Bill to end profit from children’s care in Wales becomes law

Profit-making from children’s care in Wales is set to end by 2030, other than in exceptional circumstances, after a bill to implement the measure became law.

The passage of the Health and Social Care (Wales) Act 2025 makes Wales the first UK nation to institute an effective ban on profit in the provision of fostering, children’s home or secure accommodation placements for looked-after children. In Scotland, independent fostering agencies are not permitted to make a profit, but private children’s homes are.

After the legislation received Royal Assent today, minister for children and social care Dawn Bowden said: “By removing profit from the care of looked after children, we’re ensuring that funding goes towards improving outcomes for young people and I’m proud that we’re the first UK nation to take this bold step.”

Three stages of profit ban

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.

Following stage three, placements will generally only be permitted in council-run homes, or with local authority foster carers, or with placements provided by four other types of organisation: 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.

Council and provider concerns about legislation 

The Welsh Government has said that the legislation is a response to young people’s concerns about having profit made from their care and would ensure that surpluses were reinvested in improving services.

However, both councils and providers have voiced concerns about the impact of the act.

The Welsh Local Government Association (WLGA) has warned that it risks putting pressure on an already-stretched care system, while the Children’s Home Association has said that ministers have “significantly underestimated” the cost of replacing for-profit services and that children would increasingly be placed in unregulated care as a result of the act.