Financial transparency and profit limitation in children's residential care: consultation analysis

1 Introduction

1.1 Between 11 August and 6 October 2025, the Scottish Government carried out a public consultation on its proposals for introducing financial transparency and profit limitation in relation to residential care services for children. This report presents findings from the analysis of responses to the consultation.

Policy context

1.2 The Independent Care Review, carried out between 2017 and 2020, was a ‘root and branch’ review of the children’s care system in Scotland. The review resulted in the publication of The Promise – a series of reports which set out the ambition for a better care system and included 80 recommendations. The Scottish Government has made a commitment to implement the recommendations of the Independent Care Review. It sees ‘Keeping the Promise’ as a fundamental part of its wider ambition for Scotland to be the best place in the world to grow up.

1.3 As part of that commitment, the Children (Care, Care Experience and Services Planning) (Scotland) Bill (referred to in this report as ‘the Bill’) was introduced to the Scottish Parliament by the Scottish Government in June 2025.^[1] The Bill includes a range of provisions related to (i) the children’s care system, (ii) the children’s hearing system, and (iii) the planning of children’s services.

1.4 The Promise emphasised that the care of children should not be seen as a profit-making venture, and Section 8 of the Bill addresses issues related to the monetisation and marketisation of the care of children by introducing provisions relating to financial transparency and profit limitation.

1.5 Section 8 of the Bill, if enacted, will:

• Require Ministers to introduce regulations setting out an initial information requirement for providers of specified types of residential childcare services to provide financial and other information about the operation of those services.
• Enable Ministers to introduce regulations, to set out a continuing information requirement for providers, and also to introduce regulations, if deemed necessary, to limit the profits of service providers, in accordance with a framework to be set out in those regulations.

1.6 It defines the types of providers that would be covered by the provisions, and sets out (i) conditions for implementing and modifying the profit limitation requirement, and (ii) procedures relating to enforcement of the requirement.

1.7 Following publication of the Competition and Market Authority (CMA) 2022 report on its study of the children’s care sector, the UK and Welsh Governments are also both taking steps to tackle financial transparency and / or profit from care in England and Wales.

The consultation

1.8 A consultation paper seeking views on the provisions on financial transparency and profit limitation contained in the Bill was published on the Scottish Government’s online consultation hub on 11 August 2025, with a closing date for responses of 6 October 2025.

1.9 The consultation included 18 questions. The questions addressed (i) the overarching principles relating to financial transparency and profit limitation in children's residential care, (ii) the form(s) financial transparency should take, (iii) the proposed Ministerial power to limit profit, and (iv) the perceived impacts of the proposed provisions.

1.10 In addition to inviting written responses to the online consultation, the Scottish Government consultation team held six engagement sessions to discuss the proposals with stakeholders. Scottish Government officials produced a short report of each of these meetings, summarising the main discussion points. Who Cares? Scotland organised a seventh engagement session with care-experienced children and young people. However, this was not available in time to be included in this analysis. The findings of this session will be considered separately by the Scottish Government.

1.11 The Scottish Government has previously stated the importance of working with partners, stakeholders, and children and young people in taking forward the response to the Promise. The consultation gave the opportunity for all these groups to contribute to the development of provisions and related regulations on financial transparency and profit limitation in the children’s residential care sector. Any such regulations would be subject to further public consultation and parliamentary scrutiny before coming into law.

About the analysis

1.12 This report is based on a systematic analysis of the responses to the consultation.

1.13 Frequency analysis was undertaken in relation to the responses to all the closed (tick-box) consultation questions and the findings are presented in tables throughout this report. Not all respondents answered all the closed questions, and therefore the total number shown in each table is the number of respondents who answered that question.

1.14 In a few cases, respondents did not answer a closed question (i.e. they did not tick a box in response to the question), but their comments stated or strongly implied their response to the question. In such cases, the response to the closed question was imputed – i.e. added at the analysis stage. The tables throughout this report include a small number of these imputed responses.

1.15 Qualitative thematic analysis of respondents’ comments was also undertaken. The aim of the qualitative analysis was to identify the main themes and the full range of views submitted in response to each question (or group of questions), and to explore areas of agreement and disagreement in the views of different groups of respondents. A thematic analysis was also undertaken of the reports of the six engagement sessions organised by the Scottish Government.

A caveat about the findings

1.16 As with all consultations it is important to bear in mind that the views of those who have responded may not be representative of the views of the wider population. Individuals (and organisations) who have a keen interest in a topic – and the capacity to respond – are more likely to participate in a consultation than those who do not. This self-selection means that the views of consultation participants cannot be generalised to the wider population.

1.17 For this reason, the approach to consultation analysis is primarily qualitative in nature. Its main purpose is not to identify how many people hold certain views, but rather to understand the full range of views expressed and, in particular, any concerns that respondents may have.

The report

1.18 The remainder of this report is structured as follows:

• Chapter 2 presents information about the respondents to the consultation, and the engagement sessions undertaken during the period of the consultation.
• Chapters 3 to 8 present an analysis of the written consultation responses.

Note that Chapter 3 presents findings in relation to Questions 4 to 6 (which focused on respondents’ views on the principle of increased financial transparency), and Chapter 4 presents findings in relation to Questions 1 to 3 (which focused on the types of services that should be in-scope if the proposals are introduced). In their comments at Questions 1 to 3, respondents often discussed their views on the principle of increased financial transparency – as well as their views on which types of services should be in-scope. Presenting findings for Questions 4 to 6 first enables all these comments to be discussed at an early stage in the report, thus providing a context for respondents’ views in relation to the remaining questions.

Apart from this one change, the structure of this report follows that of the consultation questionnaire.

• Chapter 9 presents key points from the discussions at the engagement sessions.

1.19 In addition, this report includes three annexes. Annex 1 contains a list of organisational respondents. Annex 2 sets out the response rates for each of the consultation questions, with a breakdown by respondent type. Annex 3 provides a list of organisations that attended the engagement sessions organised by the Scottish Government.