieve the occupancy levels they built their business plans around. One provider reported being ten months into planning with a council, with "potentially another six months with Ofsted" ahead. Mark Griffiths was bleaker: "This is perhaps the second or third time around. Lessons are never learnt."

More homes should mean more beds. More beds should mean fewer children in illegal placements. That's not what's happening.

Here's the part people aren’t saying clearly.

The market is not short of beds. There are 15,328 registered beds for fewer than 9,000 children in residential care. Nationally, that’s more than 1.5 registered beds for every child. The problem is that supply is concentrated where demand is weakest. The North West holds 26% of all homes but generates only 18% of residential demand. New registrations keep piling in there anyway.

The shortage is not a capacity problem. It is a matching problem.

The children arriving at providers' doors are not the children most new homes are configured for. 63% of referrals in our dataset present with four or more simultaneous risk factors. 77% have prior placement breakdowns. 34% involve criminal exploitation. 36% involve suicide risk. These are not children who can be served by a property investor who got C2 planning approval and hired a manager last month.

Ofsted's registration backlog makes this worse. The inspectorate created the bottleneck (6-18 months to process), then the new ILACS framework penalises councils for the shortage that bottleneck helped create. The CHA has called this out publicly. Councils use unregistered placements because there aren't enough registered beds in the right places, for the right children, at the right time. The new framework tells them to stop. Nobody has told them where to send the children instead.

The system is producing more of what it doesn't need while running out of what it does.

The most discussed post among residential care practitioners this month didn't come from a minister or an inspector. It came from a Registered Manager.

"Most children's homes today proudly call themselves trauma-informed. Teams can recite ACEs, attachment theory, and even polyvagal science. But in the middle of a 2am crisis? When a young person is raging, sobbing, or shutting down, and the whole house is holding its breath? That theory often vanishes."

It's called the knowing-doing gap. The space between understanding what trauma does and being able to respond differently when it's actually happening.

Read that alongside the gold rush. If experienced homes with trained teams still struggle at 2am, what happens in the homes opened by commercial landlords with no sector experience? If a Registered Manager who has done the training, read the research, and built the team still finds that "stress biology takes over," what does that mean for a home where the RM was hired last month and the children present with four simultaneous risk factors?

Tim Alonso-Clare offered the practitioner view: "I feel so sorry for some of the poor RMs out there who find themselves working for providers who are clearly operating for the wrong reasons."

A post that generated significant discussion among RMs and RIs asked whether managers who resign with immediate effect to avoid inspection should be barred from working with children. "We see it often, more so with new children's homes that are extremely vulnerable with new staff, complex children, and causing mayhem."

More homes is not the same as better care. The sector knows this. It's time to say it out loud.

I'm not going to tell you to lobby your MP or wait for the consultation response. Here is what I'd do right now.

If you're a provider or RI: Know your data. Not your occupancy rate. Your clinical profile. What does your referral intake actually look like? 93% of children's homes describe their population using the term "complex needs." An inspector reads that and learns nothing. Meanwhile, 34% of referrals mention criminal exploitation, but only 2% of Statements of Purpose do. If your SoP doesn't describe the population you actually serve, that is a leadership finding waiting to happen under the new framework. Specificity is not a risk. It is protection.

If you're a commissioner or DCS: Map what you're actually placing, not just how many. Your sufficiency strategy is built from SSDA903 returns and provider self-assessments. Those tell you volumes and placement types. They don't tell you that 34% of your referrals involve criminal exploitation, or that children stepping down from secure arrive with 60% CCE risk and 51% weapons flags. If you're commissioning "complex needs" beds, you're commissioning a category so broad it describes 93% of the market. Commission for the specific clinical profiles your children actually present with.

We're going to be publishing LA-level supply-demand analysis in the coming months along with some FOI requests…(stay tuned!).

If you're thinking about opening a home: The worst thing you can do right now is pick a location because the property is cheap and register without understanding local demand. The areas with the strongest supply-demand gaps are not where most new entrants are targeting. The North West is saturated. Inner London, Bristol, and parts of the South West have genuine gaps and limited existing provisions. But nobody will tell you that unless you look at the data.

We’re actively thinking about these points, over the coming months, subscribers will get first access to three pieces of analysis we're going to be publishing:

If you're making decisions about where to open, what to register for, or how to focus your next home’s Statement of Purpose, make sure you're subscribed.

The children's minister is moving. Fast.

Josh MacAlister MP, Minister for Children and Families, has announced five major policy moves in a single month. The question is not whether reform is coming. It is whether the sector can absorb this pace.

1. Sibling contact becomes law. The Children's Wellbeing and Schools Bill now requires all local authorities to promote contact between children in care and their siblings, including half and step siblings. Passed the Lords on 25 March. One in three children are separated from siblings when they first enter care. Cathy Ashley OBE, Chief Executive of Family Rights Group, called it "a moment to celebrate." Tim Alonso-Clare, provider director and care-experienced himself, put it simply: "My experiences of the care system would have been completely different without my brother."

2. £88 million for fostering. A national Fostering Action Plan targeting 10,000 additional foster care places. Fewer people are coming forward. The plan acknowledges this directly. Whether acknowledging translates to fixing is the bit providers should be watching.

3. Adoption and Special Guardianship Support Fund up 10%. Extended two years, boosted to £55 million. If you deliver post-adoption therapeutic services, this is money on the table. Act on it.

4. Ofsted rewrites how it judges councils. This is the one that matters. The single "overall effectiveness" rating for children's services is gone. From April, four standalone judgements replace it: help and protection, children in care, care leavers, and impact of leaders. A council can now be Outstanding on care leavers and Requires Improvement on help and protection at the same time. No more hiding a weak area behind a headline.

Critically, inspectors will now actively challenge the use of unlawful unregistered provision. Mark Griffiths, RI and former Registered Manager, flagged the tension immediately: "Councils just got told to stop using unregistered homes. Where do you think those children are going?"

He's right. And nobody in the policy conversation has answered that.

5. Children's Protection Authority consultation launched. MacAlister opened the consultation at London Borough of Redbridge. This is the proposed body that would take over elements of Ofsted's children's social care inspection function. If you work in regulated care, don't let this one pass you by.

Requires Improvement is a monthly insider briefing for people who run, regulate, commission and reform children's social care in England.

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Marcus (linkedin)