The Health and Social Care (Wales) Act 2025 – what it is, and why it matters
In March 2025, a major new law for Wales quietly arrived: the Health and Social Care (Wales) Act 2025. It did not replace existing social care law, but it did change some very important parts of it.
In simple terms, the Act does three big things:
- starts the process of ending private profit from the care of children looked after in Wales;
- allows direct payments to be used for NHS Continuing Healthcare (CHC) so people with high health needs can have more choice and control over their support;
- tidies up and strengthens parts of existing Welsh social care law, including the Social Services and Well-being (Wales) Act 2014 and the Regulation and Inspection of Social Care (Wales) Act 2016.
It is a Welsh law, passed by the Senedd and applying only in Wales. It received Royal Assent on 24 March 2025 and parts of it came into force on 25 March 2025, with other parts being brought in gradually through further regulations.
How this fits with existing Welsh law
The 2025 Act sits on top of laws that many people working in care and support will already recognise:
- the Social Services and Well-being (Wales) Act 2014 – the main framework for social care and support in Wales;
- the Regulation and Inspection of Social Care (Wales) Act 2016 – which sets the rules for registering and inspecting care services;
- the National Health Service (Wales) Act 2006 – which underpins how NHS services are organised in Wales.
The 2025 Act does not start from scratch. Instead, it amends these existing laws so they work better, especially around:
- how care for children looked after is provided;
- how continuing healthcare is funded and delivered;
- how responsibilities are shared between the NHS and local authorities.
Part 1 – ending profit from children’s care
One of the most widely discussed parts of the Act is its plan to remove private profit from the care of children looked after in Wales. This has been a clear policy commitment by Welsh Government for several years.
The law applies to what are called “restricted children’s services”, which include:
- children’s care homes;
- independent fostering agencies;
- secure accommodation services.
The Act changes the 2016 regulation and inspection framework so that, over time:
- from 1 April 2026 – no new for-profit providers of these restricted children’s services can register in Wales;
- from 1 April 2027 – existing for-profit providers cannot expand: no new children’s homes, no increase in maximum capacity, and fostering agencies cannot approve new foster carers under a for-profit model;
- the long-term ambition is that, by around 2030, care for children looked after will be delivered only through not-for-profit models such as local authorities, local health boards, charities, or community interest companies.
In practice, this is intended to:
- reduce the role of large profit-driven companies in children’s care;
- encourage more local, stable, relationship-based provision;
- ensure that money invested in children’s care is used for support, not shareholder return.
For families and children themselves, day-to-day arrangements will not change overnight. However, over the coming years, the type of organisations providing children’s homes and fostering placements is likely to look very different.
Part 1 – other social care changes
Part 1 also makes some technical but important changes to existing social care law. One of the key areas is around the boundary between health and social care responsibilities.
Section 26 of the 2025 Act amends section 47 of the 2014 Act (“limits to social care”) to make it absolutely clear that local authorities in Wales cannot provide long-term services that are the legal responsibility of the NHS – especially in situations like those described in the well-known Coughlan judgment (which dealt with long-term nursing care that should have been provided by the NHS, not social services).
In simple terms, this is about clarity and fairness:
- health needs that properly fall under NHS Continuing Healthcare should be funded and arranged by the NHS;
- local authorities should not be using social care budgets to cover services that are essentially healthcare.
For individuals and families, this should gradually help reduce arguments about “who pays for what” and make it clearer when continuing healthcare assessments are needed.
Part 2 – direct payments for NHS Continuing Healthcare (CHC)
At present, people in Wales who qualify for NHS Continuing Healthcare (CHC) – usually individuals with significant, ongoing health needs – do not have the option to receive their CHC as a direct payment. Social care direct payments have been available for years, but CHC has been an exception.
The 2025 Act changes this.
Part 2 amends the National Health Service (Wales) Act 2006 so that Welsh Ministers can make regulations to allow direct payments for CHC. These powers will then be exercised by local health boards, who will administer the payments.
