In a pleasant detached house in a busy residential area of Stirling, four teenagers, dressed in T-shirts and tracksuit bottoms or jeans, are sitting on a large sofa looking a little self-conscious and shy.

Three of them- two girls and a boy - have just finished sitting Standard grade exams and are waiting for transport to take them to Forth Valley College, where they are trying out courses they may want to study in September. The fourth, a boy, is getting ready to go off to help disabled children with horse riding lessons.

Their achievements and aspirations may seem pretty normal for 15- and 16-year-olds but they are particularly impressive because these teenagers are in what the Jacqueline Wilson character Tracy Beaker would call the dumping ground, a local authority-run residential unit previously known as a children’s home.

All four have struggled with the education system, playing truant or falling badly behind. Peter, in particular, had been completely lost to the education system. He could not see the point of it. Yet the 15-year-old is now working towards his Standard grades, getting work experience in a garage and helping the Riding for the Disabled Association.

Each of them has managed to recognise the potential benefits of re-engaging with school work and knuckling down to studying, thanks to the encouragement of staff at the unit and extra educational support provided by targeted projects run by Stirling Council.

“They said it would only be me who was losing out because it was my future,” says Sarah, 16, who is trying to give up smoking by concentrating on doing complicated jigsaws. Despite losing interest and skipping school in the past, she has just sat five Standard grade exams, including classical studies and music.

Across Scotland local authorities are adopting this type of approach to turn around the historically low educational achievement of children in care. Figures for 2003-04 show that 60 per cent of care leavers did not achieve any Standard grades, compared to 10 per cent for Scotland as a whole. Of 16- and 17-year-old care leavers in 2004-05, fewer than a third achieved maths and English at Access 3 or Foundation level Standard grade or above.

For these four young people life has been hard and opportunities sparse, but their reticence to talk is born as much out of normal teenage inhibition as out of the difficult family circumstances that brought them here.

Abbie, who arrived three years ago, when she was 12, reveals that she enjoys cooking, bowling and football and is torn between a career in hairdressing or childcare. “It’s great here,” she says. “There’s lots of support.”

Lewis, who is visiting from a nearby unit, is equally upbeat about his experience in residential care. “It’s brilliant,” says the 15-year-old wannabe mechanic. “It feels like home.”

It looks like home. In this unit there are three bedrooms with ensuite bathrooms and televisions and a fourth room for a care worker who stays overnight. The residents are consulted about the colour of bedroom walls and designs of duvet covers they would like. The walls are covered in pictures of footballers or family photographs.

The house has a well equipped kitchen, a living room with a big comfy red sofa, television and plants and there is a study cum den - strictly for the teenagers - kitted out with a music system, PlayStation, TV and games.

The residents come and go pretty much as they wish, as long as they are in by 10pm on a school night and 11pm at the weekend, and can invite friends and family around for coffee or meals, all under the watchful eye of manager Cathy McRorie and childcare officer Carol McDonald.

“We try to keep everything as normal as possible,” says Cathy. “The stereotype is that they are in here because they are badly behaved or bad children. In my 20 years’ experience, there are no bad children. “It is their life experience which makes them unable to explain how they feel.

They come in here with very low esteem. A lot of them have had really bad experiences. They are withdrawn or angry or can’t cope.

“It is fabulous to see them leaving school with something and leading productive lives. Now they can hopefully look forward to a better lifestyle.”

The potential for residential care to change children’s lives for the better was the focus of the annual conference of the Scottish Institute for Residential Child Care, held this month in Aviemore.

“Residential care should not be considered a last resort,” says acting director Steven Paterson. “It can be a positive choice for young people.”

One of the speakers, James Anglin, a professor of child and youth care at the University of Victoria in British Columbia, presented his findings from research in 10 residential units. He identified a list of key factors which result in good residential care. These include building rapport and relationships, challenging thinking and action, sharing power and decision making and inspiring commitment. These are the things that make a difference and allow vulnerable young people to thrive and take control of their life.

“In the past a lot of it was fly by the seat of your pants or a few basic principles from experience,” he says. “My aim was to come up with a framework.”

Professor Anglin believes residential units are vital because some children just can’t cope in foster care or at home at certain points in their life.

These residential units need to be able to tap into the emotional pain that children are suffering when they arrive, he says.

“Often children feel marginalised, like throw-away children,” he says.

“They feel unloved.

“They have to learn that they can shape their own destiny rather than feel they are victims of fate. They have to learn that they can make good choices for the future. Good residential homes can create that.”

Professor Anglin’s framework has been adopted by Cornell University, New York, as part of its training course for residential workers. It outlines 11 interpersonal interactions that he identified as key in the recipe for success, included those mentioned.

Research carried out by the Glasgow-based consultancy firm Farm7 has found that putting modern quality furnishings into homes was a successful root to raised self-esteem and pride. The study, which was discussed at the conference, looked at the effect of commissioning professional interior designers to give a modern feel to four residential homes in South Lanarkshire. Designers personalised space with bean bags, big kitchen tables, light fittings, colours, trendy bookshelves and contemporary bathrooms.

Catherine Docherty, a director of Farm7, says there is no specific guidance on design for children’s homes. “We found that what staff think kids like and what kids want can be very different and that young people care about quality and aesthetics.

“Our message is that having an interior professional (rather than in-house specialists) can add value in terms of how young people act in their space, can impact on their own self-esteem and their behaviour.

“If you give children a quality environment, they know they are cared about and that can make them feel valued.”

The names of the four children have been changed