The Local Authorities (Annual Sufficiency Plans) (Wales) Regulations: integrated impact assessment

Issue

On 24 March 2025, the Health and Social Care (Wales) Act 2025 (‘the 2025 Act’) became law in Wales. It includes provisions intended to restrict the extraction of profit by providers of children’s home services, secure accommodation services and fostering services (known collectively as ‘restricted children’s services’). The 2025 Act set out a series of arrangements, some of which came into effect from 1 April 2026, that will ultimately restrict the provision of restricted children’s services (except where provided by local authorities) to ‘not for profit’ entities registered with Care Inspectorate Wales (‘CIW’).

The 2025 Act also inserts a new section 75A into the Social Services and Well-being (Wales) Act 2014 (“the 2014 Act”).  This requires local authorities to prepare and publish a plan (an ‘annual sufficiency plan’) regarding their section 75(1) duty. From 1 April 2026 the current local authority sufficiency duty in section 75(1) was amended so that:

• Iocal authorities must take all reasonable steps to secure accommodation for their looked after children
• the duty extends to accommodation within or near to the authority’s area, recognising that in some circumstances a placement outside the county may still be closer to a child’s home community
• accommodation must be with providers who are either local authorities or who meet the not-for-profit requirements
• local authorities must consider the benefit of having a range of accommodation within or near to their areas that meets the different needs of their looked after children, replacing the previous focus on the number of providers

The intention of annual sufficiency plans is to promote and support a coherent approach to the planning and provision of not-for-profit placement sufficiency within local authorities, according to local needs, and in the context of the rebalancing of care and support provision more widely.  Requiring publication of annual reports on sufficiency will ensure that local authorities’ plans are transparent and accessible to other key stakeholders, promoting greater join-up and integration.

Section 75A(3) of the 2014 Act, as inserted by the 2025 Act, sets out the core information that must be included in an annual sufficiency plan. In summary, this includes:

• estimates of the number of children the local authority expects to look after, including those for whom suitable arrangements are unlikely to be available
• assessments of the availability of accommodation (including local authority foster care and children’s homes) and the extent to which that accommodation meets the sufficiency duty in section 75(1)
• information relating to anticipated use of supplementary placements, including the expected number of applications and the reasons for those applications
• the steps the authority intends to take to ensure sufficient accommodation is available in line with the requirements of section 75(1)

New section 75A also contains new regulation making powers:

• subsection (2)(a) regarding the form of plans
• subsection (3)(d)(iii) and (iv) regarding information on for-profit providers who provide accommodation in Wales, and any information to be prescribed in regulations about for-profit providers who provide accommodation in England
• subsection (3)(f) regarding other information to be prescribed in plans

The 2025 Act also inserted new sections 75B, 75C and 75D into the 2014 Act, requiring local authorities to submit a draft of their sufficiency plans to the Welsh Ministers for approval, specifying the procedure to be followed where a draft plan is not approved, and the preparation of an annual report for each financial year by the local authority.

Action proposed

Welsh Government proposes to make regulations under all the new regulation making powers within new Section 75A listed above.

Regulations under S75A(2)(a) would prescribe that sufficiency plans must be in the form of a template made available by Welsh Government.

Regulations under S75A(3)(f) would set out further ‘core’ elements to be included in sufficiency plans in addition to those already set out in S75A(3). These include:

• the profile and assessed needs of children and young people requiring care and support within the local authority area
• numbers of looked after children
• placement patterns, including placements outside the local authority area and outside Wales
• use of children’s home services, fostering services and secure accommodation services
• placement of children in places in respect of which the provider is not registered to provide a regulated service
• number of children subject to deprivation of liberty orders
• current and forecast sufficiency challenges and risks
• the availability of accommodation and placement provision at local, regional and national levels
• workforce capacity, capability, recruitment, retention and workforce planning
• data quality and data limitations
• alignment of annual sufficiency plans with other relevant strategies and plans

Proposed regulations not being considered:

The new arrangements in relation to approving applications for supplementary placements will not come into force until April 2030. This includes any corresponding requirement for sufficiency plans to meet the requirements under sections 75A(3)(b), 3(c) and 3(d). Consequently, regulations made under section 75A(3)(d)(iii) and (iv) are not being brought forward under this legislation and will be considered in due course.

How the five ways of working in the Well-being of Future Generations (Wales) Act 2015 are applied, throughout the policy and delivery cycle

1. Long term

The Welsh Government’s approach to removing profit from children’s care reflects a long-term vision for sustainable, equitable care. By requiring providers to operate on a not-for-profit basis, the policy aims to ensure that resources are reinvested into improving outcomes for children rather than distributed as profit. This aligns with the long-term goal of creating a stable care system that prioritises well-being over financial gain.

