Joanna is 14 and has been in care since she was nine. In that time, she has lived with 11 different families. "At first I used to get attached and want to stay, but now I try not to," she says when I speak to her at the children's home where she is living. "Being in care has taught me that you have only yourself."

The local authority's struggle to find Joanna an appropriate foster family reflects a bigger picture: nationally, there is a shortage of 10,000 foster carers, a situation exacerbated by a 40 per cent increase in children going into care since the Baby P case erupted in late 2008.

Babies often take priority when foster placements become available, leaving children like Joanna with nowhere to go, or being shunted between new homes. Just over 10 per cent of children in care endure three or more moves in a year; 2 per cent are moved more than 20 times. This instability is unsettling for children who have suffered neglect or abuse, and can be compounded by moves across the country that separate them from their birth families.

As became apparent after the high-profile cases of Baby P and Victoria Climbié, the child protection system is straining under immense pressure. It will get worse. The Association of Directors of Children's Services (ADCS) estimates that an additional £173m is needed nationally to provide for the extra children in care. But instead, children's services face deep spending cuts as local authorities prepare for 25 per cent budget reductions.

“Because the government has chosen to protect - to some degree - funding for universal services like schools and health," says Matt Dunkley, vice-president of ADCS, "the bits of council funding for our most vulnerable children are under the most pressure."

Right now, there are 70,000 children in care, with more than three-quarters of them cared for by foster families. Not only is it a big saving for the council - costing roughly £30,000 each year, against £160,000 for a residential placement - but a home environment helps keep children from becoming institutionalised, and can provide much-needed pastoral care. A survey by the Adolescent and Children's Trust published in September 2009 found that 93 per cent of children in care said the most important adult in their life was their foster carer.

Slough is just the start

Akiva Solemani, who has been a foster carer for five years, talks to me about his experience. "When he first came to me, my boy was very unmanageable, but now he is lovely. His behaviour has transformed. He would say, 'You're teaching me to be good.' It is really gratifying."

Yet such good-quality placements can be hard to come by. According to a recent report by the Fostering Network, some carers are already being asked to take on challenging children as their first placement, without sufficient training. Dunkley stresses that most local authorities will try to avoid reductions to foster care, but the Fostering Network notes that some areas have already suffered cuts to training, while others have axed respite carers, who look after children to give full-time carers time off.

Slough is an example of things to come. The council has cut its payment to new foster carers by 50 per cent and is trying to cut it for existing carers, too, taking the weekly amount for a single child from £400 to £200. The council says this will bring the fee - raised several years ago to help recruitment - into line with those for neighbouring boroughs. But the move places existing foster carers in a difficult position.

Zareen Keaton, a mother-of-two, has been a foster carer for a decade, five of those years in Slough. "It will have huge repercussions," she says. "I currently foster two children. I've made a commitment to one that I've had for five years to look after him until he's an adult.

"I may not be able to honour that if they cut the money by half. Telling this 11-year-old that I might not be able to look after him would not just scare him witless; it would affect his schooling, his behaviour, his criminality - there would be another 20 services involved in that child's life overnight."

The council admits that there is a "risk" that the department will be left with "fewer in-house placements and heavier reliance on more expensive independent fostering agency placements", which cost an extra £250 a week on average. "I'm sure Slough is just the beginning," says Robert Tapsfield, chief executive of the Fostering Network. "We will see increased cuts and efforts to save money on foster care, but that won't reduce the number of children coming into care. If the quality of the service they receive worsens, it will not only have a disastrous effect on their life chances, but will ultimately cost the state more."

Always coming last

The junior children's minister, the Conservative MP Tim Loughton, has spoken of the need for a cross-departmental approach of "investing to save", as good-quality care will, in the long term, reduce the social and financial cost of children ending up in the prison system or with mental-health problems. Already, 23 per cent of adult prisoners have spent time in care, although care-leavers account for just 1 per cent of the total population.

Dunkley stresses the danger of cutting early intervention services, such as working with families to stop children being taken away. "Not doing anything to change parents' behaviours will create a huge strain on the public purse in two or three years' time," he says. "As well as the fiscal cost, we'd see a vast increase in the number of children needing state protection. Nobody wants that."

For those who do need state protection, the type of care they receive is essential. Helen Thompson has looked after a four-year-old boy, Ray, for eight months. "When he arrived, he would sit in the corner of the room with his face to the wall and his hands over his ears because of the abuse he underwent at home," she tells me. Now, he plays with other children and is doing well in school. "He needed consistent, round-the-clock care that you don't get in a residential home where people change shifts after eight hours," she says.

There is an urgent need for more carers to do this work. Solemani, chair of his local fostering association, notes that low pay is one problem. "There is always this attitude that 'they're not in it for the money'. It's a trite saying that is so frustrating, because it perpetuates the notion that carers should be paid a pittance."

The emotional impact on the carer must not be underestimated, either. "It's a very hard, intrusive job," Keaton says. "The [children] that come to you are really in a bad place. Their anger is directed at you, at your family. This is a very hands-on job that affects you completely." For those in care, the future is uncertain. "Kids in care always come last," Joanna says. "There's no one to look out for us, so it's easier to take stuff away." It is vital that central and local government work together to prove her wrong.

Some names have been changed to protect identities

The left-behinders

The outcomes for children in care are not good at present: just 12 per cent leave school with five A*-C GCSEs, which 58 per cent of other children achieve. And 6 per cent of them make it into higher education, compared to 38 per cent nationally.

This can be explained in part by the care system, which puts children out on their own by the time they are 18, if not before. This contrasts with most young people, who tend to have a measure of parental support after they reach the official age of adulthood. Moves to extend funding to give these vulnerable teenagers continued support by foster carers or the state until their early twenties are likely to be blocked.

The impact of being cut adrift so young can also be seen in the 20 per cent of women who leave care between the ages of 16 and 19 and become mothers within a year, compared to just 5 per cent of the total population. And 31 per cent of children who have been in care end up in the Neet (not in education, employment or training) category, compared to 13 per cent of other young people.

The difficult histories of these children - frequently including neglect and physical or sexual abuse, as well as addiction or mental illness in the family - play a part in this. But stable placements with fully trained and dedicated carers would lessen the impact.

Samira Shackle