Plans to ban profit from the care of looked-after children could lead to a lack of choice, less investment and the loss of hundreds of placements, a Senedd committee has heard.

Private providers gave evidence to the Senedd’s health committee about the Welsh Government’s plans to “eliminate” profit from the children’s social care sector.

Harvey Gallagher, chief executive of the Nationwide Association of Fostering Providers, similarly dismissed any notion that profit equals poor quality and value for money.

He said independent providers provide specialist care for children and young people with complex needs, which councils are often unable to meet.

Jen Robbins, of the Children’s Homes Association (CHA), warned 885 beds could be lost in a worst-case scenario, leaving the public purse with a £550m bill to replace services.

Ms Robbins, head of policy, said a Competition and Markets Authority report on children’s social care recommended neither banning nor capping profit.

She told committee members: “It comes back to the point about profit versus profiteering, which I think is largely misunderstood.”

Criticising the Welsh Government’s “blanket” approach to eliminating profit, Ms Robbins said it “is not evidence-based policy making in any form – I’ve never seen anything like this, it is purely ideological.”