Children’s Wellbeing and Schools Act 2026

16 Financial oversight

(1) The Care Standards Act 2000 is amended as follows.

(2) After section 30ZD (inserted by section 15) insert—

“Financial regulation (England)

30ZE Persons who are subject to financial oversight

(1) A person is subject to financial oversight if the Secretary of State determines that the person is—

(a) a relevant provider who meets one or more of the financial oversight conditions, or

(b) a member of a relevant provider group which meets one or more of the financial oversight conditions.

(2) A “financial oversight condition” is a condition specified in regulations made by the Secretary of State for the purposes of this section.

(3) Before making the regulations the Secretary of State must have regard to the public interest in securing that—

(a) a relevant provider is subject to financial oversight if the provider has a position of strategic significance in respect of the provision of relevant establishments or agencies;

(b) a member of a relevant provider group is subject to financial oversight if the group has a position of strategic significance in that respect.

(4) The conditions which may be specified in the regulations may, in particular, relate to—

(a) the number of relevant establishments or agencies which are carried on by a relevant provider or a relevant provider group;

(b) the size of those establishments or agencies;

(c) the geographical concentration of those establishments or agencies;

(d) the share of any market within England for the provision of relevant establishments or agencies which is held by a relevant provider or a relevant provider group.

(5) Where the Secretary of State determines that a person is subject to financial oversight, the Secretary of State must serve written notice of the determination on the person.

(6) The notice may require the person to name an individual who—

(a) has a significant role in the management of the person, and

(b) may reasonably be expected to be in a position to ensure that the person complies with any requirement imposed by or under section 30ZG, 30ZH or 30ZI.

(7) In this section and sections 30ZF to 30ZJ—

• “relevant establishment or agency” means—

  (a)

  a children’s home in England, or

  (b)

  a fostering agency in England (or, where the activities of a fostering agency are carried on from two or more branches, the branches in England);

• “relevant provider” means a person, other than a local authority, who is registered under this Part as carrying on one or more relevant establishments or agencies;

• “relevant provider group” means—

  (a)

  a parent undertaking of a relevant provider, and

  (b)

  its relevant subsidiary undertakings;

• “relevant subsidiary undertaking” means—

  (a)

  a relevant provider, or

  (b)

  a parent undertaking of a relevant provider;

• “parent undertaking” and “subsidiary undertaking” have the meanings given by section 1162 of the Companies Act 2006.

30ZF Financial oversight period

(1) A person is subject to financial oversight for the financial oversight period.

(2) The “financial oversight period” is the period of 12 months beginning with the day on which the Secretary of State makes a determination under section 30ZE(1), but this is subject to subsection (3).

(3) If the Secretary of State makes a further determination under section 30ZE(1)before the end of the financial oversight period, that period is extended until the end of the period of 12 months beginning with the day on which the further determination is made.

30ZG Power to require provision of recovery and resolution plan

(1) The Secretary of State may serve a written notice on a person who is subject to financial oversight requiring the person to—

(a) prepare a recovery and resolution plan, and

(b) submit the plan to the Secretary of State before the end of the period specified in the notice.

(2) A recovery and resolution plan is a plan containing information about—

(a) the nature and extent of any risk to the financial sustainability of the person,

(b) the action the person proposes to take to mitigate or eliminate those risks,

(c) any adverse impacts on local authorities, and children looked after by local authorities, that might result if those risks materialised, and

(d) the action the person proposes to take to reduce those adverse impacts if they arise.

(3) The period mentioned in subsection (1)(b) must not be less than 28 days beginning with the day on which the notice is served on the person.

(4) Subsection (5) applies where the person on whom the Secretary of State serves a notice under subsection (1) is a parent undertaking of a relevant provider.

(5) The Secretary of State may also require that the information provided under subsection (2)(a) is to include information about the nature and extent of any risks to the financial sustainability of the relevant subsidiary undertakings of the parent undertaking.

(6) The Secretary of State may serve written notice on a person who has submitted a recovery and resolution plan requiring the person to provide an explanation of any information contained in the plan.

(7) Subsection (8) applies where—

(a) a person has submitted a recovery and resolution plan to the Secretary of State,

(b) there is a material change to the matters mentioned in subsection (2), and

(c) the person is subject to financial oversight when the change occurs.

(8) The person must inform the Secretary of State of the change as soon as is reasonably practicable.

