CQC State of Care 2025/26: What the findings mean for small care providers

Oscar Berko · 26 October 2026 · 10 minute read

The CQC's State of Care 2025/26 report, published on 23 October, describes an adult social care sector that is growing in provider numbers while becoming more fragmented. England had more than 13,500 registered homecare services in April 2026, a 42% increase since April 2019.

Yet growth in the number of providers has not meant growth in the size of individual businesses. 30% of homecare services were supporting four or fewer people, meaning almost one in three operates at very small scale.

That combination - a crowded, fragmented market and a large population of micro-providers - shapes what the next few years will demand of registered managers and care business owners. It also explains why the same compliance and growth pressures land very differently depending on the size of the service.

The key findings at a glance

A bigger market, not bigger businesses

A smaller client base does not mean a smaller management burden. A provider supporting three people must still maintain care records, manage risk, oversee staff, evidence governance and demonstrate compliance against the same regulations as a service supporting 300.

What changes with scale is the capacity available to do that work. A service supporting four people has no compliance lead, no bid writer and usually no operations manager. The registered manager carries all of it alongside coordinating care, supervising staff and covering shifts.

So the administrative weight of running a regulated service is largely fixed, while the income available to fund it scales directly with the number of people supported. That is the structural squeeze the report's 30% figure describes, and it is why the smallest providers are both the most numerous and the most exposed.

The financial pressure underneath the report

The CQC describes a market facing significant financial sustainability challenges. The Homecare Association's research, published on the same day as the report, puts an average figure on that pressure: it calculates the English local authority rate for homecare at £25.37 per hour for 2026/27, against its own calculated minimum sustainable price of £34.42, and estimates an annual funding shortfall of around £2.3 billion across council- and NHS-funded homecare.

These are the association's research estimates, not official government funding determinations. But the direction of travel is consistent with what the regulator describes: a market where demand for care is rising, provider numbers are rising, and the price paid for publicly funded care is under strain.

For a provider supporting four people, that gap is not an abstract policy question. It decides whether there is budget for a deputy manager, a compliance subscription or a bid writer - the very roles that help a small service grow out of being small.

Commissioning is making growth harder

One of the report's most commercially significant findings concerns commissioning. The CQC describes a fragmented homecare market in which providers have reported slow commissioning processes and underused capacity, with local authorities distributing work across a wider range of services.

The result is a difficult position to be in: trained staff, available hours and the ability to support more people, but not enough allocated work to justify the fixed costs of staffing, insurance, training, digital systems and compliance.

For providers in that position, growth is not simply a matter of wanting more referrals. It requires understanding what a contract actually demands, judging whether the opportunity is viable, holding the evidence to prove capability, and preparing a credible response, without pulling the registered manager away from care delivery. Tender readiness and operational readiness are the same problem seen from two angles.

A relevant tender can still be the wrong tender

Tender discovery tools solve a visibility problem: many providers do not know what is being commissioned near them, or learn about frameworks after they have been awarded. But visibility alone is not commercial value.

A tender can be live, in your region, for your service type, and still be a poor decision. Before committing weeks of management time, a provider needs to weigh:

• The requirement and the volume. Minimum package sizes, guaranteed hours and call-length rules can make a contract unworkable for a small staff team.
• Travel and geography. Rural rounds, dispersed housing schemes and short calls change the real cost per hour substantially.
• Staffing and mobilisation. Recruitment lead times, training requirements and TUPE considerations can outweigh the contract value in the first year.
• Price and payment terms. A rate below your sustainable cost, or payment windows of 30 days and beyond, can create cash pressure long before they create profit.
• The evidence requirement. Social value commitments, quality questions, audited management information and reference requirements all need evidence you already hold - not evidence assembled the week before submission.

This is why we think bid work should be treated as an evaluation exercise first and a writing exercise second. An opportunity that scores well on relevance can still fail on readiness, and the cost of finding that out after submission is measured in management hours you never get back.

For a closer look at the difference between searching for tenders and understanding them, see Manual tender searching vs tender intelligence for UK care.

Governance is where assessments fail

The report reinforces the importance of leadership and governance. Among the care homes in the CQC's published data, 34% were rated requires improvement or inadequate for Well-led.

That figure concerns assessed care homes rather than homecare services generally, but the lesson transfers. Compliance is not a folder of policies. It is the demonstrable ability to show that processes are understood, implemented, monitored and improved through current care plans, reviewed risk assessments, incident oversight, training records and evidence of action taken.

