Children in care should be given pound;20 per month to pay for after-school clubs other pupils take for granted, the Government’s favourite think-tank believes.

The Institute for Public Policy Research this week said there was a danger looked-after children would miss out-of-hours activities. All of the 60,000 children cared for by local authorities should be given an account to pay for extra-curricular clubs and trips and to provide a nest-egg for adult life, it said.

The report came after Lord Adonis, schools minister, confirmed the Government is planning to send children in care to boarding school in an attempt to improve their results. The proposals were first revealed by The TES in January as part of the Time to Care campaign highlighting the wide gap in educational achievement between children in care and their peers.

Last year, only 6 per cent of children in care gained five or more A*-C grade GCSEs, compared to 56 per cent of all children.

The IPPR estimates it will cost pound;24.7 million (or pound;1.32 per year for the average council-tax payer) to fund an account for every looked-after child. In addition to regular monthly payments, each child would get an initial deposit of pound;200 on entry into care and a further pound;500 on their 16th birthday.

A three-year research study for the Department for Education and Skills showed children who participate in extra-curricular activities do better than their peers at school and have more positive attitudes towards education.

As well as clubs, children could use their accounts for activities such as rock-climbing or martial arts. Or for treats which many of their peers take for granted, such as iPods or mobile phones.

The average parent spends more than pound;9,300 on their child’s hobbies and pound;6,700 on leisure pursuits by the time they are 21, the IPPR said. Jim Bennett, its head of social policy, said: “Rightly, we hear a lot from the Government about the importance of good parenting but the sad truth is that the state does a pretty bad job, too.

“With the Government encouraging schools to extend their hours, there is a real worry that looked-after children will lose out because they won’t be able to pay to access those activities.”

Lord Adonis said a pilot scheme placing children in care at state and private boarding schools would be included in the Government’s green paper, due to be published within the next two months.

Christian Collins believes he has benefited after boarding at Christ’s Hospital Bluecoat school in Horsham, West Sussex. He had been living with his mother who was brain-damaged and partially disabled after a car crash.

His father had returned to Mexico.

“Being at boarding school allowed me to concentrate on my work,” said Christian, now 18. “For me, spending two-thirds of my time here and the rest at home has been a really good balance.”

Lord Adonis said: “Such placements come at a price but they could provide good value in terms of greater stability and educational success for looked-after children. Many boarding schools are keenly interested in participating.”

An asset account for looked-after children, by Dominic Maxwell, Sonia Sodha and Kate Stanley, is available from www.ippr.org.ukpublicationsandreports