New Legislation to Cap Profits in Children's Homes
The Children's Wellbeing and Schools Bill and the Health and Social Care (Wales) Act 2025 were both introduced in 2024. Both include provision to limit profits in certain settings which provide care and support wholly or mainly to children.
Health and Social Care (Wales) Act 2025 received Royal Assent recently and will restrict profits in these services and will require that they are a 'not-for-profit' entity.
The Children's Wellbeing and Schools Bill intends to impose a profit cap, which will cap the profits on non-local authority providers of children's homes and fostering agencies in England. The legislation will leave certain details, including how profit will be determined and the level at which the cap will be set, to be defined at a later date through secondary legislation.
The Children's Wellbeing and Schools Bill is now at its second reading in the House of Lords, which serves as the initial chance for the Lords to discuss the Bill's core principles and main objectives. It also provides an opportunity to highlight any concerns or suggest areas where amendments may be necessary.
We have been working with providers in order to pre-empt these changes in legislation by providing advice and support around different corporate strictures which would be compliant with the new proposed legislation.
We will also continue tracking the progress and developments of this legislation in order to be able to advise providers on the potential impact this may have on their businesses as and when this legislation comes into force.