Bill to remove profit from children’s care in Wales approved by Senedd

Legislation to eliminate profit from the provision of care to looked-after children in Wales has been approved by the Senedd and so will become law.

Under the Health and Social Care (Wales) Bill, new placements in for-profit children’s homes, secure accommodation or foster placements, by Welsh or English councils, will be banned – other than in exceptional circumstances – in April 2030.

This is three years later than Welsh ministers’ original target for eliminating profit, but they have lengthened their planned timetable in response to significant concerns about the potential disruption to children’s care from their original plan.

Currently, the private sector provides 87% of children’s home and 35% of fostering placements in Wales.

Young people ‘don’t want profit made from care’

Introducing its final debate in the Senedd last week, the Labour government’s minister for children and social care, Dawn Bowden, said the legislation was a response to young people saying that “they did not want to be the means of someone making a profit out of the challenges that they and their families faced”.

She said in delaying implementation, the government was “mindful of minimising the risk of disruption to children”.

However, she added: “But I want to be very, very clear that the 2030 date for the ending of new placements by Welsh local authorities in existing for-profit services is not a target date, it is the absolute end date.

“And I expect substantial progress to be made before then in ending placements of existing for-profit children’s homes and fostering services prior to 2030 in areas that have sufficiency for that not-for-profit provision, and I will be making sure that we get to that place as quickly as we possibly can.”

Councils’ concerns over impact on care system

However, the Welsh Local Government Association, while voicing support for the bill’s ambitions, raised concerns about its impact on the care system.

“Councils continue to fully support the ambition of removing profit from the care of children that the Health and Social Care Bill aims to deliver,” said Charlie McCoubrey, the WLGA’s spokesperson for health and social services.

“It’s an important step towards making sure vulnerable children and young people get the right support, with their needs prioritised over financial gain.

“That said, we’re still concerned about the potential impact on a system that’s already under pressure, with a need for appropriate levels of funding to make this work. Councils are already stretched, and without proper, long-term investment, there’s a real risk of putting even more pressure on the services children rely on.

“We’re keen to keep working closely with the Welsh Government to help deliver these changes in a way that supports local authorities, doesn’t destabilise existing placements, and makes a real difference to children’s lives.”

Welsh Government ‘has significantly underestimated costs’

From a provider perspective, the Children’s Home Association said there was “no evidence” that many children’s homes providers would be able to transition to a not-for-profit model, meaning councils would have to replace them.

However, it warned that the Welsh Government had “significantly underestimated the cost of replacing the providers who have provided specialist care to society’s most vulnerable for decades”.

The CHA cited figures produced by the Welsh Government itself showing that the average weekly cost of looking after a child in a standard four-bed independent home was £3,811, 38% below the equivalent for a local authority home (£5,625).

The association also accused the Welsh Government of rejecting efforts from the sector to devise a “viable solution”, for example, by permitting models of care that restrict profit. It said that children would increasingly be placed in unregulated settings due to a lack of placements.

‘The right thing to do, but concerns must be addressed’

Giving the British Association of Social Workers (BASW) Cymru’s response to the bill, national director Sam Baron said: “This is a progressive and ambitious piece of legislation which, is simply the right thing to do.

“Whilst full implementation will take several years, this move will rightly return public money into the public care system, increasing available resources and, by implication, release public money to address the issues of quality variations and low salaries.

“However, frontline voices and concerns must be listened to and addressed, by ensuring an already stretched public system receives the desperate investment it already needs to avoid even greater pressures being felt further down the line.”

Profit ‘not inherently at odds with excellent care’

The bill, which will also introduce direct payments for people receiving NHS continuing healthcare, was passed comfortably, with only the Conservatives voting against.

The party’s shadow cabinet secretary for health and social care, James Evans, said private sector providers played “a critical role in ensuring that children have somewhere safe to live and receive the care and support they need” and that it was “wrong to assume that  making profit is inherently at odds with delivering excellent care”.

Under the government’s plans, the policy to eliminate profit will proceed in three phases:

1. From 1 April 2026, no new for-profit providers of children’s home, fostering or secure accommodation services will be allowed to register in Wales.
2. From 1 April 2027, existing for-profit providers will not be able to add additional beds or foster carers to their services.
3. From 1 April 2030, councils will not be able to make new placements in existing for-profit providers of children’s home, fostering or secure accommodation services without ministerial approval, in the case of Welsh authorities, or in exceptional circumstances specified in regulations, in the case of English authorities.

Who can provide care to children?

The bill permits local authorities and four types of organisation to provide care to children: charitable companies limited by guarantee without share capital; charitable incorporated organisations; charitable registered societies or community interest companies.

Under all four models, there are no dividends paid to shareholders or members and surpluses must be reinvested in services. These organisations would also have to have as their primary purpose the welfare of children or another public good determined by the Welsh Government.