A few key points:
- Direct payments for CHC are not automatic – they will depend on eligibility, individual circumstances, and the regulations that Welsh Government puts in place.
- The plan is to begin introducing CHC direct payments from 2026, following consultation and detailed regulation-making.
- Consultation launched in July 2025 sets out proposals on how these payments will be managed by health boards, what they can be spent on, and how safeguards will work.
For people who meet the criteria for CHC, direct payments could eventually mean:
- greater choice and control over how care is arranged;
- more flexibility to combine health support with community-based or non-traditional options, where appropriate;
- less need to fit into rigid, pre-designed packages.
However, it is important to note that the detailed rules are still being developed, so the exact shape of CHC direct payments will depend on final regulations and guidance.
Part 3 – general and technical provisions
Part 3 of the Act includes:
- the formal coming-into-force arrangements (which parts start when);
- powers for Welsh Ministers to make regulations and transitional provisions;
- standard legal sections on interpretation and consequential amendments.
While these sections are less visible to the public, they are what allow the Act to be rolled out gradually and integrated with existing legislation and guidance.
Who is most directly affected?
The 2025 Act is significant, but its impact is not the same for everyone. Some groups will see changes sooner or more directly than others.
Children looked after and their carers
Children in residential care, secure accommodation, or foster placements may not notice immediate changes, but the market around them is shifting. Over time, placements are expected to move towards:
- local authorities and health boards;
- not-for-profit providers, such as charities and community interest companies.
For foster carers currently with for-profit agencies, there may eventually be options or incentives to move to not-for-profit providers, although details will likely develop gradually through policy and commissioning changes.
Adults with high health needs
Adults who meet criteria for NHS Continuing Healthcare may, in future, have new options about how their support is arranged. Direct payments for CHC are intended to give more flexibility, similar to what already exists on the social care side.
For now, CHC assessments and eligibility rules remain in place as before. The new powers are about how support can be delivered, not about changing who qualifies.
Local authorities and health boards
Local authorities and health boards are at the centre of implementation. They must:
- commission children’s services in line with the new not-for-profit requirements;
- adapt funding and planning to the clarified boundaries between social care and healthcare;
- prepare for CHC direct payments, including new financial and risk management systems.
What this means for people using services in Wales
For individuals and families, the key messages are:
- Care for children looked after is moving towards not-for-profit provision, with a focus on long-term stability and reducing profit-driven placements.
- Adults with very high health needs may gain more choice in how their NHS Continuing Healthcare is arranged once direct payment regulations are in place.
- Disputes about whether needs are “health” or “social care” should, over time, become clearer, as the law now reinforces that long-term healthcare needs sit with the NHS, not local authority social care.
Some of these changes will take years to fully filter through. The Act is the legal foundation; the practical differences will appear gradually as regulations, guidance, commissioning decisions, and local policies are updated.
Where to find reliable information
For anyone wanting to read more or check details directly:
- Law Wales provides an accessible overview of the Act and its structure.
- legislation.gov.uk hosts the full text of the Health and Social Care (Wales) Act 2025 and its Explanatory Notes.
- Senedd Research and Welsh Government publish updates, consultations, and briefing papers on how the Act is being put into practice.
When in doubt, it is always best to rely on these official sources rather than social media summaries or hearsay.
A final note
The Health and Social Care (Wales) Act 2025 is part of a wider direction of travel in Wales:
- away from profit-driven care for children;
- towards stronger rights, clearer responsibilities, and more choice and control for people who rely on health and social care.
Understanding the details can be daunting, especially when already dealing with complex situations. Independent, community-based guidance and advocacy services across Wales can help people make sense of the changes, understand their options, and prepare for conversations with professionals where needed.
Important notice:
This page provides professional non-statutory advocacy and guidance, not legal or clinical advice. For case-specific legal queries, a qualified legal adviser or relevant statutory body should be consulted.