The proposed regulations regarding annual sufficiency plans are intended to secure benefits over the long term, through supporting the sufficiency planning framework which will require local authorities to:

• assess current and projected needs, including trends in looked‑after children, future demand scenarios, and anticipated placement pressures
• plan for a range of accommodation within or near their area, reflecting the long‑term wellbeing of children by reducing unnecessary distance from home
• develop workforce plans, recognising workforce resilience as a long‑term determinant of placement stability and quality

In response to feedback via the formal consultation held on the sufficiency plan duty we have developed a template and supporting guidance for sufficiency plans. These will promote consistency, transparency and comparability and across the plans submitted, aiding longer term regional and national planning.

Annual sufficiency plans will enable local authorities and Welsh Ministers to evaluate long‑term progress, identify shifts in demand and provision, and inform continuous policy development. This aligns with the long‑term objectives of the overall removing profit and transformation agenda which emphasises sustained improvements in outcomes and reinvestment in public benefit.

2. Prevention

The broader removing profit policy seeks to prevent risks associated with profit-driven care, such as potential instability in placements due to market-driven decisions and increasing costs.

The proposed regulations regarding annual sufficiency plans will support prevention by:

• requiring forecasting of future need specifically requiring authorities to estimate the number and type of placements required, allowing them to plan capacity in advance rather than relying on emergency or unsuitable placements
• mandating analysis of risks, gaps and workforce pressures specifically gaps in provision, data weaknesses and risks, along with the actions to address them
• including forward‑looking actions to develop provision by requiring authorities to set out how they will ensure sufficiency in future years, promoting early market shaping, capacity building and investment, preventing shortfalls from materialising

Engagement with local authorities to develop the template specified in regulations will ensure that the preventative elements reflect operational realities and frontline experience.

3. Integration

As referenced within the Integrated Impact Assessment completed for the removing profit elements of the then Health and Social Care (Wales) Bill these proposed regulations form part of the wider removing profit work and Transformation Programme. To deliver this wider transformation programme governance arrangements have been put in place. We have taken a three-tiered approach to provide the right direction and scrutiny to achieve our aims and to ensure connections with other relevant policy agendas. The current structure has three key groups:

1. a Ministerial Oversight Board to oversee the Transformation Programme, providing political leadership and direction chaired by the First Minister and the Minister for Children and Social Care
2. a Transformation Delivery Group to lead work to drive forward the delivery of the Transformation Programme
3. the Eliminating Profit from the Care of Looked After Children Programme Board to provide additional expertise as we consider evidence, legislate and develop practical programmes for implementing this commitment

As the programme moves increasingly into an implementation phase, and in light of the formation of the new Welsh Government, these governance arrangements are subject to review. However, any amended successor structures will continue to reflect the core principles of strategic oversight, delivery focus, sector expertise and stakeholder engagement that have underpinned the programme to date.

Producing detailed annual sufficiency plans represents a significant administrative and analytical obligation, particularly for smaller authorities. To address any risk of unnecessary duplication and to provide greater clarity, a template and guidance to support the proposed changes will set out the importance of clear alignment between annual sufficiency plans and other planning and strategy documents in order to provide a coherent planning framework.

4. Collaboration

Development of proposed arrangements

Officials engaged closely with ADSS (The Association of Directors of Social Services) Cymru in developing the proposed approach. ADSS Cymru convened a group of local authority heads of service who provided feedback on the structure of the plans, the related submission processes, and the potential use of regulation‑making powers. Officials carefully considered this feedback in drafting the consultation. As a result, the document reflects this engagement, including the proposal to prescribe a template for the plan and to work collaboratively with local authorities to develop this initial template and update it, if necessary, in response to emerging needs.

Public consultation on proposals

A consultation ran from 9 February to 7 April 2026 covering the proposed approach and potential content of regulations relating to sufficiency plans. This included:

• use of the regulation making powers under new section 75A:
• the proposed approach and processes relating to:
  • new section 75B - duty to secure accommodation: procedure for approval of sufficiency plan
  • new section 75C - duty to secure accommodation: procedure if draft plan not approved by Welsh Ministers
• general feedback on implementation of the other requirements relating to sufficiency plans within new section 75A, including:
  • requirements to estimate the number of children that it will be looking after
  • the amount of accommodation provided by local authority foster parents and children’s homes that will be available to the local authority
  • the number of applications the local authority anticipates making for approval of supplementary placements in accordance with section 81B inserted into the 2014 act

Alongside the above areas, the consultation sought views on draft sections 1 and 8 of the Integrated Impact Assessment (IIA) to enable structured consideration of the impact of the proposals.

