Written statement (Wales) on The Health and Social Care (Wales) Act 2025 (Commencement No.1 and Transitional and Saving Provisions) Order 2025 and updates on implementation of the Act - Dec 2

Dawn Bowden MS, Minister for Children and Social Care: On 24 March 2025, the Health and Social Care (Wales) Act 2025 (“the Act”) received Royal Assent, marking a significant milestone in our commitment to improving care and support across Wales.  This landmark legislation introduces reforms designed to strengthen the health and social care system, enhance transparency and empower individuals through greater choice and control.

The Act delivers three key policy objectives:

• Removing profit from children's social care, ensuring that care for children looked-after is provided on a not-for-profit basis;
• Introducing direct payments for healthcare, focusing on adults eligible for Continuing NHS Healthcare (CHC); and
• Making miscellaneous amendments to both the Social Services and Well-Being (Wales) Act 2014 and the Regulation and Inspection of Social Care (Wales) Act 2016, to ensure these parts of the statutory framework operate effectively.

Commencement of Provisions

Last week, I signed the first Commencement Order that brings relevant provisions of the Act into force, in line with our implementation schedule:

• From 1 January 2026
• Relevant regulation-making powers will come into force to allow necessary subordinate legislation to be in place by April 2026.
• Provisions will come into force to support consultation, in Spring 2026, on the contents of the annual local authority sufficiency plans which will be required under section 11 of the Act.
• Part 2, Section 24 (and associated provision in Schedule 2): Direct payments in healthcare will also be commenced, giving power to Local Health Boards (LHBs) to provide CHC packages to eligible adults via direct payments, from April 2026.
• From 1 April 2026
  • Part 1, Chapter 1 will come into force, commencing, with certain exceptions, provisions relating to restrictions on profit in children's social care services.
  • Part 1, Chapter 2 will come into force, commencing, with certain exceptions, provisions relating to social care services, workforce, and direct payments in social care.

These dates have been planned and publicised in advance to provide sufficient time for consultation (which took place between July and October, this year), legislative drafting and support for operational preparations.

My officials are currently working to prepare all statutory instruments and supporting documentation required for April 2026, including consultation summary reports, for laying or publication after the Christmas Recess. 

The Commencement Order also makes transitional provision concerning applications by providers to register a new ‘restricted children's service'[1] or to add a place at which a restricted children's service is provided to their existing registration. The cut-off date for such applications to be considered, without application of the new not-for-profit requirement, will be 31 March 2026.

And from 1 July 2026, the Commencement Order will also bring into force further provision relating to the local authority duty to prepare and publish annual sufficiency plans, and Ministerial approval of these. The first plans are due to be submitted to the Welsh Ministers in December 2026.

Implementation Updates

1. Removing Profit from Children's Social Care

Preparations for implementation of the not-for-profit provisions are progressing at pace, in partnership with local authorities, service providers, and sector bodies. 

From 1 April 2026, no new children's homes, secure accommodation or fostering services will be permitted to register with Care Inspectorate Wales (CIW) unless the provider is one of the specified types of not-for-profit organisation. In addition, existing providers of these services will not be able to apply to CIW to vary their registration to add a new service or place, unless the provider is one of those specified types of not-for-profit organisation.

A public consultation on proposed regulatory changes and an approach to monitoring and enforcing the Act's provisions around unreasonable or disproportionate financial arrangements closed on 8 October 2025. A summary of responses will be published early next year and will inform the final regulations. 

To support delivery, Welsh Government has committed £75 million over three financial years (ending in 2028) through the Eliminate and Radical Reform Grant, to help local authorities and regions develop new residential and fostering provision. This builds on £68 million already provided between 2022 and 2025. We are also funding the Association of Directors of Social Services Cymru to coordinate planning and support local authorities and regions across Wales.

In addition, we are working with Cwmpas to assist existing for-profit providers which are considering re-establishing as one of the four specified not-for-profit organisations. Expert advisors are providing tailored, confidential advice to help providers make informed decisions. Early feedback indicates this support is highly valued.

