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Welsh Government Consultation to eliminate profit-making for residential children in care

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The Welsh Government open consultation on plans to eliminate profit-making residential

provision for children in care.

The Welsh Government has opened a consultation on plans to eliminate profit-making residential

and fostering provision for children in care.

The proposals, which form part of a cooperation agreement between the Labour administration and

the Plaid Cymru group in the Welsh Senedd would restrict the registration of service providers to those

operating a non-profit model.

New providers seeking to register with Care Inspectorate Wales would have to demonstrate not-for-profit status from 1 April 2026, with existing for-profit firms needing to transition by 1 April 2027, under new primary legislation sought by the Welsh Government.

Consultation documents said work was “currently being undertaken” to support private providers

wishing to move away from profit-making models, and to assist non-profit organisations looking to

expand their provision.

As of March 2021, the rate of Welsh children in care was 115.3 per 10,000 of the population, far

above the 67 per 10,000 for their English counterparts.

Of 1,068 residential places available as of July 2022, 85% were with private providers, consultation documents said, with nine of Wales’s 22 local authorities wholly reliant on private-sector children’s homes.

The Competitions and Markets Authority (CMA) warned that profits among the largest providers of both residential and foster care were higher than would be expected in a well-functioning market. However, it rejected restricting for-profit provision, arguing that doing so would not necessarily

deliver significant cost savings and could choke the supply of places, at least in the short term.

Meanwhile, Peter Sandiford, the chief executive of the Children’s Homes Association (CHA), which represents independent providers, said he was “significantly worried” about the consultation,

including the potential cost implications of the proposals.

Sandiford said there was a “significant risk” that the proposals would “result in large-scale closure of good provision without any alternatives being put in place”. He added that more children could end up placed in unregulated provision, or sent over the border to England, where they may be deprived of being able to interact in their first language.

Sandiford said the CHA continued to favour reform of commissioning practices, in line with the

recommendations of the CMA review, and that he would be writing to the Welsh Government “to

set out our views and express our concerns”.

The new consultation includes discussion of action around commissioning, which would complement registration restrictions by limiting local authorities to purchasing placements from non-profit providers.

The Welsh Government’s consultation runs until midnight on 7 November 2022.

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