At a House of Commons public accounts committee session MPs heard from two directors of children's services on the increasing costs to find suitable places for children with complex problems who need specialist residential care.
Cath McEvoy-Carr, executive director of children's services at Northumberland County Council, said that although its children in care population had fallen it is facing mounting costs due to a lack of local supply of specialist support for children with complex needs.
This is forcing the council to look beyond its boundaries and enter into bidding wars with other local authorities in the search of suitable placements.
"The cost of our out-of-county placements has increased by 116 per cent in the last three years but our looked-after children population has gone down," she said.
"What we are finding is that the market and the availability of suitable places is extremely stretched and it is driving prices up as we are often fighting for the same placements with the same local authorities."
When asked by a member of the committee if there is now a bidding war between councils for specialist care placements, she replied: "Absolutely, yes."
Although Northumberland is involved in regional procurement with other councils, which can help bring prices down, "there are occasions that we have to go off the framework to provide a child with a specialist placement or specialist intervention", said McEvoy-Carr.
MPs also heard from Oxfordshire County Council's director of children's services Lucy Butler. She said that a scarcity of residential care places coupled with a rise in its looked-after children population, by 76 per cent over the last four years, had seen its children's care bill more than double during the last decade, from £46m to £95m.
"The children's social care market, i.e. residential care, is scarce and the costs are huge," said Butler.
"If I tell you that over Christmas we spent £21,000 on one child you can see some of the costs we are faced with. Children with very complex needs are really not having enough care in the market to meet their needs."
Committee member Gareth Snell, Labour MP for Stoke-on-Trent Central, said he is concerned that children in care are "being treated as a commodity" by councils and care providers.
"I do fear we are talking much more about the pounds, shillings and pence and not the children," he said.
"Are we getting to a point where providers start to see children as a way of making profit?"
McEvoy said: "I can see where you are coming from in terms of commodity but I hope we are never in the position where we see children and young people in that way, particularly very vulnerable children. But yes there are some real worries there are businesses out there who are."
She added: "Most of the private organisations we use are businesses. While individually they are looking to provide good quality care, and as local authorities we wouldn't want them to be put in places that didn't provide good quality, I think there is a real issue of prices being driven up because it is a market place. There's a lack of resources so that demand is going to increase the price."
The hearing took place to discuss the National Audit Committee's report Pressures on Children's Social Care, which was published last month. This criticised the government for failing to understand why demand for children's social care is increasing.