The Commission for Social Care Inspection said the cost of services for looked-after children in England increased by an average of 10 per cent in the past year. Even allowing for inflation, the real-terms increase was five per cent.
This compares to a real-terms increase of 15 per cent between 2001/02 and 2002/03.
And on this aspect of performance, only a quarter of councils were ranked in the top band by the commission.
David Hawker, director of children's services in Brighton and co-chair of the Association of Directors of Education and Children's Services, said: "A lot of people are struggling with the underfunding of services."
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