Removing profit from children’s care

The Welsh Government has introduced the Health and Social care (Wales) Act 2025 [external link] which will remove profit from the care of children looked after in Wales. This will affect how some care services are delivered in the future.

You can find full details about the legislation and re-establishing as a not-for-profit model on the Welsh Government Removing profit from the care of children looked after webpage [external link].

How will the changes be implemented?

The legislation will be implemented in phases:

From 1 April 2026

No new for-profit providers. The following restrictions will apply:

• New for-profit providers of restricted children’s services (children’s care homes, fostering agencies, and secure accommodation) will not be able to register with CIW.
• Existing for-profit providers of restricted children’s services will not be able to vary their registration to add another restricted children’s service
• Anyone wishing to register a restricted children’s service must be registered as one of these four business models, approved by Welsh Government:
  • A charitable company limited by guarantee without share capital
  • A charitable incorporated organisation
  • A charitable registered society
  • A community interest company limited by guarantee without a share capital

From 1 April 2027

No expansion of existing for-profit provision. The following restrictions will apply:

• Existing for-profit providers will no longer be able to increase their maximum capacity
• Fostering agencies will no longer be able to approve new foster carers

From 1 April 2030

Restrictions on placements in existing for-profit provision. The following restrictions will apply:

• Children cannot be placed into the care of a for-profit organisation in Wales by an English local authority except in exceptional circumstances (to be outlined in the regulations)
• Welsh local authorities will only be able to place children in an existing for-profit service in Wales with the agreement of Welsh Ministers via the supplementary placement process outlined in the Act
• Welsh local authorities must obtain Ministerial approval through the supplementary placements process before making any new placements in fostering, residential, or secure accommodation in England, except where the placement is within local authority-run provision.

How we will support care providers

We will play a key role in supporting the implementation of this legislation. We are here to help you understand what the changes mean for your service.

We will:

• provide advice and guidance to existing RISCA services on how the legislation will apply to them.
• introduce a streamlined registration process for providers who are currently registered and wish to re-register as not-for-profit operations.
• hold advice surgeries later this year, offering direct support and answering your questions about the transition.

If you have any questions about how the changes may affect your service, please don’t hesitate to contact our dedicated CIW – Remove Profit mailbox. 

Consultation: Removing profit from children's care

The Welsh Government is consulting on how it will implement the removal of profit from children’s care services from 1 April 2026.

The proposals include changes to:

• the registration process
• annual returns
• monitoring and enforcement arrangements

We strongly encourage you to read the proposals and respond to the consultation. Your views will help shape how these important changes are delivered.

View the consultation document and submit your response [external link]

The consultation will close on 8 October 2025.

Related consultations

The Welsh Government is also consulting on two other sets of draft regulations to support the implementation of the Health and Social Care (Wales) Act 2025. These consultations focus on:

• Proposed changes to provider annual returns and applications to cancel registration [external link]
• Proposed regulations for direct payments in health and social care [external link]

Additional support

If you're considering transitioning to a not-for-profit business model, we recommend contacting Cwmpas for advice.