New Era in Children’s Social Care: Is Wales set for success?

Background

On 24 March 2025, the Health and Social Care (Wales) Act 2025 received Royal Assent, marking a significant milestone in the provision of children's residential and foster care services in Wales. This legislation aims to eliminate private profit from these services by 2030, making Wales the first UK nation to take such a step. The Act mandates that children's residential and foster care services be provided exclusively by local authorities, charities, or not-for-profit organisations. 

The changes

The Welsh government introduced the Health and Social Care (Wales) Bill in May 2024 with the clear intention of ending private profit in the care of children looked after in residential and foster care services. The Minister for Children and Social Care, Dawn Boden said “this landmark law represents a fundamental shift in how we care for our most vulnerable people in Wales, whose voices have been central in our decisions”^[1].

The Act amends Part 1 of the Regulation and Inspection of Social Care (Wales) Act 2016 and Part 6 of the Social Services and Well-being (Wales) Act 2014 to achieve this goal. The amendments include restricting the registration of a for-profit provider from registering with the Care Inspectorate Wales (“CIW”). Previously, local authorities were required to take steps to secure sufficient accommodation within their area. The amendments now mandate that local authorities must take all reasonable steps to secure a sufficient not-for-profit accommodation in or near their area^[2]. In addition, under the new Act local authorities are now required to use a not-for-profit provider when placing a child, unless doing so would be inconsistent with the child’s wellbeing^[3].

Transitional Period Timetable

The Minister for Children and Social Care has outlined a phased implementation plan to transition children's residential and foster care to a not-for-profit model. From 1 April 2026, any new providers registering with CIW to provide children's services as a care home, fostering service, or secure accommodation must have not-for-profit status. From 1 April 2027, existing for-profit providers will face transitional restrictions unless they re-establish their business as a not-for-profit model. These restrictions include the prevention of registering new homes, no additional beds or foster carers to be added, local authorities in Wales will not be able to place children within an existing for-profit provider without approval from the Welsh Ministers and English placing authorities will be restricted from using Welsh children’s services unless specific prescribed circumstances are met.

By 1 April 2030, there will be no new placements of children from Welsh placing authorities with for-profit providers unless approved via a supplementary placement process. Similarly, English placing authorities will only be able to place children in existing for-profit children's services in exceptional circumstances. This date is set as the absolute end date for eliminating private profit from the care of children looked after, rather than a target date.

Will it work?

This landmark decision is said to ensure that money going into the system is reinvested into children's welfare. The changes have been welcomed and supported by providers, but concerns have been raised about the pressure the changes will have on local authorities. 

The Children's Home Association expressed concerns, stating, "the Bill threatens decades of evolution and expertise in children's residential care and risks worsening the sufficiency crisis in Wales with significant impact on children and young people."^[4] 

On the other hand, the British Association of Social Workers Cymru, National Director, Professor Sam Baron, described the legislation as "a progressive and ambitious piece of legislation which, is simply the right thing to do."^[5]  However, Professor Baron urged that concerns must be listened to and addressed to avoid greater pressures further down the line.

Conclusion

The Act represents a fundamental shift in the provision of children's residential and foster care services in Wales. By eliminating private profit from these services, the Welsh government aims to ensure that funds are reinvested into children's welfare, ultimately providing better care for the most vulnerable members of society. Providers currently operating on a for-profit basis will need to transition to a not-for-profit model to continue offering these services.

Our team is on hand to assist with your regulatory queries on transitioning children’s services to a not-for-profit model.
 

^[1] Landmark law in Wales to end profit from children in care | GOV.WALES

^[2] Section 74, Social Services and Well-being (Wales) Act 2014 

^[3] Part 6, Regulation and Inspection of Social Care (Wales) Act 2026

^[4] [4] Paper 6 - The Children’s Homes Association.pdf

^[5] Wales to remove profit from children's care welcomed by BASW Cymru | BASW