ON March 24 2025 the Health and Social Care Act was placed on the statute books and Wales became the first UK nation to stop companies delivering care for children from making a profit.

The move, which was part of the 2021 manifesto, could be one of the most radical actions of the Welsh Labour administration. The legislation means that from April next year, no new for-profit providers can be commissioned to provide children’s care in Wales. By April 2027, care must be provided by not-for-profit organisations, charities or councils.

The move met predictable opposition in some quarters — most notably the for-profit providers. But with profit margins of up to 22 per cent that selfish hostility was to be expected.

As councils continue to deal with the fallout of years of underfunding, allowing companies to cream off profits for providing care for the most vulnerable young people was unjustifiable.

Crucially, the children in looked-after care made it clear that they opposed the profiteers running the show and the Welsh government’s actions are to be applauded.

As a union for social care workers, Unison Cymru has worked with the Welsh government throughout the process. The pioneering social partnership model ensured that trade unions were represented on the programme board and can continue to offer support throughout the implementation phase.

This is a key moment for children and the care sector in Wales and we want to work with ministers and civil servants to ensure that young people receive the very best provision.

Change is a big deal and care staff need assurances from ministers that there is a clear plan for the transformation period.

The outsourcing of care services saw a predictable race to the bottom with pay, conditions and protections for staff as some of the first casualties. Much needs to be done to give staff the confidence to speak up and ensure the voice of the people delivering care is being heard.

The potential for a mass exodus of for-profit providers over a short period is a concern for councils and they will require significantly more funding to meet extra demand. When local authorities were directed to move to the commissioning model, council-run care homes were wiped out, along with the capacity to absorb displaced children.

There will be significant long-term savings by removing profit from the sector, but that will require spending in the short term. The £68 million in extra funding, with the promise of more to come, is an important step in the right direction.

With vulnerable children no longer to be treated as commodities, the question turns to vulnerable adults. It is time to look at a national care service in Wales, where children and adult care is free from profit.

Welsh Labour and Plaid Cymru said they’d look at the creation of a national care service in their Senedd agreement and set up a panel to make recommendations. There is now a 10-year plan for the creation of a national care and support service for Wales.

However, a report by the Association of Public Service Excellence concluded that unless profit is removed from delivery, it will simply become a national commissioning service with a huge bill for the improvements that are needed.

The financing of care in Wales is complex but lacks transparency. There is a myth that most care home provision in Wales is delivered by small, independent, family-run businesses. If that ever was the case, it certainly isn’t any more.

Many may sound like local, small family-run businesses. However, look behind the signage, or on the website, and, despite the cosy name, the home is likely part of a chain or a much larger corporation.

Care provision has increasingly been identified by global investment companies and hedge funds as a cash cow. Easy money with low risk. In 2024, the Investors’ Chronicle had a feature on why big money could be made by investing in care homes in Wales.

Large care providers use aggressive tax avoidance and complex company structures to shift profits offshore to tax haven subsidiaries, often reporting little or no profit in Britain and even claiming multiple tax credits.

For small and medium-sized care home companies, 7 per cent of state funding goes to profit, but for the largest, that figure rises to 15 per cent. Often, they will split their companies into operating (what we see) and property companies, then run a sale and leaseback system where the operating side pays inflated rent to themselves.

The largest for-profit providers spend five times more on rent than not-for-profit providers. The five largest companies in Britain, owned or backed by private equity, have debts that amount to £35,000 per bed, with interest of £105 per bed per week. So, 16 per cent of public funding goes toward paying off “debt” to companies set up by none other than themselves.

Without fixing the leaky bucket, public money will continue to pour into offshore profits and the taxpayer will continue to lose out. Every penny of public money spent on care should go to delivering care, not to offshore profits.

People have a right to dignity in old age or ill health. Removing the for-profits from the children’s care sector is a huge step in the right direction. The next important step is to give councils the capacity to deliver their own adult care services and bring service back in-house.

If for-profit care companies were not eating up more than 60 per cent of provision in Wales, we could finally start to treat all care workers as the skilled and valued professionals they are.

Mark Turner is Unison Cymru regional organiser lead for social care.