Proposed changes to Children’s Care in Scotland - What providers need to know

The Scottish Parliament is reviewing the Children (Care, Care Experience and Services Planning) (Scotland) Bill (“the Bill”), which is expected to come before members for a final vote later this year.

The new legislation would significantly change Scotland’s children’s social care sector. It reforms the regulatory footing for fostering and residential care, introducing measures relating to providers’ finances and organisational structure. It also addresses more personal aspects of the care system, expanding support for care-experienced individuals once they reach adulthood and adjusting the rules which govern the children’s hearings system.

This article summarises some of the key provisions of the Bill and draws parallels with similar legal changes in Wales.

Overview of the Bill

The Bill has three main pillars. Firstly, it proposes regulatory changes for children’s care providers. Driven by concerns about excessive profit-making, the Bill proposes a new framework which gives Scottish Ministers the power to impose financial transparency requirements on providers and limit their profits.

Ministers would be given the power to impose an information requirement on private providers of children’s care homes, school care accommodation and secure accommodation services, using financial and operational data to assess their profitability. The Bill then enables Ministers to introduce further regulations setting profit limitation requirements, if they are satisfied it is necessary in the public interest and compatible with the wellbeing of looked‑after children, the interests of local authorities, and the interests of the providers themselves.

The Bill strengthens the ‘not‑for‑profit principle’ in Scottish fostering, proposing that all fostering services be structured as UK registered charities. Anticipating some complexity, a transition period is expected to be given for organisations in the sector to make this change.

Secondly, the Bill increases support and rights for people with care experience. It extends access to aftercare so that young people who were looked after at any point before their 16th birthday can, from age 16 to 26, apply to their local authority for assistance, with support provided where eligible needs are identified. It also expands ‘corporate parenting duties’ so that they apply up until “such age as the local authority considers appropriate having regard to the person's individual needs”, allowing support to be provided well into legal adulthood, if required.

Finally, it redesigns aspects of the children’s hearings system to ensure that they are “trauma-informed” and increases the flexibility of hearings to meet the needs of individuals. Among the most notable changes are removing the default obligation for a child to attend hearings and enabling single‑member hearings to make certain preliminary decisions, with the aim of speeding up decision-making.

Parallels with Welsh Reforms

Wales legislated early in 2025 to phase out private profit from children’s residential and foster care by 2030 through the Health and Social Care (Wales) Act 2025. This directed that child placements only be made with local authority, charitable or other not‑for‑profit providers, save for narrow exceptions.

There are differences between the Scottish and Welsh legislative approach. Whereas the Welsh legislation is directive and driven by a strict timetable, Scotland’s Bill proposes a more incremental method to restrict profit in the sector. However, the direction of travel is similar.

Implementation of the recent Welsh legislation highlights risks that may also face the Scottish sector. There has been commentary that indicates that as the deadline approaches for restriction of profit, many private providers have exited the market while others have substantially increased their prices. This left councils with fewer placement options and significantly increased costs. There is a risk that this issue will compound once for-profit providers are compelled to leave the market – with a target to largely achieve this by April 2027.

This experience indicates a risk of similar unintended consequences could stem from the Scottish Bill; risks that lawmakers will no doubt hope to avoid. Scotland has signalled awareness of these risks. The Policy Memorandum that accompanies the Bill stresses that profit limitation in the sector will follow only after the application of a public‑interest test[1]. It also acknowledges that any future profit cap could trigger provider exits and commits to consult the sector before imposing limits. As the Bill receives a final phase of scrutiny in the Scottish Parliament, it will become apparent if legislators consider these mitigating measures to be sufficient.

Outlook

The Bill’s aims are laudable: it strengthens support for people with care experience, reforms the children’s hearing system to take account of individual needs, and equips Ministers with mechanisms to curb excessive profits in the sector. However, legislators will likely be mindful of the risk of market disruption as they continue to examine the legislation.

The experience of implementing similar regulatory changes in Wales is cautionary. The policy objective to eliminate private profit can - if pursued without enough public and charitable capacity in the system - reduce supply and drive prices up among some of the providers that remain. Scotland’s more phased approach aims to avoid that trap, but legislators must decide whether the risk is worth taking.

Our team will continue to monitor the progress of this Bill and is on hand to assist with your regulatory queries.

Co-authored by Philip Gaffney, Graduate Solicitor Apprentice