Be SURE you haven't just misunderstood her humour. I have repsonded to "who's having the children" with "no one, im going to gaffa tape them to their beds" before.
Clearly i do not do that, its just i have a bit of a warped sense of humor.
If she was serious then you need to contact SS. It may be that she just doesn't fully understand the reasons this is just not acceptable.
some people are so incredibly trusting they just don't see the dangers involved.
SS wont be horrid to her. more likley that they will speak with her about what she hasd been doing, place her on some parenting courses and try and get her to join a local surestart centre or something so that they can moniter her in a low key way.
But she does need some intervention as she simply cannot continue doing what she has been