The cost to councils of looking after children in care is rising by £1bn a year, according to new analysis by the Local Government Association.

The findings have renewed calls by councils for the government’s reforms to the market for children’s placements to “deliver real and substantial change”.

Councils spent £9.5bn on support for looked after children in 2025-26, compared to £6.6bn in 2022-23, according to latest government data – an annual average increase of roughly £1bn over the three years. Taking inflation into account, council spend has increased by almost 29.1% in this period.

The pressure on council budgets is also shown by their cumulative £3.2bn in-year overspend over this period, LGA said.

Natalie Oliver (Ref), 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.

“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.”

She added: “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.”

The LGA says the figures are largely down to high care costs. Previous research by the LGA found the number of children’s home placements costing £10,000 or more per week increased from 120 to 1,500 between 2018 and 2023.

Ahead of the Autumn Budget, the LGA is calling on the government to deliver long-term adequate funding for children’s social care that addresses increasing demand and cost pressures.

It also wants to see the introduction of a cross-government strategy for children, young people and families to ensure all partners are working towards a shared ambition.

The LGA research adds to analysis last month by LGC, which found at least 20 councils are predicting 2026-27 overspend in their latest financial reports, which children’s services cited as one of the largest and most unpredictable elements.

Southend-on-Sea City Council’s finance member Paul Collins (Lib Dem) sand the cost of these services was high because “you can’t reduce the number of people you’re dealing with”.

He said of care placements: “We do our best to try and get the best price, but the market is extremely much in favour of the provider.”

He argued that councils are being “held hostage to a degree” by private companies running children’s homes.