The care system is “catastrophic” for the prospects of an abused or neglected child and must be overhauled, MPs say today.

The quality of residential and foster care is governed by luck to an unacceptable degree, says the crossparty Children, Schools and Families Select Committee. The MPs accuse the Government of failing in its duty as a corporate parent by not raising standards of care across the country despite a series of reforms.

The MPs call for a new national framework of fees and allowances for foster parents, who look after about two thirds of the 60,000 children in the care system, in order to attract and retain better families.

Foster parents currently face a postcode lottery in allowances, with some getting as little as £70 a week to pay for all a child’s needs and no fees, even though many give up their jobs. Foster parents should be paid all year round, and not just when they have a child living in their home, the MPs say.

Ministers should change the law and demand that the health service and criminal justice system in particular give children in care special consideration, in the same way they get preferential treatment in choice of schools.

The highly critical report also condemns local authorities for encouraging children to leave their foster homes when they are 16. That is often the point when vulnerable young people go off the rails, left alone in a bedsit or flat and given little support with managing their finances or looking after themselves.

The Government has recently said that no child should leave care before the age of 18, but the MPs said local authorities were dragging their heels because of the costs, and that in any case 21 should become the normal age to leave care.

The report echoes concerns voiced by Andrew Flanagan, new chief executive of the NSPCC, who told The Times this month that he feared children were being left in danger at home with their parents because the care system was such a poor alternative.

The outcomes for children in foster and residential care are very poor. Three quarters of those leaving care have no qualifications and within two years half become unemployed and one in six homeless. Half of those in jail aged 25 or under have been in care, as have a third of the whole prison population.

The committee is concerned that the care system’s poor reputation may contribute to reluctance to take children into care when necessary.

The MPs also urge ministers not to neglect residential care as an alternative to foster care, pointing out that care homes are used far more widely elsewhere in the European Union and to good effect.

The report criticises the low level of qualifications of staff in care homes and says they should all be trained to NVQ Level 3 without delay. In other parts of the EU, professionals in care homes are usually graduates.

The Government has implemented several programmes of reform of the care system since coming to power, but critics say they do not amount to the step change required.

Experts say that, with the thresholds for taking children into care now higher than ever, their problems are often far greater when they are removed from home and many require expert help. Local authorities say that they spend about £40,000 a year on each child in care, but much of that is spent on social workers monitoring the placement, not on the staff or foster parent doing the caring.

The care system has come into sharper focus since the death of Baby P pushed the issue of child protection to the top of the political agenda.

Barry Sheerman, Labour MP for Huddersfield and chairman of the committee, said that care must become a positive experience for the child.

“It is imperative that the Government, through its Care Matters reform programme, tackles the perception that entering the care system is catastrophic for a child’s future prospects,” he said. “It must be seen as a positive experience, but this will only happen if the state can better replicate the warm, secure care of good parents for every child in the system.”

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