Removing profit from the care of children looked after: board discussion May 2025

Our Programme for Government contains a number of commitments that set out our vision for children’s services in Wales. Our ambition is for whole system change and, at its heart, we want to see more children and young people being enabled to live with their families and in their home neighbourhoods with many fewer needing to enter care. We also want to ensure the period that young people are in care is as short as possible.

We are committed to keeping families together. Our vision is to redesign how we look after children and young people so we can do the best for our young people, their families and communities by providing services that are locally based, locally designed and locally accountable.

The initial focus of our proposals is on the private provision of residential care for children, alongside independent sector foster care and secure accommodation.

A multi-agency programme board has been established to progress the technical and development work to support our legislative options, shape our future approach and deliver market stability.

Progress in relation to the Health and Social Care (Wales) Act (the act)

• The Health and Social Care (Wales) Bill containing the removing profit provisions was passed by the Senedd on 4 February 2025. It received Royal Assent and became an act on 24 March 2025.
• Work was now underway to compile a list of potential amendments needed to existing regulations as a result of implementation of the removing profit elements of the Health and Social Care (Wales) Act 2025 (“the act”).
• Documentation for the consultation covering the proposed approach to registration and monitoring and enforcement of unreasonable or disproportionate financial arrangements was being put together ahead of the consultation launch in summer 2025.

Funding

Funding had recently been confirmed for several areas of work to support the implementation of the legislation, including:

• revenue funding for Cwmpas to provide support to existing for-profit providers to re-establish under one of the four business models outlined in the act
• revenue funding for local authorities to support and develop services as part of implementation as well as for the radical reform agenda of reducing children looked after numbers
• revenue funding for the Association of Directors of Social Services Cymru to support and coordinate local authority planning across Wales

Communications

Following extensive stakeholder input targeted communications on removing profit were published on the Welsh Government Removing Profit Webpage on 11 April 2025. These were shared with a wide range of relevant stakeholders to circulate, including all programme board members.

The Welsh Government held workshop events in Wrexham and Cardiff on 1 April 2025 and 11 April 2025 for private care providers. These were intended to update providers on the final legislation and planned implementation timescales, give providers an opportunity to pose questions to officials and identify any areas where they feel additional clarity and support was needed. A further targeted communication document for providers would be prepared based on the queries posed during these workshops.

In addition to the targeted communications a Welsh Government report was published on 6 May 2025 and shared with members of the programme board. This report, the first in a series of 6 monthly reports gives an overview of the sector in Wales as it currently stands, giving recent data on the number of children’s home services, fostering services and secure accommodation services, breaking this down by provider type (not-for-profit local authority, other not-for-profit or for-profit) and local authority area. Information on market entrants and exits was also included alongside data on placement stability and take up of statutory advocacy. The removing profit from the care of children looked after: transition to a not-for-profit model was published on 6 May 2025.

Risk register and lessons learned log

The risk register and lessons learned log had been shared prior to the meeting. The wording had been reviewed to ensure the terminology accurately reflected the process regarding reestablishing under one of the not-for-profit models listed in the act. No other changes had been made.

Terms of reference

A revised terms of reference for this board had been circulated to members prior to this meeting. This represented the first comprehensive review and update of the document since the board had been established and had been revised to reflect the implementation phase the policy had now entered.

Following members comments, officials would be considering the wording of some sections prior to board sign off and subsequent publication on the removing profit web page.

Market intelligence report

The market intelligence report had been prepared by the Children’s Commissioning Consortium Cymru (4Cs) and shared with members ahead of the meeting.

Since the previous programme board meeting and following discussions with Care Inspectorate Wales, the report now also included data on local authority residential children’s homes. An update was provided which included the below key highlights:

• Commissioned services from residential providers had increased and new homes opened. Currently no plans had been noted post 2026, and some providers had existing plans to expand their services but only up until the cut-off date of April 2027.
• Based on current registrations, local authority residential care provision had increased.
• On foster care, commissioning of independent foster care had decreased, but this was reported as being due to sufficiency not due to a move towards not-for-profit care.
• 1 for-profit foster care provider had been acquired by another provider, and an existing charity had been absorbed by another charity.

Workstream 1 update

Workstream 1 had continued to meet regularly since the previous meeting of the programme board.

The chair of workstream 1 provided an update at this meeting, noting that the risk register had been reflected on and discussed at each meeting and no specific changes were recommended at this time.

Members of workstream 1 would also be involved in the production of future Welsh Government reports on the transition to a not-for-profit model as outlined above.

Workstream 2 update

Workstream 2 had also continued to meet on a regular basis. The chair of this workstream was unable to attend this meeting and so a written update was instead provided to members following the meeting. 

The update noted that substantive discussions centred around reforming governance structures within the workstream and the creation of 2 subgroups: 

• 1 subgroup focused on growing not-for-profit provision
• another subgroup focused on engaging new market entrants in children’s care

Members supported the general approach, agreeing to initially set up 2 subgroups with broad and evolving membership, and to ensure alignment with existing Welsh Government forums.

Workstream 3 update

The programme board chair updated members that having sought the views of workstream 3 members, it was felt the group should not continue. A final wrap up meeting would be held, chaired by Welsh Government officials.