Unlawful children’s homes are demanding up to £20,000 a week per child and failing to keep vulnerable young people safe, the Family Court has heard.

In one case, heard in August in Liverpool, the court heard how despite the local authority paying high fees to an unregistered children’s home, a 14-year-old boy was still at serious risk.

Increased demand for placements, especially for children with the most complex needs, has led to costs described as “breathtaking” by a senior judge.

The estimated bill for housing children in one local authority area has more than doubled in three years to £16m, one senior manager told the BBC, which risks bankrupting the council.

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It is a busy day at Liverpool Family Court.

The BBC has taken advantage of unprecedented access to report its proceedings, as part of an extended pilot to make the workings of family courts in England and Wales more transparent.

Judge Stephen Parker is hearing two separate but very similar cases, both involving 14-year-old boys in care in north-west England.

Both are violent, and both are suspected of being criminally exploited by drug dealers.

They are the responsibility of different local authorities, both of which have been forced to place them in unregistered homes, unregulated by Ofsted – no other children’s home would take them.

Samantha Derbyshire is a senior manager at Cheshire East Borough Council, where she is in charge of finding residential placements for children. She is giving evidence in one of the cases today.

Her local authority is being asked to pay as much as £20,000 a week per child for round-the-clock care.

“This is public money,” she tells the BBC outside court.

“This is your money, this is my money, and they are profiteering off our children without the experience, and without the Ofsted regulations to go with it.”

She has struggled to find anywhere that will take “Jack” (not his real name), who has been in care since February.

In that time, he has attacked staff and even broken a staff member’s arm.

While being moved between locations, Jack tried to kick out the windscreen of a moving car. Care workers said that to protect themselves, they were forced to transport him in the boot.

Most recently, Cheshire East Borough Council placed him with a private care provider that was not Ofsted-registered. The £16,000-per-week cost of the placement is equivalent to £830,000 per year.

Despite this, Jack has repeatedly run away, and smoked cannabis regularly in the children’s home.

Once, he returned to the home covered in what appeared to be someone else’s blood – and would not say how that had happened.

The council is now applying to the Family Court to move Jack to a new private children’s home, under what is known as a Deprivation of Liberty (DoL) order.

This means he will be constantly monitored by at least two staff who can lock him in, and physically restrain him if he tries to run away.

The new home – like the current one – is not registered with the regulator, Ofsted, and so it should be unlawful to place a child under 16 there.

However, Steven Parker, sitting as a judge of the High Court, has the power to permit the placement, and the restraint.

He does so, saying there is no alternative. He adds that there is a risk Jack might “kill or be killed” if this order is not made.

Ms Derbyshire tells the court that in the past three years, the local authority’s bill for children’s residential care has risen from £7.5m per year to an estimated £16.5m.

She says this is an overspend with a significant potential impact: “Either there will be cuts in another part of the local authority, or we may be forced into bankruptcy.”

The new placement agreed for Jack will cost £12,000 per week, and the provider agrees to apply for Ofsted registration.

On the same day, Judge Parker hears the case of another boy who – like Jack – is suspected of involvement with organised criminal gangs.

The boy, who we are calling “Joe”, has been in care for three years and has several criminal convictions – one for wounding a child, and nine offences for criminal damage and theft.

He is already subject to a DoL order and his local authority is asking the court to extend it.

The terms of Joe’s placement means he is supervised at all times by three members of staff, who are allowed to restrain him. He has been out of education for over a year.

He occasionally leaves the home – closely supervised – to visit his family, or for outings.

But he has attacked staff, and made repeated attempts to abscond. Once, he tried to jump from a moving vehicle on the motorway.

Judge Parker says he sees “a risk of catastrophic harm or risk” and agrees to extend the DoL order.

As in Jack’s case, he says anyone restraining Joe must be specially trained.

Joe’s placement costs his local authority, Halton Council, £13,600 per week – about £750,000 per year.

Judge Parker describes the costs of placements as “breathtaking” and comments that local authorities are “essentially being left to the mercy of the private sector”.

He says that local authorities are often faced with “Hobson’s Choice” (a choice that is no choice at all).

Speaking to the BBC after the court hearing, Ms Derbyshire says that while there are excellent Ofsted-registered placements run by private companies who do not charge excessive rates, there are also private care providers who are not registered or inspected – some of these, she says, “are in it for the wrong reasons”.

Ms Derbyshire says some of these unregistered providers charge “staggering” sums, and says the placements are not usually staffed by trained social workers, nor do they offer specialist or therapeutic care.

However, she says it is difficult for councils to challenge the rates.

“They will always say it’s an executive cost or it’s a responsible individual cost or a management cost,” she tells us.

“And equally it’s difficult for us at this moment in time to engage in those conversations because we know there’s 10 other children waiting for that one bed.”

Ms Derbyshire says her council is not an outlier and many others face similar problems. Last year the Local Government Association said “immediate national action” was needed.

The Children’s Home Association represents providers registered with Ofsted.

Its CEO, Dr Mark Kerr, says his members want to see action taken against unregistered homes: “They’re warehousing children [who are] not getting the care that they need.”

Dr Kerr says the government also needs to support new specialist provision for children like Jack and Joe. At the moment, he says, it would be difficult to accommodate them in homes with other children.

The Minister for Children and Families, Janet Daby, has told us that the government is committed to “cracking down on providers making excessive profits”, and that measures will be contained in the upcoming Children’s Wellbeing Bill, Labour’s flagship legislation on education and children’s care.

“It is devastating that these young people are being let down by a system that should be keeping them safe,” she says.

Meanwhile, more children like Jack and Joe are coming before the Family Court.

The number of DoL orders has increased 12-fold in the past six years, from just over 100 per year to 1,200.

Ms Derbyshire tells us she often worries about whether these children are safe.

“I feel helpless,” she says.

“I’m constantly thinking – where are they going tonight and is somebody looking after them to the standards which we expect?”