Residential care for looked-after children is costing councils more than ever, but many youngsters are being placed in settings that fail to meet their needs, the National Audit Office (NAO) has warned.
According to the latest report from the national auditor, spending on residential care nearly doubled in five years, reaching £3.1bn in 2023-24.
The report found councils are forced to compete for limited spaces in a market dominated by private providers, with almost half of children placed more than 20 miles from home.
Profit margins for the largest providers have averaged 23%, raising concerns about value for money.
The NAO said the Department for Education (DfE) lacked access to key provider data on costs and profits, limiting its ability to tackle excessive charges or plan effectively. It recommended stronger oversight, cross-government coordination and clearer accountability to create a fairer, more resilient system.
A DfE spokesperson said: ‘Vulnerable children across the country have long been let down by years of drift and neglect in children's social care, which this report lays bare. But, despite this inheritance, this Government is gripping the issue and taking swift action to fix the broken care system.'