Further information on our Programme for Government commitment to remove profit from the care of children looked-after can be found on the Welsh Government website.

Finally, a second progress report on the transition to a not-for-profit model has been prepared and provided to the Health and Social Care Committee, fulfilling recommendation 9 of its Stage 1 scrutiny report. The progress report includes detailed data on registered services, places and households, broken down by local authority and regional partnership board areas. It is availableon the Welsh Government website.

We continue to engage with representative groups, including the Children's Commissioner for Wales, Voices from Care Cymru and the National Youth Advocacy Service Cymru, to ensure children and young people understand what these changes mean for them.

2. Direct Payments for Healthcare

Preparations for introducing the option of making direct payments for CHC from 1 April 2026 are well underway. This reform will give eligible adults the opportunity to request a direct payment for their CHC support, enabling greater choice and control over care arrangements.

Key developments include:

• Consultation: a consultation on proposals for regulations closed on 8 October 2025. Responses have been analysed, with a summary report due to be published early next year. These will inform final regulations and guidance.
• Drafting of guidance to understand the regulations: guidance is being developed with stakeholder input to support implementation and will evolve as delivery progresses.
• Funding: £150,000 has been approved this financial year to support LHBs with preparatory work, including a dedicated post to coordinate implementation. This forms part of a three-year transitional funding package outlined in the Act's Explanatory Memorandum and Regulatory Impact Assessment.
• Evidence base: A rapid evidence survey commissioned from Health and Care Research Wales has been published to inform policy and operational planning.
• Engagement: Officials maintain regular contact with CHC leads in all LHBs, supplemented by bimonthly meetings and wider forums. Recent engagement includes the Disability Equality Forum, All Wales Direct Payments Forum and CHC workstream of the Value and Sustainability Board. Lessons from direct payments in social care within Wales, and other regions, are being incorporated.

While the option to request a direct payment will be available from 1 April 2026, implementation will depend on meeting eligibility criteria and completing required processes. Any future extension of direct payments in healthcare, beyond CHC, will require further policy decisions and consultation.

3. Service Provider Annual Returns and Registration

The Act strengthens transparency and accountability for regulated social care services. 

From 1 April 2026:

• Providers must publish their annual returns on their own websites by 30 June each year, within 91 days of the financial year end. Failure to comply will be an offence potentially subject to a penalty notice.
• Providers wishing to cancel their registration must submit applications via their CIW online account, providing specified information to ensure service closures are managed safely and with due regard for individuals' well-being. These measures replicate existing processes for applications to vary a provider's registration.

The Act also clarifies CIW's powers under the 2016 Act to investigate suspected unregistered provision. 

A summary of responses to our consultation on proposed regulatory changes will be published early next year, to coincide with the laying of the regulations. 

Engagement and Next Steps

We remain committed to co-production and transparency throughout implementation of the Act. Engagement with stakeholders – including local authorities, LHBs, providers and representative groups – will continue to shape future regulations, guidance and operational planning.

Next steps include:

• Publishing all consultation summaries in early 2026.
• Laying all subordinate legislation (as required for April 2026) in early 2026.
• Consultation on annual local authority sufficiency plans in spring 2026, with first plans due to be submitted by 1 December 2026.
• Finalising guidance (for CHC direct payments) and all operational preparations for April 2026 implementation.
• Continuing to report progress on removing profit from the care of children looked -after, and on direct payments for CHC, to the Senedd's Health and Social Care Committee, in line with agreed recommendations.

Furthermore, CIW has dedicated webpages to provide information and support to service providers regarding the regulatory and statutory changes for them – in relation to removing profit from children's social care and general changes to requirements for the publication of annual returns and applications to cancel registration. 

Conclusion

The Health and Social Care (Wales) Act 2025 represents a transformative step in delivering a fairer, more sustainable care system. By removing profit from children's social care, introducing direct payments for healthcare and strengthening our regulatory frameworks, we are ensuring that care and support in Wales is rooted in public interest and person-centred values.

I will continue to keep Members updated as we move towards full implementation in April 2026.

[1] a care home service provided wholly or mainly to children, a secure accommodation service or a fostering service