Consultation on moving children's social care to a not-for-profit model

This consultation seeks views on two related proposals, arising from the implementation of the Health and Social Care (Wales) Act 2025, which support the Welsh Government’s reform of children’s social care and the transition to a not-for-profit model of provision.

The proposals are to:

• restrict the further expansion of existing for-profit children’s services by preventing the addition of new beds in for-profit children’s homes and the approval of new foster carers by for-profit fostering service providers; and
• enable continuity of foster carer approvals by allowing, in limited and clearly defined circumstances, foster carer approvals to be deemed to transfer where a for-profit fostering service re-establishes as a not-for-profit fostering service.

Together, these proposals are intended to support the reforms introduced by the Health and Social Care (Wales) Act 2025 while maintaining stability and continuity for children, foster carers and families.

On 24 March 2025, the Health and Social Care (Wales) Act 2025 (‘the 2025 Act’) became law in Wales. The 2025 Act includes, within Part 1, Chapter 1, provisions intended to restrict the extraction of profit by providers of children’s home services, secure accommodation services and fostering services. These are known collectively as ‘restricted children’s services’. 

The policy intent is to ensure that public money invested in accommodation for care experienced children is not extracted out as profit, but instead any surpluses are reinvested back into the system to support better outcomes, services and professional development. 

The 2025 Act sets out a series of arrangements, some of which came into effect from 1 April 2026, that will ultimately restrict the provision of those services (except where provided by local authorities) to ‘not for profit’ entities registered with Care Inspectorate Wales (‘CIW’). 

To be a recognised ‘not for profit’ entity, a provider must:

1. have objects or purposes that primarily relate to the welfare of children (or any other public good the Welsh Ministers may prescribe); and 
2. operate under one of 4 types of undertaking:

• a charitable company limited by guarantee without a share capital
• a charitable incorporated organisation
• a charitable registered society
• a community interest company limited by guarantee without a share capital

To ensure this policy is not undermined by practices which go against its spirit and intention, the 2025 Act also provides that any unreasonable or disproportionate payments made by a not-for-profit provider of restricted children’s services must be taken into account by the Welsh Ministers when deciding if a provider is a fit and proper person to be registered.

The Law Wales website provides an overview of the 2025 Act and its development. This includes an Explanatory Memorandum which offers a detailed explanation of the legislative changes made by the 2025 Act, along with an assessment of the regulatory and other impacts identified

From 1 April 2030, it is intended that children will only be placed with for-profit providers in exceptional circumstances, and subject to Ministerial approval.

The Welsh Government is taking a phased approach to implementing the removal of profit from children’s care, through subordinate legislation, to support stability, integration and effective system planning.

On 1 April 2026, restrictions came into force preventing the registration of new for-profit children’s homes, secure accommodation and fostering services and preventing existing ‘for-profit’ providers of these services from varying their registration to add a new service or place. 

From 1 April 2026 the amended sufficiency duty under section 75(1) of the Social Services and Well-Being (Wales) Act 2014 Act (‘the 2014 Act’) also came into force, requiring local authorities to take all reasonable steps to secure suitable accommodation for looked after children; prioritising options within or near to their area; and using only local authority or not-for-profit providers.

By 1 December 2026, local authorities will be required to submit their first annual sufficiency plans to Welsh Ministers for approval, with these required to be published by 31 March 2027 and annually thereafter. 

Further measures (which are the subject of this consultation) are intended to take effect from 1 April 2027 to prevent the expansion of existing for-profit children’s homes and the approval of new foster carers by for-profit fostering service providers.

This consultation document sets out proposed regulatory changes to restrict the expansion of existing for-profit restricted children’s services. These proposals would prevent the addition of new beds to existing for-profit children’s homes and prohibit the approval of new foster carers by existing for-profit fostering service providers.

The consultation also proposes amendments to the Fostering Panels (Establishment and Functions) (Wales) Regulations 2018 to allow, in limited circumstances, the deemed transfer of foster carer approvals from for-profit to not-for-profit fostering service providers, with appropriate safeguards in place to minimise disruption for children, foster carers and families.

Legislative context

The Regulation and Inspection of Social Care (Wales) Act 2016 (“the 2016 Act”) provides the statutory framework for the regulation and inspection of care services in Wales, including children’s homes, secure accommodation and fostering services.

The 2016 Act was amended by the 2025 Act, which introduced a range of measures to support the Welsh Government’s commitment to remove profit from the care of children who are looked after. As part of those reforms, the 2025 Act inserted Schedule 1A into the 2016 Act. Paragraph 3(1) of Schedule 1A confers regulation-making powers on the Welsh Ministers to place restrictions on certain activities of providers of restricted children’s services.