30ZH Power to require information

(1) The Secretary of State may serve a written notice on a person who is subject to financial oversight requiring the person to provide such information as the Secretary of State considers it necessary or expedient to have for the purpose of assessing—

(a) the nature and extent of any risks to the financial sustainability of the person;

(b) the action the person could take to mitigate or eliminate those risks;

(c) any adverse impacts on local authorities, and children looked after by local authorities, that might result if those risks materialised;

(d) the action the person could take to reduce those adverse impacts if they arise.

(2) Subsection (3) applies where the Secretary of State serves a notice under subsection (1) on a person who is a parent undertaking of a relevant provider.

(3) Where this subsection applies, the power under subsection (1)(a) includes the power to require information for the purposes of assessing the nature of any risks to the financial sustainability of the relevant subsidiary undertakings of the person.

(4) The power under subsection (1) includes the power to require the provision of—

(a) an explanation of any information required under that subsection,

(b) copies of any documents or records, and

(c) a legible copy of information recorded otherwise than in legible form.

(5) Subsection (6) applies where—

(a) a person provides information to the Secretary of State under this section,

(b) there is a material change to that information, and

(c) the person is subject to financial oversight when the change occurs.

(6) The person must inform the Secretary of State of the change as soon as is reasonably practicable.

30ZI Power to arrange for independent business review

(1) The Secretary of State may arrange for a qualified person to carry out an independent business review in relation to a person who is subject to financial oversight (a “reviewed person”) if satisfied that either or both of the conditions in subsection (2) are met.

(2) The conditions are—

(a) there is a significant risk to the financial sustainability of the reviewed person, or

(b) where the reviewed person is a parent undertaking of a relevant provider, there is a significant risk to the financial sustainability of one or more of their relevant subsidiary undertakings.

(3) An “independent business review” is a review of—

(a) the nature and extent of any relevant financial sustainability risks;

(b) the action the reviewed person could take to mitigate or eliminate those risks;

(c) any adverse impacts on local authorities, and children looked after by local authorities, that might result if those risks materialised;

(d) the action the reviewed person could take to reduce those adverse impacts if they arise.

(4) A “relevant financial sustainability risk” means—

(a) where the Secretary of State is satisfied that the condition in subsection (2)(a) is met, a risk to the financial sustainability of the reviewed person;

(b) where the Secretary of State is satisfied that the condition in subsection (2)(b) is met, a risk to the financial sustainability of the relevant subsidiary undertakings mentioned in that subsection.

(5) A person is “qualified” to carry out an independent business review if the Secretary of State is satisfied that the person—

(a) is independent of the reviewed person and the Secretary of State, and

(b) has the skills necessary to carry out the review.

(6) Where the Secretary of State arranges for a qualified person to carry out an independent business review, the Secretary of State must serve a written notice on the reviewed person informing the person of that fact.

(7) The notice may make provision for the reviewed person to be liable to the Secretary of State for payment of the qualified person’s remuneration and expenses relating to the review.

(8) An amount payable to the Secretary of State under the notice is recoverable, if a county court so orders, as if it were payable under an order of that court.

(9) The reviewed person must give the qualified person all such assistance as the qualified person may reasonably require to carry out the review.

30ZJ Duty to issue advance warning notice

(1) The Secretary of State must serve a written notice (an “advance warning notice”) on a local authority if the Secretary of State considers that—

(a) there is a real possibility that one or more relevant establishments or agencies will cease to be carried on because of any risk to the financial sustainability of a person who is subject to financial oversight, and

(b) the local authority, or any children looked after by the local authority, might be adversely affected if that were to happen.

(2) An advance warning notice must—

(a) identify the establishments or agencies mentioned in subsection (1);

(b) inform the local authority that the Secretary of State considers that there is a real possibility that those establishments or agencies will cease to be carried on for the reasons mentioned in that subsection, and

(c) explain why the Secretary of State considers that the local authority, or children looked after by the local authority, might be adversely affected if that were to happen.

(3) Where the Secretary of State serves an advance warning notice under subsection (1), the Secretary of State must also—

(a) serve a copy of the notice on the CIECSS, and

(b) inform the person who is registered as carrying on the establishments or agencies identified in the notice that an advance warning notice has been served in relation to those establishments or agencies.”

(3) In section 118 (orders and regulations)—

(a) after subsection (2) insert—

“(2A) A statutory instrument containing (alone or with other provision) regulations to which subsection (2B) applies may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(2B) This subsection applies to regulations under—

(a) section 30ZE(2);”;

(b) in subsection (3) for “subsection (2)”, in the first place it occurs, substitute “subsections (2) or (2A)”.