Councils call for long-term funding as costs of supporting children in care rise by £1 billion a year

In 2025/26, councils spent £9.5 billion on support for looked-after children, compared to £6.6 billion in 2022/23 - an annual average increase of roughly £1 billion over the three years from 2022/23.

Adjusting for inflation, council spending has increased by almost a third (29.1%) in this period, the LGA observed.

The Association added: “The pressure on council budgets is also made clear by the continued presence of in-year overspends – a cumulative £3.2 billion overspend over this period – as councils have been hit with escalating in-year costs.”

The LGA largely attributed the figures to “astronomical” care costs, adding that its previous research found that the number of children’s home placements costing £10,000 or more per week increased from 120 to 1,500 between 2018 and 2023.

It warned: “High care costs are driven by the increasing complexity of children’s needs and the lack of appropriate homes for these children, and the challenges of commissioning placements.”

Ahead of the Autumn Budget, the LGA called on Government to:

• Deliver long-term adequate funding for children’s social care that addresses increasing demand and cost pressures;
• Develop a cross-government strategy for children, young people and families to ensure all partners are working towards a shared ambition.

Cllr Natalie Oliver, Chair of the LGA’s Children, Young People and Families Committee, said: “Every child deserves the support they need to thrive and flourish in life.

“However, these figures highlight the stark financial pressures on councils to provide this vital support."

Cllr Oliver added: “It is crucial that the Government’s current reforms to the market for children’s placements deliver real and sustainable change, and that it adequately funds children’s services in the Autumn Budget.

“We also need to see genuine investment in early intervention and prevention, including health services, as this can make a huge difference and prevent children and families from reaching crisis later on.” 

A Department for Education spokesperson said: “This government is grasping the nettle where others have failed to act, reforming the children’s homes market so it works for vulnerable children and delivers value for money for the taxpayer, tackling excessive profit-making and putting control back in the hands of councils.

“Alongside this, we are investing £2.4 billion in effective early help and intervention through our Families First Partnership programme and funding a £500 million expansion of children’s homes delivering an increase in care placements in the right places to meet children’s needs.”

Lottie Winson