The cost for residential care for vulnerable children has nearly doubled in the last five years in England. Many children however are still not receiving appropriate care according to a report from the independent public spending watchdog.
Councils on average spend £318,400 on each child placed in residential care in the year ending in March 2024, according to the National Audit Office (NAO). But these, it added, do not represent value for money.
The report found that rising costs were largely due to a record number of children in care, an increase in the complexity of their needs, and a market driven by profit.
In 2023-24, councils spent £3.1 billion on residential placements. The report describes this as “dysfunctional.” Councils, it said, were struggling to find enough appropriate placements, adding that this has allowed many private providers to cherry-pick the children they take based on the support they need and the profit this would allow.
The report looked at past research which revealed that 15 of the largest providers of children’s homes were making an average of over 22% in profits.
Emma Wilson, the report’s author, cited several factors as contributing to the rising costs. With 84% of children’s homes being run for profit however, it’s “really important to get right that balance between supply of available care home places and demand,” she said. She is calling on the Department for Education to do more to oversee it, saying that it is failing children in its care.
“The NAO report concludes that the system of residential care for looked after children is not delivering value for money. On the one hand, costs have doubled to over three billion in the last five years, whilst many children are not in appropriate settings,” she told BBC News.
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