Purpose of the proposed regulations

This consultation sets out proposed regulatory changes to restrict the expansion of for-profit children’s services. The intention of regulations (to be made under Schedule 1A to the 2016 Act) is to prevent further growth of for-profit provision, while wider reforms to children’s care and support services are implemented.

These proposals support the Welsh Government’s statutory commitment, established through the 2025 Act, to enable transition to a not-for-profit model of care for children who are looked after. Introducing these restrictions at this stage is intended to stabilise the current care market and avoid further entrenchment of for-profit provision during the transition period (intended to run until April 2030).

The proposed regulations would introduce restrictions on existing for-profit providers of children’s services. Specifically, the regulations would provide that, from 1 April 2027:

• no additional beds may be added to existing for-profit children’s homes
• no new foster carers may be approved by existing for-profit providers of fostering services

These restrictions are prospective in nature and would apply only to future expansion. They would not:

• require existing for-profit providers to cease operating
• affect existing placements or children and young people currently receiving care
• affect foster carers already approved by for-profit fostering services
• reduce the existing registered capacity of children’s homes or approved capacity of fostering services

Policy rationale

The Welsh Government considers that continued expansion of for-profit children’s services may undermine the effective delivery of the reforms introduced by the 2025 Act. Further for-profit market expansion could make it more difficult for local authorities to meet their sufficiency duty and to plan, commission and develop sustainable not-for-profit provision within or near to their areas.

The proposed regulations are intended to:

• stabilise the current landscape of children’s services provision
• prevent further expansion of for-profit services during the transition period
• support local authorities in planning for sufficient not-for-profit provision
• ensure that public funding and system capacity are focused on improving outcomes and stability for children and young people

The proposed regulations would not amend any existing regulatory standards, inspection arrangements or safeguarding duties. CIW will continue to regulate and inspect children’s services in accordance with the existing framework established under the 2016 Act.

The following questions are intended to gather views on the proposals set out above and to inform the development of the regulations. Respondents are invited to draw on their experience and evidence to highlight any issues, impacts or considerations that should be taken into account in preparing the legislation.

Question 1

Do you agree that the proposed use of regulation-making powers within paragraph 3(1) of Schedule 1A to the 2016 Act, with restrictions taking effect from 1 April 2027, is appropriate and proportionate?

Question 2

What impacts, if any, do you anticipate the proposed restrictions may have on children, foster carers and families?

Question 3

What impacts might the proposed restrictions have on service sufficiency and local authority commissioning arrangements?

Question 4

What other impacts (including any costs or benefits) do you think the proposals might have on the care and support sector.  Your views on how positive effects could be increased, or negative effects could be mitigated, would also be welcome.

Question 5

Please specify on which bodies any impacts (benefits, disbenefits, costs, savings) arising from the proposed regulations might fall?

Question 6

Are there any unintended consequences arising from the proposed restrictions that the Welsh Ministers should consider before the regulations are made?

Question 7

What are your views on Sections 1 and 8 of the Integrated Impact Assessment for this proposal? Are there any specific areas where you feel further detail is required, or specific issues that may impact on a specific group? 

• this could include (but is not limited to) impacts relating to equality, children’s rights and well-being, socio-economic disadvantage

Background 

In scoping wider changes needed to subordinate legislation, to support implementation of the 2025 Act reforms, the Welsh Government has identified a specific implementation issue relating to the transfer of approved foster carers from an existing for-profit fostering service to a new not-for-profit fostering service, established to meet the not-for-profit requirements set out in the 2025 Act.

As things stand, if a for-profit fostering service re-establishes itself as one of the permitted not-for-profit models, the newly created not-for-profit fostering service will be regarded as a new legal entity, even if the people, systems and operations remain the same. This means it must demonstrate that it meets all registration, governance and foster carer approval requirements as a new provider.

As the new not-for-profit fostering service is a distinct and separate legal entity, existing foster carer approvals cannot simply transfer from the for-profit service to the new not-for-profit service. Every foster carer, therefore, would need fresh approval from the new service. Furthermore, foster carers cannot be approved by two agencies at once. 

In practice, this means foster carers currently approved by an existing for-profit fostering service would be subject to a full re-approval process, in order to continue fostering with a provider that re-establishes itself on a not-for-profit basis, even where there has been no change in their circumstances or suitability. 

A full re-approval process would typically involve a repeat assessment of the foster carer’s suitability, including updated statutory checks and references, consideration by a fostering panel and a new agency decision. This would create a significant administrative and financial burden for both foster carers and providers and could result in disruption for children already in placement.

