Ministers have spent the past few months dropping a steady series of hints about their plans for transforming the lives of the 60,000 children in the care system. Last week, education secretary Alan Johnson finally unveiled the Government's masterplan in the form of the Care Matters green paper.

"The proposals in this green paper build on what we have achieved and what we have learned," he announced. "Systems will be strengthened, accountability improved, support better structured - in and out of school. We have a chance to really address some serious issues at the very core of education and social exclusion."

Care Matters is the second attempt by the Blair Government to tackle this difficult issue - coming three years after the Social Exclusion Unit published its report on improving education for children in care.

Since then, outcomes have improved in some respects. But there remains a significant and widening gap between outcomes for looked-after children and outcomes for other children. Shockingly, only 11 per cent of children in care attained five good GCSEs last year, compared with 56 per cent of all children.

The long-term outcomes for looked-after children are also devastating.

These children are over-represented in a range of vulnerable groups, including those not in education, teenage parents, young offenders, drug users and prisoners.

Money matters

In the foreword to Care Matters, Johnson says this state of affairs is "neither acceptable nor inevitable" and the subsequent 115 pages of the document are brimming with proposals to reverse the trend. The children's sector has welcomed most of these proposals but stressed that the Government's final package will need to be backed by sustainable funding.

So what is on the table? The Government will look at giving social workers a ringfenced budget to spend on individual children in their care. Social workers could spend the money on whatever they see fit: football boots; train tickets; or therapy. A number of local authorities will now carry out pilots to explore the level of budget that could be held by social workers.

There are also plans to improve the status of foster carers through salaries, registration and training. The Government will consult on a three-tiered model of placement types that reflect the various levels of need among different children in care. The model would be underpinned by a new framework of skills and qualifications.

The document states that this new arrangement would offer "a ladder of career progression for carers", although it does not make it clear at which level carers would be paid. At the press conference last week, Department for Education and Skills officials revealed that only tier-three foster carers providing specialist care were likely to qualify for a salary.

There are also a plethora of new proposals focused on improving the education of children in care. The Education and Inspections Bill already contains provisions to give local authorities the power to direct schools to admit looked-after children, even when the school is fully subscribed. And the Government will introduce a free entitlement to school transport so that children can stay at the same school after a placement move.

Exclusions from school are a major issue for children in care, with 0.9 per cent of this group excluded last year, compared with 0.1 per cent of all children.

The Government will "strengthen existing guidance on school exclusions to encourage schools not to exclude children in care other than in the most exceptional circumstances".

To ensure that the education system delivers for children in care, the Government is proposing a "virtual head teacher" in every local authority. This would be a senior individual working for the local authority and tasked with driving up standards in the education of children in care. The Government will pilot this initiative in a number of trailblazer authorities, with a view to rolling it out across England.

But some of the most significant proposals in the document are focused on the transition to adult life. Some 28 per cent of children in care leave the system aged only 16 and it is usually not their choice. The document acknowledges the mounting evidence that these children are being forced out against their will and comes up with a promising solution. Care Matters proposes to pilot the idea of giving young people a veto over any decisions about legally leaving care before they turn 18.

The Government is also proposing to pilot allowing care leavers to live with foster families up to the age of 21 and to evaluate the support required and the impact on their longer-term outcomes.

Robert Tapsfield, chief executive of the Fostering Network, is impressed.

"The plans outlined in the green paper could make a real difference in the lives of children in care," he says.

"In particular, allowing teenagers to stay with their foster carers until the age of 21 would offer massive benefits for many young people who are currently forced out before they are ready."

Children's minister Beverley Hughes and her colleagues at the DfES masterminded most of the proposals. But one controversial plan was added in at the last minute by Tony Blair's advisers at 10 Downing Street.

The document states: "We propose to explore a model of 'social care practices': small groups of social workers undertaking work with children in care commissioned by, but independent of, local authorities. A practice would be an autonomous organisation, whether a voluntary or community sector organisation, a social enterprise or a private business - similar to a GP practice."

The Prime Minister believes that there can be an inherent tension for social workers operating in local authorities. On the one hand they must do what is best for children, but on the other they must defend the authority's existing policies. He is also concerned that the various levels of management in authorities can mean that decisions about children are taken by people with no direct knowledge of that child's needs.

So the big idea is that responsibility is passed over to private agencies employing about 20 social workers.

Alastair Pettigrew, director of children's social care at Lewisham Council, is one of the drivers behind the plan. He tells Children Now that it could put a stop to the rapid turnover of staff in the social care profession.

"Looked-after children need and want someone to confide in and it is disrespectful to them that we create organisations that result in those people continually changing," he says.

"It seems to me we have to learn from the example of GP practices where people remain in place throughout. Why? Because they are incentivised to remain in place. They have investment in the premises and investment in repeat business."

Outsourcing with care

But many children's services directors are far from convinced. David Hawker, children's services director at Brighton & Hove City Council, says: "I am not against exploring alternative modes of provision. But there are certain areas of service that are so fundamental to the role of the local authority as corporate parent that you do need to be very careful about what you are outsourcing."

He says there is no evidence that social care practices would lead to better long-term stability. But most crucially, he says, the new practices would probably be far more expensive than most current arrangements.

"It's not necessarily more cost-effective. So unless there is more money in the system to contract in this sort of way, then it is likely that it will cost us more and therefore take resources from elsewhere," he says.

"And the biggest danger is that it will take resources from the very social work functions that are core to our role, such as child protection work."

Those who do have reservations will have time to make them known. A working group is being set up to explore the idea and its conclusions are not expected until next year. Children Now understands that the group is currently searching for a director of children's services who is sceptical about the plan. It is unlikely that there will be a shortage of applicants.

KEY PROPOSALS

THE ROLE OF CORPORATE PARENTS

- A working group will explore the feasibility of new, independent "social care practices" to provide services to children in care

- The Government will conduct a pilot that gives social workers a ringfenced budget allocated to a particular child in care

CARE PLACEMENTS

- The Government is proposing developing a "tiered" model of placement types, depending on the needs of the child. This could be underpinned by a formal qualifications framework for foster and residential carers

EDUCATION

- The Education Bill will give local authorities the power to direct schools to admit children in care

- The Government is proposing free school transport for children in care following a placement move

- It is also proposing to pilot a "virtual head teacher" in a number of authorities. This is a senior professional who would monitor the progress of looked-after children

LEAVING CARE

- The Government is proposing to pilot giving young people a veto on any decisions about legally leaving care before they turn 18. It is also proposing to pilot allowing care leavers to live with foster families up to the age of 21

- The Government will top up the child trust funds of young people in care and is proposing a bursary of £2,000 towards university costs

INSPECTIONS

- The Government will ask Ofsted to inspect how every local authority is performing in relation to the education of children in care

WHAT NEXT?

- The Government is consulting on the green paper until 15 January 2007

- Children in care, care leavers and professionals are all invited to respond

- Care Matters is available at www.dfes.gov.uk/publications/ carematters/index.shtml.