New Wales Report: Children’s care at risk as Senedd prepares to vote through budget with black hole

For immediate release: Children’s care at risk as Senedd prepares to vote through budget with black hole

The Children’s Homes Association (CHA) has today published a new report warning that Welsh Government’s policy to eliminate profit from children’s residential care is being implemented without a funded or realistic delivery plan — creating immediate risks for children, local authorities, and the care workforce.

The report, ‘Crisis in children’s care: The budget cap, cost shunting to councils and the risks for children in Wales’  is published just days after the Welsh Government’s Final Budget 2026–27 was announced on 20 January, and ahead of the Senedd’s budget vote on 27 January.

While the budget identifies “children’s care services – aiming to end profit-making in children’s care” as a priority area, no funding figure or costed implementation plan is attached. CHA warns that this leaves local authorities absorbing the financial and operational consequences of reform at a time when the system is already under severe strain.

“The policy destination may be clear, but the journey is not funded,” said Dr Mark Kerr, CEO of The Children’s Homes Association. “Decisions taken in the coming days risk locking in instability before the practical consequences for children are fully understood.”

Evidence of harm already emerging

Drawing on Welsh Government data, sector evidence, and frontline case studies, the report shows that the assumptions underpinning the eliminate-profit policy no longer reflect current realities.

Key findings include:

• Rising placement instability, with children moved despite being settled, driven by pressure to exit independent provision rather than assessed need.
• Growing reliance on emergency and temporary placements, including agency-staffed provision, as sufficiency tightens.
• Increased costs to the public purse, with local authority residential provision averaging around £1,450 more per child per week than independent provision. At current scale, over the next 5 years this equates to around £ 335 million, or £250 per Welsh household, before capital costs.
• No identified funding envelope in the Final Budget capable of delivering the policy safely at scale without creating material risk to children.
• The report includes case studies that illustrate how policy pressure translates into disrupted placements, loss of attachment, escalating trauma for children, and distress for the workforce.

A call for pause — and a pragmatic route forward

CHA is calling on Welsh Government to pause further restrictive implementation of the eliminate-profit policy and commission an independent, time-limited review focused on sufficiency, workforce capacity, fiscal impact, and children’s lived experience.

The report also sets out a pragmatic solution: widening the range of permitted not-for-profit models to include regulated, mission-locked, investable structures such as Employee Ownership Trusts and Community Interest Companies limited by shares. CHA argues this would protect the policy’s intent while reducing capital exposure for local authorities and avoiding an avoidable sufficiency cliff edge.

“This is not about abandoning reform,” Dr Mark Kerr added. “It is about governing responsibly. There is a credible way to protect children, reduce risk, and align ambition with reality — but only if decisions taken now are grounded in evidence.”

The Senedd will debate and vote on the Final Budget 2026–27 on 27 January.

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Contacts for media enquiries:

Sophie Crewdson | media@the-cha.org.uk | 07974 081549

Dr Mark Kerr’s Personal Assistant (Naomi Bowler) | naomi.bowler@the-cha.org.uk | 07498 959 731

Notes to editors

• The Children’s Homes Association (CHA) represents providers of registered children’s homes across England and Wales and across the public, private and charity sectors, alongside local authority and not-for-profit partners.
• CHA has already tightened its own sector standards: since April 2024, CHA membership has required UK ownership, UK taxpayers as shareholders, and the exclusion of tax-haven loans or investment.