Purpose

CYPE is proposing a package of
financial enhancements designed to strengthen the recruitment,
retention, and stability of in-house fostering homes. The proposal
is grounded in a cost-benefit rationale: investing now to support
the recruitment and retention of foster carers, to reduce long-term
reliance on costly external home types and improve outcomes for
children. This report summarises the current challenges, the
proposed changes, and the expected financial and strategic
returns.
 
This proposal is directly in
line with Outcome 3 of the Mayor’s Business Plan: Children
and young people in Croydon have the chance to thrive, learn and
fulfil their potential. With the proposed package of enhancements,
we aim to strengthen the recruitment, retention and support of our
in-house foster carers, leading to a number of benefits outlined in
this paper that support the priority “Ensure children and
young people have opportunities to learn, develop and fulfil their
potential.”
 
 
Draft
recommendations:
 
For the reasons set out in the
report and its appendices, the Executive Mayor is
recommended:
 
1.1        
To agree the proposed package of financial
enhancements aimed at strengthening the recruitment, retention and
support of our in-house foster carers. In recognition of the
critical role foster carers play in providing stable, nurturing
homes for children in care, the proposal includes:
 

Foster carer skills
fee uplift
Addition of a
specialist level for foster carers looking after children with
complex needs
Reimbursement of
Council Tax
Fostering hub lead
weekly fee
Start-up grant
uplift
Investment in
emergency foster carers

 

Content

For the reasons set out in the
report and its appendices, the Executive Mayor
RESOLVED:
 
To agree the proposed package
of financial enhancements aimed at strengthening the recruitment,
retention and support of our in-house foster carers. In recognition
of the critical role foster carers play in providing stable,
nurturing homes for children in care, the proposal
includes:
 
·        
Foster carer skills fee uplift
·        
Addition of a specialist level for foster carers
looking after children with complex needs
·        
Reimbursement of Council Tax, (for qualifying
periods when carers have children living with them) 
·        
Fostering hub lead weekly fee
·        
Start-up grant uplift
·        
Investment in emergency foster carers (for
qualifying periods when carers have children living with
them) 
 

Reasons for the decision

These measures are part of a
broader strategy to improve home stability, reduce reliance on
high-cost external placements, and support the recruitment and
retention of skilled and resilient foster carers. In March 2025,
there were a total of 546 children placed in care. 222 (41%) of
these children were placed in in-house Foster Care, 188 (34%) in
Independent Fostering Agencies and 136 (25%) in Residential Care.
When effective, this investment in Croydon fostering service will
reduce the future financial burden of more expensive independent
fostering associations (IFAs) and, ultimately, residential
homes.
 
Croydon currently pays IFAs
between £634 and £2,284 per week per home, with an
average of £1,161, which is significantly higher than the
cost of in-house payments. Investing in a more competitive in-house
fee structure is not only a fair recognition of carers'
contributions, but also, over time, a cost-saving strategy.
Following successful implementation of recruitment and step-downs
as outlined in section 8 of this report, it is expected that the
savings be equal to the investment by Q3,and reach a saving of £0.9 million net by
Q4.
 
The proposed investment
represents an additional £1.66 million to the current funding
and is projected to generate a financial saving of £2.57
million, delivering a net gain of £0.90 million. Savings will
be made through a mixture of stepping children down from costly
residential placements into ‘specialist foster care’
placements and preventing placement break downs that lead to
increased costs in foster care or the need for residential
care.
 
While the financial case for
this investment is strong and outlined within this paper and its
appendices, the broader value lies in its potential to improve the
quality, stability, and experience of care for both children and
foster carers. The key benefits that the investment in our in-house
foster carers will be evident across:
 
Children:
·        
Increased home stability, with fewer breakdowns
allowing children to develop trusting relationships, improving
emotional well-being, education and life chances
·        
Specialist foster carers enable better matching of
children to carers who are trained and capable
·        
Skilled carers provide more consistent, therapeutic
and supportive environments, leading to enhanced emotional
wellbeing, educational progress, and long-term outcomes.
 
Foster Carers:
·        
Higher fees and specialist levels attract new carers
and incentivise existing ones to remain with Croydon, looking after
Croydon children. 
·        
Recognising foster carers as skilled professionals
improving morale and identity, reducing turnover and the risk of
our carers joining IFA’s
·        
Greater support infrastructure (e.g. hub model,
council tax relief)
·        
Skilled and experienced carers are more likely to
remain in the system if they feel valued and fairly compensated
·        
Enhanced training and support to increase
carers’ capacity to manage challenging situations
 
Council:
·        
By supporting foster carers to manage complex cases,
it can reduce the reliance on higher cost residential and IFA
homes
·        
Better care outcomes often mean reduced future costs
in mental health, justice, education and welfare system, thus
long-term cost avoidance and improved budget
predictability
·        
Strengthened in-house sufficiency and home type
resilience
·        
Alignment with wider transformation and outcomes
agenda
·        
Reduced number of placement breakdowns and SGO
arrangement breakdown, where each breakdown incurs costs for
emergency care, re-assessments and sometimes residential
placements.
·        
Costs associated with recruiting and training a
foster carer for them to leave and then having to replace
them.
 
Current central government
thinking is moving towards regional care arrangements.  While this may benefit the sector, it will become
ever more important that LB Croydon is able to lead its own
response.

Alternative options considered

Option 1 – Do nothing.
 
No change to the existing
foster carer skills fees.
 
Over the past three years, an
average of 34 foster carers have left annually, leading to a net
loss of around 19 carers. Given the ongoing attrition, this trend
will continue unless we exceed our current recruitment target of 15
new carers. Feedback from foster carers indicates that a key
contributing factor to this trend is the importance of financial,
system and structural support offered. To reverse this decline, we
must take a new, more strategic approach to recruitment. This
includes not only attracting new carers but also maximising the
skills and expertise that already exists within the Croydon
network.    Strengthening
efforts to retain our existing carers. The ‘Do Nothing’
option would not contribute to reversing the declining
trend.
 
Option 2 – Uplift Skills Fees closer to statistical and
neighbouring Local Authorities.
 
To maintain competitiveness
within the region, this option positions Croydon in the top third
of local authorities, ensuring we remain attractive to foster
carers. This option draws on benchmarking data to propose fees that
are competitive enough to support recruitment and retention without
placing Croydon at a disproportionate financial risk.
 
Details of Option 2 and the
financials can be found in Appendix 1 and Appendix 2.
 
Choosing this option would not
lead to the potential financial benefits that the recommended
option brings.