I think the responses to this query from the OP have more or less answered her. I have 30 years experience as a sw and tm mgr in Fostering & Adoption and have been retired from LA work for 8 years.
For as long as I can remember there has been a shortage of good foster carers, but once the IFAs came along, and started to syphon off our carers with the promise of much better pay and support etc then many of them left the LA and why wouldn't they really. In fact we wondered back then how we managed to retain any of our foster carers.
Our fcs were asking us the same question as is being asked here "how come you have the money to pay the IFA carers but not us" and this of course was a highly relevant query, which we took to senior managers but always got the same response "we can't afford it - we haven't the finance to do this" our arguments about losing more and more of our carers fell on stoney ground. Back then we were not using IFAs that much, and only for hard to place children, but i know that that situation has changed a lot and will as you all say only get worse.
We fought for so many years (it seems) for foster carers to be paid an annual salary so that they had security and that this would greatly increase the chance of recruiting and retaining carers, but no go, as the response was always the same "we can't afford it" - I got so mad at one of these meetings I said "well what you could do, is get rid of all the fostering social workers and tm mgrs which would release enough money for all carers to be paid the same as IFA carers" ther was a lot of shuffling about and this was quickly passed over. I realise that they couldn't just make us redundant but I think I just got to the point of frustration at the picture we could see unfolding before us.
The thing is though that many carers who went to IFAs didn't realise that their allowances and all the support bought in for the children, play therapy, support with education and allsorts of other things that were good for the children, but were charged to the LA. These IFA owners/directors are making enormous profits and I know one of the first social workers who saw this gap in the market and was something of an entrepenur (awful social worker!) set up one of the first IFAs in the shire county were I worked and is now a multi-millionaire and has sold the company and lives a life of luxury. Thing is whatever govt is in power they have encouraged this kind of privatisation and this coalition will not rest until all public services are privatised.
I think someone made a good point about treating foster carers as part of the team, rather than "childminders" and many of the young inexperienced social workers and those without their own kids, had no idea at all of the stress that fostering involves and perceive themselves to be somehow superior to foster carers. My team were often involved with trying to educate social workers about the demands of foster care and many social workers did understand, but many of them didn't and this is another area that needs sorting. I feel a bit pessimistic though hearing of all the things in these posts that I and others fought for over a decade ago are still the same.
There is of course a national shortage of LA carers and that I believe is because more and more IFAs are springing up. When they first started they would only take experienced carers, but then many of them took new carers, though many of these placements ended, because brand new carers were getting very difficult kids from all over the country. Obviously LAs willonly use IFAs when they are desparate because there is no option - if there is no "in house" placement, you can try neighbouring authorities but usually no go, and so it had to be an IFA because you can't send an abused/neglected child home because there is no placement.
I think the other thing is that since the death of Peter Connelly, there has been a 50% rise in applications for Care Orders, as social workers were no longer willing to take the risk of supporting families when being constantly worried about them (and who could blame them, as they are vilified when a child dies) and to prevent this you would have to be with the family 24 hours per day! and so of course the need for placements for allthese children have exacerbated an already "crisis" situation.