The consultation was promoted to a wide range of stakeholders, including social care providers, local authorities, health boards, NHS trusts, regulators, inspectorates, third sector organisations and social partners, and was publicised through Welsh Government and Health and Social Care e-newsletters. Easy-read and children and young people’s versions were not produced as the proposed regulatory changes were minor and technical. However, engagement with representative organisations, including the Children’s Commissioner for Wales, Voices from Care Cymru and NYAS Cymru, continues to ensure children and young people understand the wider programme of reform.

Summary of consultation outcomes

17 consultation responses were received. Broadly these comprised a mix of individual for-profit and not-for-profit providers, individual local authorities and umbrella organisations representing the interests of local government, service providers and children and young people. A collective response was submitted on behalf of ADSS Cymru the Children’s Commissioning Consortium Cymru (‘4Cs’), Foster Wales and the Welsh Local Government Association (WLGA).

The majority of respondents supported the proposal to require annual sufficiency plans to be completed using a nationally prescribed template. Respondents generally considered that a standardised approach would support consistency, comparability and oversight across Wales.

There was also broad support for regulations prescribing additional information to be included within annual sufficiency plans. Respondents highlighted the importance of ensuring plans contain sufficient information to support assessment of current and future sufficiency, while avoiding unnecessary duplication of information already contained within related strategies and planning documents.

Regarding draft sections 1 and 8 of the IIA responses were broadly positive, with many agreeing that the assessment reflected the policy intent and expected benefits of removing profit from children’s care. Some respondents sought greater detail on workforce sufficiency and retention, the sustainability of residential and specialist provision, impacts on rural and smaller authorities, transitional risks, potential disruption for children with complex needs, administrative burdens and Welsh language considerations.

Feedback received through the consultation was carefully considered, including in updating and preparing this full IIA and the Explanatory Memorandum and Regulatory Impact Assessment accompanying the specific regulations.

5. Involvement

In addition to the consultation on the proposals, officials have worked closely with the local government sector to develop the proposed arrangements. These efforts include direct engagement with ADSS Cymru, which convened a dedicated group of local authority heads of service to scrutinise and shape the proposed approach to sufficiency plans. This group provided detailed feedback on the structure of the plans, the submission and approval processes, and the potential use of regulation making powers.

8.1 How have people most likely to be affected by the proposal been involved in developing it?

In developing the proposed regulations regarding annual sufficiency plans, engagement was undertaken with those most likely to be affected, in line with the Well-being of Future Generations (Wales) Act 2015 and the Equality Act 2010 and a formal consultation completed.

The Eliminating Profit Programme Board and its associated workstreams contain wide-ranging representation from across the relevant sectors. These include public sector and not-for-profit care sector and for-profit sector providers of children’s care home and fostering services. The programme board and its workstreams have been updated on this work at key points and members had an opportunity to contribute formally through the consultation process. While the programme's governance arrangements are currently being reviewed, any successor board, workstreams or working groups will continue to bring together key stakeholders and provide opportunities for them to contribute to and inform the ongoing development and implementation of this work.

8.2 What are the most significant impacts, positive and negative?

Given their technical nature, the proposed regulations regarding annual sufficiency plans are expected to have limited impacts across people, culture and the Welsh language, the economy, and the environment in Wales. However, they are expected to have a positive effect on the Welsh language by requiring local authorities to consider Welsh language demand, provision and workforce capability, helping to identify gaps, strengthen Welsh-medium capacity and support children to remain within their communities.

Regarding anticipated positive impacts by mandating consistent analysis of needs, demand trends, risks, and workforce capacity, the regulations will help local authorities anticipate pressures and shape provision more effectively, improving the likelihood that children can be placed close to home and in settings that meet their needs. This greater structure and consistency across Wales will also enhance transparency and accountability, creating a stronger basis for national oversight and comparison. The requirement to align sufficiency plans with existing statutory documents- such as population assessments, area plans and market stability reports - further strengthens integration and encourages a whole‑system approach to improving care.

Regarding potential negative impacts the regulations do create new demands on local authorities. Producing detailed annual sufficiency plans represents a significant administrative and analytical obligation, particularly for smaller authorities. There is also a risk of duplication with existing strategic documents unless guidance is sufficiently clear.

