Private providers of child social care in England will be pushed out of the system if they are found to be profiteering, the children’s minister has said.

Josh MacAlister, who is in charge of overhauling the care system for children, also called for a fostering equivalent of the Homes for Ukraine scheme to provide homes for tens of thousands of children.

Announcing a major push to recruit 10,000 new foster carers as part of a bid to rebalance child social care away from private providers, MacAlister said the state was “failing to provide the lifelong, loving relationships that these kids need”.

MacAlister led an independent review of child social care under the last Tory government before becoming an MP and then minister. He said his message to private providers was: “If you want to be part of this system in the future, don’t price-gouge; don’t profiteer.”

He added: “There might be some [private] providers in that mix who are on board and those that aren’t will be pushed out of the system.”

Ministers are carrying out an urgent review of the financial security of private providers of child social care, and are homing in on profit-gouging in the sector – warning they will implement a profit cap if profiteering is identified at private providers.

An oversight mechanism that will be in place within months would reduce the risk of a repeat of the Southern Cross scandal, which saw the collapse of a major private equity backed UK care home provider in 2011 after a rapid and unsustainable expansion, MacAlister said.

Landmark legislation to eliminate private profit from children’s social care services in Wales come into force in April last year, while in Scotland the government is trying to limit for-profit operators. But in England, more than 80% of child residential homes are for profit. In 2022, the Competition and Markets Authority found that children’s home owners in England, Scotland and Wales were making excessive profits while carrying too much debt – exposing children and councils to unacceptable risks.

Taxpayer spending on residential care has doubled in England since 2020, with residential care costs reaching £3.1 billion in 2023-24, meaning each children’s home place costs more than £300,000 a year.

Roxy Wilson, a contestant on this year’s BBC programme The Traitors, and who has experienced foster care, said: “People think they will not get support, but they will. Fostering can fundamentally change a child’s path, and you don’t have to be perfect or rich – you just need to have the room in your heart.”

Wilson said she had seen first-hand the difference a stable home could make after experiencing foster care for the early part of her life before she was adopted by Judy Wilson, who also featured on the show.

A new national system will seek to halt an exodus of foster carers, which has seen the number of people approved for foster care fall by almost 12% over the past decade, with the drop sharper since the Covid pandemic.

The government’s £88m fostering plan will also include £25m to help potential fosterers update or extend their homes to accommodate more children, and will see a rollout of pilots that could see potential fosterers help out part-time. New regional fostering hubs will give stronger guidance about who is suitable, challenging “outdated” ideas that they need to be married, homeowners or not work full-time, and help local areas collaborate on recruitment and giving support to local parents.

MacAlister said the recruitment push was a “call to arms” and compared the drive to the Homes for Ukraine scheme, which saw more than 100,000 people offering a place in their homes to Ukrainian refugees in its first 24 hours. “The public is ready, they want to play their role in this. We just need to change the system so that they can step forward and do their bit,” MacAlister said.

Sarah Thomas, the chief executive of The Fostering Network, said the government’s pledge to find foster families for 10,000 more children by 2029 was a welcome step forward, but it needed to focus more on retaining foster carers and increasing pay as some were caring at poverty levels.

“Retaining foster carers is just as crucial as recruiting them, which is why the lack of equal emphasis on retention and financial support is so disappointing,” she said.