The Children’s Wellbeing and Schools Bill, introduced in December 2024 as part of Labour’s manifesto to rebuild the UK and “break down barriers to opportunity by reforming our childcare and education systems”, has now reached the Committee stage in the House of Lords.
One of the stated aims of the Bill is to “improve the children’s social care placement market and tackle profiteering” and ensure that the right types of homes are in the right places to meet the needs of the children.
Measures include:
- Establishing a “financial oversight regime” to increase transparency of “difficult to replace care operators and their corporate owners”.
- Providing for the Secretary of State for Education to implement “a cap on the profits of non-local authority providers of children’s social care in future, if other market intervention measures do not have the desired effect”.
- Supporting the creation of “regional care co-operatives” to improve the forecasting and commissioning of placements.
The Bill’s measures apply to England but many of the measures would also apply to Wales.
The government has been clear that it only intends to use its powers to cap profits if other policies do not sufficiently reduce profiteering in the market. The profit cap measure will be subject to a public consultation, including engagement with provider representatives and local authorities.
The measures support the government’s proposals outlined in the November 2024 policy papers, Keeping children safe, helping families thrive, which set out its plan to “reset the children’s social care system” including fixing the “broken care market” ensuring “levels of profit are not above what would be expected in a well-functioning market”.
It also follows the March 2022 Competition and Markets Authority’s market study on the children’s social care market which identified problems in how the placement market is functioning.
A few impacts of the Bill
While the Bill’s proposals set out the framework for how a future profit cap will work, there are many unanswered questions which will need to be worked through in secondary legislation, such as how profit will be calculated and the level of the cap. However, the Secretary of State will need to consult on the profit cap before making secondary legislation with providers given sufficient notice before being implemented.
The Welsh case
We have already seen Wales introduce new legislation to end profit being made from children in care, with the Health and Social Care (Wales) Act 2025 receiving Royal Assent in March 2025. Wales is the first UK nation to legislate to end private profit in children’s residential and foster care.
Care for looked after children will only be provided by the public sector, charitable or not-for-profit organisations in the future.
It means that 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).
So, the cap proposed in the English Bill does not go as far as Wales have done.
Roundtable discussion: A collaborative and child-centred approach to children’s social care
During a recent female-led roundtable on children’s social care kindly hosted by Christie & Co, Compass Carter Osborne and GK Strategy, key stakeholders from the sector discussed the challenges facing operators and investors across England and Wales.
Some of the issues discussed covered:
- The introduction of profit-capping in children’s social care and what this means for the sector.
- Investment in the sector and ongoing communication issues impacting progression.
- Leadership and an effective management structure in healthcare businesses.
Complexity of placements, quality standards, outcomes and progression all featured heavily during discussions.
The outputs from the roundtable are summarised here and include some actionable takeaways that collectively operators and investors can take to demonstrate the positive outcome the private and independent sector is delivering for children and young people.
If you’d like to discuss any of the issues raised here, please do contact Jill Mason.
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