The increase in children's services spending last year was entirely absorbed by the care system, official figures have shown.
English councils boosted expenditure on children's social care by £297m (2%) in real terms in 2024-25, when they spent £15.5bn on the service, according to Ministry of Housing, Communites and Local Government figures published last week.
However, this rise was more than consumed by expenditure on looked-after children, which increased by £322m (4%) in real-terms last year.
By implication, spending on other areas of children's social care - family support, children's centres, youth services, youth justice or safeguarding provision - was static or fell.
Children in care services absorbing increases in spend
The figures are part of a trend of looked-after children's services - predominantly the costs of placements - absorbing the bulk of increases in expenditure on children's social care. In 2023-24, councils spent £971m (7.1%) more in real-terms on children’s social care than the year before, with £731m (79%) of the increase accounted for by expenditure on looked-after children’s services, which rose by 10.5% between the two years.And authorities' budgetary plans for 2025-26 show a similar pattern, with increased spending on looked-after children accounting for almost three-quarters of the planned overall real-terms rise in children's social care expenditure (£732m out of £1bn).
The figures reflect both a historically large care population and upward pressures on the unit costs of placements, due to a shortage of provision, children's increasingly complex needs, a shift in provision from fostering to children's homes and alleged profiteering by large providers.
'Astronomical placement costs means less money for early help
In response to the latest data, the chair of the Local Government Association's children, young people and families committee, Amanda Hopgood, warned: "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.“The astronomical cost of care placements also means there is less money available for councils to spend on the earlier help children so desperately need.
The news illustrates the scale of the challenge facing the government in implementing its children's social care reforms, which seek to shift the system towards earlier intervention, to support children to stay with their families, and reduced spending on care placements.
Children's social care reform rollout
The key changes started being rolled out in April of this year, when the Department for Education (DfE) tasked councils with establishing multidisciplinary family help services, responsible for supporting families across the targeted early help, child in need and child protection tiers of intervention, to help enable children to remain at home where safe to do so.At the same time, councils are being expected to make greater use of family group decision making meetings, offering extended families the chance to come up with solutions to safeguarding concerns, such as kinship care arrangements, to prevent children going into care.
As well as seeking to reduce the number of children in care - which was 83,630 as of March 2024 - the reforms are intended to bear down on the costs of placements and shift provision from costlier children's homes to less expensive foster care. Specific measures include:
- Investing in more placement capacity: the government’s spending review provided £560m from 2026-29 in capital funding to refurbish and expand the children’s home estate and boost foster care provision, for example, by enabling carers to extend their homes to accommodate more children.
- Setting up regional commissioning co-operatives: the Children's Wellbeing and Schools Bill, currently going through Parliament, would empower the government to direct councils to make regional co-operation arrangements to carry out their functions in relation to accommodating looked-after children. Such regional care co-operatives, which are being tested in the South East and Greater Manchester, are designed to have greater clout than individual councils currently do to shape services across their areas and ensure sufficient high-quality placements for children in care.
- Increasing the transparency of placement costs: the bill would also enable the DfE to oversee the finances of placement providers who would be difficult to replace in the market. This is designed to increase the transparency of the costs providers charge councils for care, among other purposes.
- Boosting recruitment of foster carers: the government is spending £15m this year to complete the roll out of regional fostering recruitment hubs, designed to make the process of becoming a foster carer easier, with £25m committed from 2026-28 to recruit an additional 400 fostering households.
MacAlister's first act as minister
The reforms' implementation is now being overseen by their architect, Josh MacAlister, who led the 2021-22 Independent Review of Children's Social Care, the basis for many of the changes, and was appointed children's minister earlier this month.
His first visit after taking up the post was to one of the fostering recruitment hubs, Foster4, which covers Cheshire and Merseyside, and following the visit he said that the DfE would shortly be announcing more action on foster care recruitment.
"As a country, we need far more foster carers," he said, in a video posted on social media channels. "This is really urgent. It's a top priority for me. It's a top priority for the Department for Education, so we'll be announcing further plans in the near future to make sure we've got the foster carers, the foster homes, that children so desperately need."
MacAlister's care review called, in 2002, for the recruitment of 9,000 foster carers over three years. However, the number of mainstream foster care households - a group that excludes kinship foster carers - fell by 10% from 2021-24.
LGA urges children's services funding boost
For the LGA, Hopgood called for the government to use its forthcoming Budget - on 26 November - to "ensure all councils receive sufficient funding to invest long-term into family help, child protection, and child in care and care leaver services""It should also develop a cross-government strategy for children, young people and families to ensure all partners are working towards a shared ambition," she added.