Proposed approach

To address this, the Welsh Government intends to amend the Fostering Panels (Establishment and Functions) (Wales) Regulations 2018 (as amended by The Fostering Panels and Care Planning (Miscellaneous Amendments) (Wales) Regulations 2026) to allow, in these limited and specific circumstances only, existing foster carer approvals to be deemed to transfer from the existing for-profit entity to a new not-for-profit entity.

Scope and application of the proposal

It is intended that this transitional provision will apply only to the transfer of foster carers where an existing for-profit fostering service is re-established as a not-for-profit fostering service, in line with the requirements of the 2025 Act and where there is a high degree of organisational and operational continuity.

Factors that may be relevant in establishing whether such continuity exists may include the extent to which there is:

• a transfer of existing foster carer records 
• continuity of existing foster placements
• continuity of the Responsible Individual 
• continuity of Directors or Trustees

It is envisaged that those providers who are eligible to complete the CIW change of legal entity variation in their CIW online account will fall within the scope of these provisions.  If there is uncertainty, CIW will be able to offer advice to relevant providers. 

Circumstances where the proposal will not apply

The transitional provision proposed above is intended to apply only in specific and limited circumstances where there is a clear continuity between an existing for-profit fostering service that is re-establishing on a not-for-profit basis. They will not apply where: 

• where there are significant changes in ownership, such as the sale or transfer of the organisation to a different provider, such that continuity cannot reasonably be established;
• where the Responsible Individual, Directors or Trustees are substantially different from those of the existing provider;  

In these circumstances, a provider will be required to comply fully with all relevant registration, approval and regulatory requirements as a new fostering service, including the requirement for foster carers to undergo a full approval process.

Safeguards and oversight arrangements

The Welsh Government recognises the importance of maintaining appropriate safeguards where foster carer approvals are deemed to transfer, to ensure continued oversight and protection for children, while reflecting the continuity of the service.

These safeguards would include:

• ensuring there is no period of dual approval, with the deemed approval taking effect immediately upon the cessation of approval with the outgoing provider
• at the point of transfer, requiring the provider that is re-establishing on a not-for-profit basis to take all reasonable steps to satisfy itself that key statutory information, such as Disclosure and Barring Service checks and medical assessments, remain valid and up to date
  • ensuring continuity of supervision and support arrangements for foster carers and children
  • ensuring there is no disruption to existing foster placements at the point of transfer
  • ensuring that relevant foster carers continue to be subject to ongoing review processes, including consideration of the views of children, foster carers and relevant professionals
  • maintaining appropriate oversight through existing regulatory and inspection arrangements

Review requirements following transfer

Under this approach, transferred approvals would be subject to a mandatory review within 12 months of the transfer, undertaken as part of foster carers’ existing annual review cycle. This is intended to provide assurance that foster carers’ approvals remain appropriate following the transfer, to confirm that all regulatory requirements continue to be met and to ensure that children’s well-being and safeguarding remain paramount.

Reviews would be undertaken on a proportionate and rolling basis, aligned with individual foster carer’s existing review schedules, rather than requiring all transferred foster carers to be reviewed at the same time.

The provider would retain discretion to bring forward an early review of a foster carer’s approval, or take appropriate action, where this is considered necessary to safeguard and promote the well-being of children.

Transitional and time-limited nature of the proposal

Any provision allowing for the deemed transfer of foster carer approvals will apply for a clearly defined, time-limited period only.  In line with the current policy intention that, from 1 April 2030, children will only be placed with for-profit providers in exceptional circumstances and subject to Ministerial approval, it is intended that these transitional arrangements will cease to have effect from this date. This offers sufficient clarity and certainty for providers, foster carers and CIW about the period during which they will operate.

This consultation seeks views on whether such an approach is appropriate, proportionate and workable in practice, including whether the proposed use of subordinate legislation would be a suitable means of achieving this.

Question 8

Do you agree with the proposed approach to allow the deemed transfer of foster carer approvals in the limited circumstances described, as a means of maintaining continuity of care for children and reducing the administrative and financial burden on providers? Please explain your view.

Question 9

Is the scope of the proposed transitional provision wide enough?  Should it apply in any other circumstances? 

Question 10

To what extent do you consider that the proposed factors provide a suitable basis for assessing organisational and operational continuity in these circumstances? Are there any additional factors that should be taken into account?

Question 11

Do you agree that the proposed safeguards are sufficient to ensure appropriate oversight and protection for children where foster carer approvals are deemed to transfer? Please explain your answer, including any additional safeguards you consider necessary.

