A report by the Nationwide Association of Fostering Providers (NAFP) found evidence that some councils are forcing foster carers to apply for special guardianship orders (SGOs), a more permanent form of placement that costs less money.
There was also evidence that local authorities were pressuring agency foster carers to move in-house so they are paid directly by the local authority.
A National Audit Office report puts the cost of councils’ own foster care provision at between £15,000 and £57,000 a year, compared with between £18,000 and £73,000 for other providers’ foster care.
The report was put together based on the findings of a survey with 19 foster parents.
In some cases agency foster carers reported that social workers had told looked-after children living with them that their current care arrangements were too expensive.
“It is evident from this survey that there is a small but significant number of cases, spread over a wide area, where children have had a stable and beneficial placement threatened for purely financial reasons,” the report states.
“It is likely that the cases that we have identified are the tip of a larger iceberg.
“There may have been a reluctance about bringing forward cases, for fear of damaging relationships with local authorities, and possible commercial detriment.
Carers also reported being told that if they didn’t move in-house or switch to a special guardianship arrangement the child would be moved.
There were also claims that adoption plans were pursued for children even when they were settled in a long-term foster placement.
Harvey Gallagher, NAFP chief executive, said: “This is similar to what we are hearing with our meetings with independent providers throughout the year.
“It is a small number of councils doing this, but they are spread out nationwide.
“In some cases a special guardianship arrangement may be in the best interests of the child, but the fact remains that a foster carer will get less support from that and they are easier and cheaper for a council.”
He added that in some cases councils believe moving a carer from the independent agency sector in-house would cut costs.
“But we have done a lot of work around costing and the data shows that the cost situation is not clear-cut,” said Gallagher.
Gallagher said calculations by councils on costs do not take into account additional costs around support, training and administration.
The NAFP report also found that independent reviewing officers (IROs) too often failed to challenge councils around their placement decisions.
The organisation is calling on the Department for Education to set up a system of monitoring cases where concerns are raised that placement decisions may harm a child’s welfare.
According to latest government figures, the use of SGOs, an order made by a court under the Adoption and Children Act 2002 that gives legal guardian status for non-parents, has rocketed in recent years.
Between April 2013 and March 2014 a total of 3,330 SGOs were issued, compared with just 1,290 in 2010.