A windfall tax should be imposed on profits made by the largest private children’s home providers to fund the overhaul of England’s “dysfunctional” care system, according to a landmark review.

The Independent Review of Children’s Social Care is calling for a “radical reset” to improve the lives of children in care and their families.

The review calls for a break to the “cycle of escalating need and crisis intervention”, with resources instead rebalanced “to back those who care for and love children”.

Among more than 80 recommendations is a call for someone’s experience of being in care to become a protected characteristic, recognising that many children in care and care leavers experience discrimination or stigma.

The review also says young offender institutions should be phased out over the next decade as they are “wholly unsuitable” for children.

Responding to the review, the Government did not immediately commit to most of the recommendations but said they would be considered in the longer term.

Education Secretary Nadhim Zahawi said the Government is ready to meet the challenge and will publish plans for “bold and ambitious change” in the coming months.

Josh MacAlister, a former teacher who led the review, said change is “morally urgent and financially unavoidable”.

He told the PA news agency: “What we found is that this is a system – the children social care system – that needs a radical reset, because at the moment it is in a cycle where problems escalate, costs rise, outcomes continue to be too poor, and that’s getting worse and worse over time.

“What we need to do is to tilt the system firmly back to supporting the adults, the carers, the parents, the families who love their children.”

His review said care should not be based on profit, and that providers who have made “unusually high” profits from the dysfunction of the current system should contribute to fix it.

It is calling for the Government to levy a windfall tax on the 15 largest private residential children’s homes and independent fostering providers.

A tax of 20% on profits could generate hundreds of millions of pounds to help transform the system, it says.

Moving away from the existing model will require investment and local authorities need help to “take back control” by establishing regional care cooperatives, the review recommends.

These would be responsible for creating and running public sector fostering, residential and secure care, and commission not-for-profit and private care, and would aim to end profiteering in the market and enable more children to be placed near family, friends and their community if this is in their interest.

The review is also calling for equalities legislation to be amended to include someone’s experience of care as a protected characteristic.

This would make the UK the first place in the world to recognise children in care and care leavers this way.

Other recommendations include:

Creating an “Expert Child Protection Practitioner” role, which would see experienced social workers work with family teams when there are concerns about the serious harm of a child.

More support for extended family members such as grandparents, aunts and uncles who look after relatives who may otherwise go into care.

Creating a new Lifelong Guardianship Order so care leavers can legally and practically join the family of another non-related adult who is important to them.

A national recruitment drive to bring in 9,000 new foster carers over three years

£253 million for the professional development of social workers over four years.

A new set of care standards to ensure children in care receive care up to their 18th birthday and improve quality in children’s homes.

The review is calling for investment of around £2.6 billion over the next four years.

The changes would mean almost 30,000 more children living safely and thriving with their families over the next decade than if things stayed as they were, it estimates.

But without a dramatic reset, outcomes will remain “stubbornly poor” and it estimates there will be around 100,000 children in care in 10 years, costing more than £15 billion a year.

It says the Government must address child poverty rates and other factors that push children into care, and that, without wider action, reforms “risk treating the symptoms and not the cause”.

In the report’s foreword, Mr MacAlister said: “The time is now gone for half measures, quick fixes or grandstanding.

“Changing the easiest bits, papering over the cracks, or only making the right noises, may in fact make matters worse.

“It will create the illusion of change but without the substance. It will dash hopes and fail another generation.”

In response, the Government said it would set up a National Implementation Board to oversee changes, and pledged to recruit more foster carers, improve opportunities for social workers and give councils money to help vulnerable children remain engaged in their education.

Mr Zahawi said: “This is the start of a journey to change the culture and dramatically reform the children’s social care system.

“Everything we do to raise the outcomes for children and families must be backed by evidence.

“This report will be central in taking forward our ambition to ensure every child has a loving and stable home and we will continue working with experts and people who have experienced care to deliver change on the ground.”

In a joint statement, the National Children’s Bureau, NSPCC, Action for Children, Barnardo’s and The Children’s Society said: “Such an opportunity needs to be met with an urgent action plan from Government to implement the reforms and a commitment for ambitious, long-term investment.

“The voices of children and young people must also be heard loud and clear throughout this process.

“This is our chance to build a future where every child feels safe, secure and supported, and it is vital we all seize it and put the needs of vulnerable children and young people at the heart of our national story.”