How are local authority foster rates calculated?

Local authority foster rates are usually calculated from a standard allowance for the everyday cost of caring for a child, with separate adjustments where the placement involves additional responsibilities or specialist support. Each local authority sets its own payment structure, so the final rate depends on its fostering policy, the child’s circumstances and the type of approval held by the foster carer.

The main elements used in the calculation are:

• Basic maintenance costs: This amount is intended to contribute towards ordinary household expenses, including food, clothing, toiletries, personal items and a share of household bills.
• Age-related needs: Older children may have different costs from younger children. For example, their food, clothing, travel, social activities and personal spending needs may be higher. Some authorities therefore use different allowance bands for different age groups.
• Day-to-day activities: Allowances may take account of school-related costs, hobbies, clubs, outings, pocket money, birthdays and seasonal expenses. The exact treatment varies between payment schedules.
• Transport and contact: A placement may involve travel to school, appointments, family contact or activities. Some of these costs are included in the standard allowance, while others may be reimbursed separately under the local authority’s expenses policy.
• Equipment and one-off items: Items such as bedroom equipment, safety equipment, clothing or specialist resources may be dealt with through additional payments rather than the regular weekly allowance.

Local authorities commonly begin with a cost-of-care model or an age-banded allowance. This is then compared with the national minimum fostering allowance that applies in England. The authority must follow the relevant legal and regulatory framework, but its own published rates can be higher than the minimum and may include additional elements for particular placements.

It is important to distinguish the child’s allowance from the foster carer’s fee. The allowance is intended to meet the costs of caring for the child. A fee, sometimes called a skills payment, is payment for the carer’s time, experience and responsibilities. It may depend on the carer’s training, assessment, approval category or ability to undertake more demanding placements. Some local authorities combine these elements in one total payment, while others show them separately on their rate schedule.

The placement itself can affect the amount paid. When setting or applying rates, a fostering service may consider:

• whether the placement is short-term, long-term, emergency or respite care;
• whether one or more children are placed together;
• whether the child has additional health, emotional, behavioural or educational needs;
• whether the child requires enhanced supervision, appointments or specialist routines;
• whether the placement is part of a specialist or therapeutic fostering scheme; and
• whether the carer has undertaken additional training or has specialist approval.

These factors do not always change the basic maintenance allowance itself. In many payment systems, the standard allowance remains linked mainly to the child’s age, while a separate enhancement or fee recognises the extra work involved. The local authority’s policy should explain which elements are automatic, which require approval and which are considered on an individual basis.

The calculation process generally follows several stages:

• The authority identifies the ordinary costs associated with caring for children in its area.
• Those costs are grouped into allowance bands, often according to the child’s age.
• The authority decides which additional payments apply to placement types, specialist needs and carer skills.
• The proposed rates are approved through the authority’s governance and budget-setting process.
• The fostering service publishes or provides a payment schedule explaining the rates and the conditions attached to them.

Local costs can also influence the calculation. Household expenses, travel requirements and the availability of suitable foster homes differ between areas. This is one reason why two neighbouring local authorities may use different totals or separate their payments in different ways. A payment schedule may also distinguish between the amount paid for a child and reimbursements for agreed expenses.

Rates are normally reviewed through the authority’s financial and fostering policy processes. A review may consider changes in the cost of living, national minimum rates, placement demand, local budgets and feedback from foster carers. A change to the published rate does not necessarily mean that every placement receives the same adjustment, particularly where enhanced payments are linked to specific needs or approval categories.

Before applying, ask the relevant fostering service for its current payment policy and request a written explanation of:

• the basic allowance for each age band;
• whether the allowance and carer fee are shown separately;
• which placement types attract enhanced payments;
• how travel, contact, activities and equipment are handled;
• what evidence or approval is needed for additional payments; and
• how and when rates are reviewed.

Become A Foster Family can explain how local authority payment structures work for people considering fostering across the West Midlands, including Birmingham, Worcestershire, Staffordshire, Dudley, Sandwell, Herefordshire, Telford, Wolverhampton, Shropshire, Walsall, Warwickshire, Stoke, Solihull, Coventry and Gloucestershire. Because the final calculation is set by the relevant local authority, the published policy and rate schedule should always be checked for the most accurate details.