Numbers of children in care have reached a 20-year high, with the Coalition making ‘no progress’ on improving the system – auditors have warned.

Council spending on support for children in foster and residential care rose by 3% to £2.5bn in 2012/13, yet the Department for Education has a ‘lack of understanding’ about what is contributing towards these costs – according to the National Audit Office (NAO).

A rapid rise in the number of children being taken into care has been attributed both to the death of Baby P in 2007 and recent child sexual exploitation cases. England’s local authorities were looking after 68,110 children at the end of March 2013, the highest figure for two decades.

Town halls on average spent between£131,000 and £135,000 on residential care for a child and £29,000 and £33,000 on foster care in 2012/13. However auditors said the Department for Education was not aware of the reasons behind such variations.

In a damning analysis, the NAO said ‘no improvement’ had been made on getting looked after children into the right placement first time and close to home since 2009 despite Government objectives.

Amyas Morse, head of the NAO, said too many children were not getting the right care placements the first time, which could lead to ‘significant long-term detriment to the children themselves as well as cost to society’.

‘No progress has been made in the last four years. If the department is to break this pattern, then it needs to use its new Innovation Programme to understand what works, especially in terms of early intervention.’

Cllr David Simmonds, chairman of the Local Government Association’s children and young people board, said: ‘Councils are determined to provide the best possible care for children and young people. Despite 40 per cent cuts to council funding during the course of this Parliament, this report rightly recognises that many councils have so far managed to protect and, in some cases, increase spending on children’s social care.’

Children and families minister, Edward Timpson, said the report was ‘fundamentally flawed’ and ignored ‘the very real progress’ made by the Government.