Question 12

Does the proposed mandatory review of transferred foster carer approvals within 12 months provide an appropriate level of assurance? Please give reasons for your response.

Question 13

Does the proposed 12 month review period provide sufficient flexibility for fostering service providers to manage review cycles effectively and avoid any undue concentration of reviews at a single point in time?
If not, what alternative approaches (or time frames) should be considered? 

Question 14

What are the likely impacts of the proposals on children, foster carers and the wider fostering workforce, including any implications for placement stability, safeguarding, equality and carers’ wellbeing? Please identify any groups that may be disproportionately affected and any mitigating actions that should be considered.

Question 15

What impact do you think the proposed deemed transfer of foster carer approvals would have in practice for fostering service providers, foster carers, regulators and local authorities? This could include impacts on costs, workloads, use of staff time or existing processes, as well as any savings or efficiencies you expect the proposal to create.

Question 16

What are your views on Sections 1 and 8 of the Integrated Impact Assessment for this proposal? Are there any specific areas where you feel further detail is required, or specific issues that may impact on a specific group? 

• this could include (but is not limited to) impacts relating to equality, children’s rights and well-being, socio-economic disadvantage

Question 1

Do you agree that the proposed use of regulation-making powers within paragraph 3(1) of Schedule 1A to the 2016 Act, with restrictions taking effect from 1 April 2027, is appropriate and proportionate?

Question 2

What impacts, if any, do you anticipate the proposed restrictions may have on children, foster carers and families?

Question 3

What impacts might the proposed restrictions have on service sufficiency and local authority commissioning arrangements?

Question 4

What other impacts (including any costs or benefits) do you think the proposals might have on the care and support sector.  Your views on how positive effects could be increased, or negative effects could be mitigated, would also be welcome.

Question 5

Please specify on which bodies any impacts (benefits, disbenefits, costs, savings) arising from the proposed regulations might fall?

Question 6

Are there any unintended consequences arising from the proposed restrictions that the Welsh Ministers should consider before the regulations are made?

Question 7

What are your views on Sections 1 and 8 of the Integrated Impact Assessment for this proposal? Are there any specific areas where you feel further detail is required, or specific issues that may impact on a specific group? 

• this could include (but is not limited to) impacts relating to equality, children’s rights and well-being, socio-economic disadvantage

Question 8

Do you agree with the proposed approach to allow the deemed transfer of foster carer approvals in the limited circumstances described, as a means of maintaining continuity of care for children and reducing the administrative and financial burden on providers? Please explain your view.

Question 9

Is the scope of the proposed transitional provision wide enough?  Should it apply in any other circumstances? 

Question 10

To what extent do you consider that the proposed factors provide a suitable basis for assessing organisational and operational continuity in these circumstances? Are there any additional factors that should be taken into account?

Question 11

Do you agree that the proposed safeguards are sufficient to ensure appropriate oversight and protection for children where foster carer approvals are deemed to transfer? Please explain your answer, including any additional safeguards you consider necessary.

Question 12

Does the proposed mandatory review of transferred foster carer approvals within 12 months provide an appropriate level of assurance? Please give reasons for your response.

Question 13

Does the proposed 12 month review period provide sufficient flexibility for fostering service providers to manage review cycles effectively and avoid any undue concentration of reviews at a single point in time?
If not, what alternative approaches (or time frames) should be considered? 

Question 14

What are the likely impacts of the proposals on children, foster carers and the wider fostering workforce, including any implications for placement stability, safeguarding, equality and carers’ wellbeing? Please identify any groups that may be disproportionately affected and any mitigating actions that should be considered.

Question 15

What impact do you think the proposed deemed transfer of foster carer approvals would have in practice for fostering service providers, foster carers, regulators and local authorities? This could include impacts on costs, workloads, use of staff time or existing processes, as well as any savings or efficiencies you expect the proposal to create.

Question 16

What are your views on Sections 1 and 8 of the Integrated Impact Assessment for this proposal? Are there any specific areas where you feel further detail is required, or specific issues that may impact on a specific group? 

• this could include (but is not limited to) impacts relating to equality, children’s rights and well-being, socio-economic disadvantage

Submit your comments by 23 September 2026, in any of the following ways:

• complete our online response form
• download, complete our consultation response form and email it to: removingprofit@gov.wales (please include the reference WG54724 in the subject of your email)
• download, complete our consultation response form and post to the address stated below:

Consultation: WG54724 
Removing Profit Policy Team  
Social Services and Integration Directorate
Welsh Government
Cathays Park
Cardiff
CF10 3NQ

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