Actually I think you might be overreacting but since I know none of the kids concerned I really can't pass a meaningful judgement on it.
Firstly it most certainly is NOT illegal.
You will quite often find that social Services will place older kids 13, 14, 15 in their own flats, depending upon their level of maturity.
The children being babysat are not young children and may be quite reasponsible themselves and sensible.
My sons when they were 13 upwards often babysat for us as they were very responsible and mature and I had utter faith in their abilities.
The crux is the level of maturity of the kids ( all of them), the backup the lad has if things went really wrong,how far away the mother is and if their are any known complications ( like one of the kids being epileptic maybe etc).
If their mother feels that it is perfectly safe knowing her own children then perhaps you need to consider she may indeed know best,there are adults available in a crisis and she's only 2 hours away herself. However if you are convinced that the children will be in serious jeopardy then talk to her and express your concerns again, but she make take it that you are casting doubts on her parenting abilities and that will not go down well.
Personally I'd allow her to parent her children a she sees fit as she has clearly made arrangements and thought about backup assistance should anything go wrong.