To address this, the proposed template and guidance will set out the importance of clear alignment between annual sufficiency plans and other planning and strategy documents in order to provide a coherent planning framework. They will state that sufficiency plans act as the primary statutory vehicle for demonstrating how local authorities are meeting their duties relating to children looked after. They will also state how in compiling them local authorities should draw appropriately on existing strategies, assessments and regional documents.

Challenges with ensuring consistent data quality, especially around forecasting and identifying gaps may also risk the comparability of plans. These potential negative impacts are intended to be mitigated through close working with local authorities to shape the accompanying template and guidance. This should ensure the requirements are practical and realistic with guidance and processes co-designed with those required to implement the regulations.

8.3 In light of the impacts identified, how will the proposal:

• maximise contribution to our well-being objectives and the seven well-being goals?
• avoid, reduce or mitigate any negative impacts?

Given the changes in the proposed regulations regarding annual sufficiency plans are technical in nature and relate to existing processes they are not anticipated to impact significantly to the seven well-being goals. However potential impacts are set out below, in some cases linked to the broader removing profit policy:

• a prosperous Wales – the proposed regulations strengthen long‑term planning and effective use of public money by giving local authorities clearer data requirements and specifying a consistent template, helping them direct investment toward the right types of local provision and avoid inefficient emergency or distant placements, while co‑produced guidance reduces unnecessary administrative cost
• a resilient Wales – by requiring authorities to analyse future needs, risks, workforce challenges and sufficiency gaps, the proposed regulations help build a more stable, adaptable care system that is better able to withstand market pressures and minimise disruptions for children, while shared guidance helps authorities manage transitional risks
• a healthier Wales – improved sufficiency planning will support children to access stable, appropriate accommodation close to home, which is essential for physical, emotional and mental well‑being; clearer guidance will also help ensure that data and planning weaknesses do not undermine children’s outcomes
• a more equal Wales – a standardised template and clearer duties reduce variation between areas, helping ensure all children—regardless of location—benefit from the same level of planning, evidence and scrutiny, and that no group is disadvantaged by inconsistent practice or local capacity
• a Wales of cohesive communities – the strengthened, more consistent planning supported by the proposed regulations will help more children remain connected to their families, schools and communities, supporting healthy relationships and community stability, while co‑developed guidance encourages more joined‑up working across authorities
• a Wales of vibrant culture and thriving Welsh language – the structured planning approach supported by the proposed regulations will make it easier for authorities to identify and respond to Welsh‑language placement needs, and shared national templates help ensure linguistic considerations are embedded consistently across Wales
• a globally responsible Wales – requiring the strengthened evidence‑based planning supported by the proposed regulations alongside co‑produced guidance promotes responsible, ethical use of public funds and supports a care system designed around children’s rights and long‑term sustainability, mitigating risks associated with uneven implementation.

8.4 How will the impact of the proposal be monitored and evaluated as it progresses and when it concludes?

The impact of the proposed 2026 regulations will be closely monitored. Officials regularly engage with partners across the sector to obtain market intelligence, including regular engagement with local authorities via ADSS Cymru and through the national body of work undertaken through the Eliminating Profit Programme Board.

Regarding broader evaluation the overall removing profit policy is expected to be subject to a formal evaluation over the coming years. Using the evidence gathered to date within the RIA (Regulatory Impact Assessment) and the intelligence gathered as part of the 2024 Delphi exercise, we intend to commission a follow-up study to refresh sector intelligence to assess the extent that the views of the children's social care sector on the removing profit agenda have evolved since the 2024 Delphi study. It will also identify the factors (for example, the development of sufficiency plans) that could affect its successful delivery and evaluation.

This study will examine the 2024 Delphi findings, assess current perceptions of the 2025 Act, and identify new risks, assumptions, and areas of consensus or divergence. It will also generate actionable inputs such as candidate indicators, feasible data sources, and evaluation options.

The follow-up study will adopt a formal methodology to provide a wider evidence base and account for external factors and risks. In parallel, officials will engage with key stakeholders through the Eliminating Profit Programme Board (or any implementation-focussed successor board) to gather views and shape the evaluation approach collaboratively.

The approach to that evaluation has been agreed by ministers and will be undertaken in collaboration with government social research officials to determine the most effective evaluation method. It will include the collection of baseline data obtained from the introduction of new arrangements in 2026.

The study is expected to be commence during 2026. This will enable preparation of the formal evaluation specification and commencement of work in 2026 to 2027.