The evidence

Understand the evidence behind our campaign

Understand the evidence behind the carechildrenneed.wales campaign, and why the previous Government's policy to eliminate private children's homes is placing children, families and communities at unnecessary risk.

What the evidence says

Our approach

How did we analyse the risks?

Our analysis considers not only the risks created by the policy, but also the assumptions that were used to justify it.

The evidence shows a consistent pattern: the assumptions do not match the realities of the current system and carry significant risks for children, families, and communities.

Financial risks

The assumption

The policy is underpinned by the assumptions that councils can afford to simply replace private children's homes and that removing private organisations will make care cheaper.

This assumption is not supported by evidence.

£436m–£518m

plausible four-year public expenditure exposure from the children's social care provisions of the Health and Social Care (Wales) Act 2025

We looked at:

  • The cost of implementation

    We modelled the children's social care provisions in the Health and Social Care (Wales) Act 2025 and identified a plausible four-year public expenditure exposure of approximately £436 million to £518 million, with the upper sensitivity exceeding £500 million.¹

  • The cost difference between existing independent provision and local-authority provision

    Data from the Children's Commissioning Consortium Cymru (opens in a new tab) indicates the average cost to an independent provider of a child placed in a registered regulated care home setting will be about £3,811 per child per week. An equivalent placement within a local authority setting is 38% higher, about £5,265 per child per week on average.

  • The current financial situation of local authorities

    The WLGA and the Society of Welsh Treasurers (opens in a new tab) estimate £486 million in spending pressures for 2027–28, within cumulative pressures of £1.559 billion between 2026–27 and 2028–29. Audit Wales (opens in a new tab) has also raised concerns about the way the costs of implementing new legislation are estimated, saying that councils need clearer information to plan effectively for new responsibilities.

  • The rising cost of delivering care

    Since the Welsh Government's Regulatory Impact Assessment (opens in a new tab), employer National Insurance has risen from 13.8% to 15%, the secondary threshold has fallen from £9,100 to £5,000, the Welsh social-care Real Living Wage is now £13.45 per hour, and work on pay and progression and future Fair Pay Agreements continues. These pressures are particularly significant in residential care, where staffing is the dominant operating cost.

Sufficiency & quality risks

The assumption

The policy assumes that children can simply move to another home.

The evidence shows that Wales does not have enough suitable homes now.

1,349

maximum places across 397 children's home services registered in Wales, as of 31 March 2026

We looked at:

  • The capacity of the existing care system

    The latest report (opens in a new tab) on the transition from the Welsh Government shows that as of 31 March 2026, there are 397 children's home services registered in Wales offering a maximum of 1,349 places. Private provision continues to account for over three-quarters of all children's home services and places.

  • The quality of independent provision

    The Welsh Government's own Regulatory Impact Assessment (opens in a new tab) states that existing data from Care Inspectorate Wales does not support a marked difference in quality between local authority and for-profit provision, with feedback provided by the Children's Commissioning Consortium Cymru's members demonstrating that the services members provide lead to good outcomes.

Timescale risks

The assumption

The policy is underpinned by the assumption that 3 years is enough time for local authorities to replicate the services that will be lost. The policy assumes that private providers will be able to become not-for-profits or charities.

The evidence shows that this is not realistic.

100%

of Children's Homes Association members surveyed responded that they will not be able to transition to the current model that is on offer

We looked at:

  • The ability of private providers to continue

    100% of Children's Homes Association members surveyed responded that they will not be able to transition to the current model that is on offer. 62% of members said they would consider changing if other models were available such as employment owned trusts and community interest companies. Existing providers seeking to continue providing care cannot simply ‘convert’ their company. In practice, a regulated service is likely to need to be wound down and re-established through a separate permitted legal entity, involving significant issues including staff consultation, TUPE arrangements, property ownership or leases, lenders and finance, and working capital.

  • The ability of councils to plan and fund replacement provision

    The evidence of financial risks demonstrates that councils are not financially positioned to absorb substantial new capital and operating costs associated with replacing independent children's homes.

  • How quickly new capacity can be developed

    Welsh Government transition reports (opens in a new tab) show only incremental changes in registered capacity over time, with modest net increases in places and continued reliance on privately run services. Case studies collected by The Children's Homes Association (opens in a new tab) indicate that the current implementation timeline is already affecting decisions being made about children's residential care.

Community risks

The assumption

The policy assumes removing private providers will not harm local communities, economies or the workforce.

4,318

people work in children's residential care in Wales, according to Social Care Wales

We looked at:

  • The role of independent care homes on the workforce and local economy

    Social Care Wales (opens in a new tab) estimates that 4,318 people work in children's residential care in Wales; 96.9% of workers in commissioned residential services are on permanent contracts. Losing providers means losing stable jobs.

