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A new children’s home in Newport will provide better care for looked-after young people closer to home, the city council believes.

The local authority has bought a property at an undisclosed location, which will be renovated into a new home for two children.

Covered by Welsh Government funding, the property cost more than £500,000 but is expected to save the council money in the long run, by reducing the need to house children at more expensive out-of-county specialist placements.

The council and the government share ambitions to remove profit from children’s care in the next few years.

But this will require initial investment – Newport City Council expects to spend an extra £1.87 million this year to increase its “in-house provision” for looked-after children.

Cllr Laura Lacey, Newport’s cabinet member for social services, said: “The council has recognised for some time that it is important for children looked after to stay as local as possible, to help them maintain relationships with their family and friends and remain in the communities in which they have grown up.”

She added: “Newport has developed new residential homes to enable children and young people to be cared for closer to home and, in doing so, reduce the numbers of children who are placed in privately-run children’s homes.

“We have applied for funding through the Welsh Government’s Eliminate programme, which is aimed at removing profit from children’s care, so more children and young people can be looked after in council-owned and managed homes.

“Like all Welsh councils, the aim is to make sure we have enough provision in place to meet the legislative timescales set out by the government.”

The new property is reportedly the second of six the local authority plans to buy, which will provide homes or placements for 22 children – equal to the capacity Newport can currently afford to accommodate in out-of-county placements.

However, comments from the council’s chief financial officer, in a report on the purchase, show actual placements are currently above capacity “and could reach 30 by the end of March”.

The officer warned the issue “will need to be resolved as soon as possible” or the council will have to further increase its funding or capacity for the service.