Research shows the cost of residential care for looked-after children has almost doubled within the last five years, but placements are still failing to meet children’s needs.
Today (12th September) the National Audit Office (NAO) published new research that provides a bleak insight into the state of children’s care. The report found the cost of a single place in a residential children’s care home in England has almost doubled in five years to an average of £318,000 a year.
The public spending watchdog said rising demand, limited placements and a market dominated by private providers have contributed to the huge price increase – findings show 84% of children’s home are now privately run.
However, experts found the substantial price hike does not represent value for money. The report highlights serious shortcomings in the Department of Education’s oversight of the care system – particularly in relation to kids being placed in homes that do not meet their needs.
In March 2024, two thirds of children in residential care were living outside their local authority, with nearly half placed more than 20 miles from home.
Additionally, frequent moves, placements in unregistered homes and instances of children being deprived of liberty without proper authorisation were found to be contributing to poor long-term outcomes, including high risks of unemployment and exclusion from education.
Against this backdrop, Gareth Davies, head of the NAO, said the care system is ‘not delivering value for money’ and called on the Department of Education to clarify its role, improve cross-government coordination and act quickly to fix a system that is failing vulnerable children.
In similar vein, Cllr Amanda Hopgood, chair of the Local Government Association’s Children, Young People and Families Committee, described the report’s findings as ‘astronomical’.
‘Our priority is ensuring that children get the very best care and support. However, with more children needing help with increasingly complex and challenging needs, a lack of appropriate homes and the challenges with commissioning those placements are leading to an escalation in costs,’ Hopgood said.
‘In the autumn budget, the government should ensure all councils receive sufficient funding to invest long-term into family help, child protection, and child in care and care leaver services.’
Dr Mark Kerr, chief executive of the Children’s Homes Association, added: ‘The NAO report confirms what we see daily: a system where demand is rising, spending is intensifying and children are not consistently getting the right placement. But missing from the government’s response is the single most important ingredient—people. Despite billions invested in the early years workforce, adult social care, and even fostering, there is still no comparable investment in children’s residential care staff.
‘This neglect means high turnover, agency reliance, and homes unable to take children with the most complex needs. That failure lands hardest on the most vulnerable children.’
The NAO’s report can be accessed in full here.
Photo by Vitolda Klein via UnSplash
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