  • The effect of provider exit

    Provider exit is not simply a loss of ownership but also of experienced staff, established teams and existing relationships with children and other services.

  • The effect on council budgets

    See financial risks above.

And most importantly

The impact on children and families

The assumption

The policy assumes that children and families will not be affected by the changes, or that more children should be living with foster families anyway.

We looked at:

¹ Footnote to the financial risks

CHA financial sensitivity methodology

The CHA model is a sensitivity analysis, not a forecast. It tests what the financial exposure could look like if a substantial amount of existing residential care capacity had to be replaced. The model uses published Welsh Government cost data alongside explicit CHA assumptions.

A1. One-off residential implementation and establishment cost

The model assumes approximately 240 replacement homes. The core property assumption is £700,000 per home, totalling £168.0 million. The higher scenario then adds £100,000 per home for mobilisation and set-up, £150,000 per home for first-year operating deficits while homes build occupancy, and a 10% allowance applied to the £228.0 million property-plus-mobilisation-plus-deficit subtotal for developments that fail, are delayed, or are otherwise not sustainably operational. This produces £250.8 million.

A2. Recurrent operating-cost sensitivity

Welsh Government's March 2024 written answer reported average weekly costs of £3,811 per child for a standard independent placement and £5,265 for an equivalent local-authority placement. The difference is £1,454 per week. The CHA model applies this to approximately 885 occupied-equivalent affected places: 885 × £1,454 × 52 = £66.913 million per year. Over four years, the sensitivity is £267.652 million.

A3. Combined range

Adding the four-year recurrent sensitivity to the property-only assumption yields approximately £435.7 million. Adding it to the higher one-off implementation and establishment scenario yields approximately £518.5 million.

A4. Limitations and interpretation

The model does not assume that every affected residential place will be lost, that every future local-authority or permitted-sector place will cost £5,265 per week, or that all costs will be incurred evenly over four years. Provider re-establishment, occupancy, service design, prevention activity and demand could reduce exposure. Greater provider exit, higher specialist need, property inflation, workforce shortages, financing constraints, registration delays or lower early occupancy could increase it. The model is therefore best used as a stress test to demonstrate why a refreshed Government affordability assessment should include materially higher-cost scenarios.

Where next?

The Solution

Read the three steps we're asking the new Welsh Government to take.

See the solution

What this means where you live

See the local evidence for each of Wales's 22 local authorities.

Find your area

Why is this happening?

Understand the policy, the current timeline and what it means for communities across Wales.

Why is this happening

References 

² Senedd Cymru (2024). Written Question WQ92167: Residential children’s homes. 18 March 2024. https://record.senedd.wales/WrittenQuestion/92167  

³ Welsh Local Government Association (2025). In Summary: Financial Pressures in Welsh Local Government. https://www.wlga.wales/wp-content/uploads/2026/03/Financial-Pressures-in-Welsh-Local-Government-1.pdf  

⁴ Audit Wales (2026). Funding councils: how the Welsh Government funds councils. https://audit.wales/publication/funding-councils-how-welsh-government-funds-councils  

⁵ ADSS Cymru (2024). Regulatory Impact Assessment into the Health and Social Care (Wales) Bill 2024. https://www.adss.cymru/en/blog/post/regulatory-impact-assessment-into-the-health-and-social-care-wales-bill-2024  

⁶ Welsh Government (2026). Removing profit from the care of children who are looked after: Third report. July 2026. https://www.gov.wales/sites/default/files/publications/2026-07/removing-profit-from-care-for-looked-after-children-third-report_0.pdf  

⁷ Children’s Homes Association (2026). Crisis in children’s care: The budget gap, cost shunting to councils and the risks for children in Wales. https://the-cha.org.uk/sites/default/files/content-files/Crisis%20in%20children's%20care_The%20budget%20cap%2C%20cost%20shunting%20to%20councils%20and%20the%20risks%20for%20children%20in%20Wales_CHA220126.pdf   

⁸ Social Care Wales (2023). Workforce Report 2023. https://socialcare.wales/cms-assets/documents/Workforce-Report-2023-PDF_2025-02-03-160149_qyyf.pdf  

⁹ Anglia Ruskin University (2024). Unregistered children’s homes: Final report. https://www.aru.ac.uk/-/media/Files/research/ceeups/unregistered-childrens-homes-final-report.pdf  

¹⁰ ADSS Cymru (2025). The experiences and views of young people in Wales on living in care home services operating without registration. https://www.adss.cymru/en/blog/post/report-the-experiences-and-views-of-young-people-in-wales-on-living-in-care-home-services-operating-without-registration