Croydon Council must do more to attract permanent children's social workers to the borough, its leader has admitted, as new figures reveal the enormous cost of employing temporary staff.

In the last year the council has spent £5.4m on agency staff working in children's social care, a recent Freedom of Information (FOI) request revealed - almost £1.5m more than if permanent staff had filled the same roles.

The most recent figures for the authority’s social care workforce, from September 2014, showed it employed 173 permanent staff, with 68 vacancies - a gap entirely plugged by agency workers.

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A Croydon Council spokesman said its use of agency staff was "factored into the budget setting and management process".

But Labour leader Tony Newman described the bill as one of the council's "major remaining challenges" - at a time when the council is offering nearly all its staff voluntary redundancy, in an effort to cut costs.

He said: "We're going to have to have a harder look at our offering, because in this area there has not been enough progress.

"There are historic reasons about what social workers can earn in inner and outer London. We absolutely recognise the issue that's there."

Coun Newman spoke of offering social workers "incentives to work in Croydon", including the prospect of a larger pay packet, although he declined to give further details.

He also placed hope in the regeneration effort taking place in the borough.

He said: "I would hope that with a change in reputation as a place to live and work we can attract more social workers.

"This remains an outstanding challenge in terms of having a more permanent workforce. With more social workers based here you get the historic knowledge of the borough, and less change.

"As well as the money to be saved in this area, it is an opportunity to increase output in professional terms."

In last week’s spending review Chancellor George Osborne announced new powers that would allow local authorities to raise council tax by up to two per cent to spend exclusively on adult social care.

But he also revealed government grants to local authorities would also be slashed by 56 per cent over the next five years.

The council spokesman said: "All councils have a legal duty to ensure there are sufficient qualified social workers employed to safeguard local young people.

"In common with much of the rest of the country this does mean a reliance upon agency staff, and this is factored into the budget setting and management process.

"However, Croydon has a successful programme under way to improve recruitment and retention of directly employed staff and unlike some areas where this problem is getting worse, we have increased the number of permanent social workers by 3.3 per cent in the last year, as well as reducing staff turnover by four per cent."