Profit making from children’s care in Wales set to end by 2030 through introduction of Health and Social Care (Wales) Act

The passage of the Health and Social Care (Wales) Act 2025 has made Wales the first UK nation to legislate to introduce an effective ban on private profit in children’s residential and foster care.

The legislation, which received Royal Assent this week (24 March), sets out a framework that aims to ensure decisions about children’s care are based on their best interests, rather than financial motives.

Under the new legislation, care for looked after children will only be provided by the public sector, charitable or not-for-profit organisations - but this will proceed in three phases:

• 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.
• From 1 April 2027, no additional beds or foster carers will be allowed to be added by existing for-profit providers.
• 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.

Welcoming the new legislation, the Welsh Local Government Association (WLGA) acknowledged that children in care deserve support “shaped by their needs, not by market forces”, but warned that the changes must be backed by “sustainable funding and clear long-term planning”.

It added: “Councils across Wales are already working together to prepare for these reforms, with a focus on planning, investment, and collaboration with care providers and third-sector organisations.”

Meanwhile, the Children’s Homes Association (CHA) claimed that the "social and human costs" of eliminating private children’s homes providers from Wales have been "dangerously underestimated".

The organisation stated: "With no evidence that Wales’ many privately run children’s homes organisations will be able to transition to a ‘not-for-profit’ model as has been proposed, local authorities will need to replace these children’s homes that are being ‘eliminated’. The Welsh Government has significantly underestimated the cost of replacing the providers who have provided specialist care to society’s most vulnerable for decades."

Following the sealing of the Bill on Monday, Welsh Minister for Children and Social Care, Dawn Bowden, 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.

“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.

“This reform, alongside empowering disabled people through direct payments, shows our unwavering commitment to creating care services which are built on compassion rather than commercial interests.”

Lottie Winson