Small providers often have the practice right and the evidence thin. Good care happens; the record of it is scattered across inboxes, spreadsheets, paper files and a manager's memory. When an inspector asks how a concern was identified, escalated and resolved, the answer exists but is not retrievable.

For smaller organisations, the challenge is building routines consistent enough to survive a busy week, a period of sickness and a change of manager without becoming paperwork disconnected from care. Our guide to CQC audit readiness walks through what that looks like in practice.

Supported living adds operational complexity

Supported living services grew by a further 20% during 2025/26, and 27% of homecare services also provide supported living. This is one of the clearest signs of how provision is diversifying.

For providers expanding across service types, complexity rises faster than headcount. Care documentation, risk management, staff oversight and regulatory evidence must accommodate different support arrangements, different commissioning routes and individual needs, while keeping the person-centred approach that makes the service worth choosing in the first place.

Growth needs systems that hold that consistency in place, because the alternative is a second set of spreadsheets and a manager who now has two jobs.

Scale changes the problem, not just the volume of work

It is tempting to treat "small providers" as one group. The pressures are not the same across it. The three situations below are illustrative patterns rather than CQC categories, but they are useful for thinking about what a provider actually needs next.

A handful of service users. The priority is usually viability: affordable compliance support, evidence that stands up at inspection, and help finding the next few packages without paying for a business development function. Overheads have to stay near zero, so anything adopted must replace a cost rather than add one.

Roughly five to twenty-five service users. The manager is typically the bottleneck. The service can win more work, but every new package lands on the same person already writing care plans, covering calls and preparing for inspection. The need shifts to delegation: consistent documents, oversight that does not depend on memory, and enough market awareness to bid selectively rather than reactively.

Beyond twenty-five service users. The problem becomes consistency and assurance across teams, locations and managers: standardised evidence, audit trails, workforce oversight and the ability to demonstrate good governance at scale. This is where disconnected systems start to cost real money in management time and missed opportunity.

Most providers recognise themselves in one of these - and most will move between them. The practical point is that the same report creates three different commercial agendas.

What the report does not tell you

It is worth being precise about the limits of the evidence, because several of these figures will be quoted loosely across the sector in the coming months.

• The assessment results are not a representative sample. 80% of the 2,121 homecare services assessed under the CQC's current approach were rated good or outstanding, but the regulator notes these results are not necessarily representative of the whole market, because inspections are not a random sample.
• The Well-led figure is about care homes. The 34% rated below good for Well-led applies to assessed care homes in the published data, not to homecare services generally.
• The funding figures are association estimates. The £25.37 average rate, the £34.42 minimum sustainable price and the £2.3 billion shortfall are Homecare Association research calculations, not government funding determinations.
• The report describes a market, not your business. Sector averages say nothing about whether a particular provider is well led, financially sound or ready to grow.

Reading the report carefully matters commercially. A provider that quotes the strongest-sounding number without its caveat is the easiest to challenge - and being challengeable is expensive in a regulated sector.

Five questions worth answering this quarter

1. Do we understand our current capacity? How many people can we safely support with the staff we have, what does each additional package genuinely cost us, and where are the operational constraints?
2. Can we evidence our compliance position? Are policies, care plans, risk assessments, training records and improvement actions current, accessible and supported by evidence - or do they exist only in practice?
3. Are we actively finding suitable growth opportunities? Are we monitoring local authority contracts, commissioning routes and referral channels, or waiting for enquiries and word of mouth?
4. Can we explain our quality using evidence? Do our records show outcomes, quality monitoring and the experience of the people we support, in a form that would survive scrutiny?
5. Will our management processes survive growth? If we doubled the number of people we support next month, which process breaks first?

None of this is only about inspection preparation. It is about building a service that can deliver good care consistently and remain commercially sustainable between inspections.

Where technology helps and where it doesn't

Technology will not fix insufficient funding, slow commissioning or workforce shortages. Anyone claiming otherwise is selling rather than solving.

What it can do is make the information within a provider's control easier to organise and act on. Care management software supports more consistent records. AI-assisted tools can help teams review documentation, spot gaps, organise evidence and prepare drafts for professional review. The value comes from connecting those activities to business decisions: a documentation gap becomes an improvement action, updated evidence supports inspection readiness, and the same evidence strengthens a future tender response.

That connected approach is what ELSA, the AI Care Business Partner, is built to do. ELSA brings care documentation, compliance review, tender discovery, bid preparation and operational oversight into one platform, for providers who do not have compliance teams and bid writers on hand.

Its findings and drafts are designed to support professional judgement. Users review and approve every output, and any assessment of a contract's viability depends on the assumptions and cost inputs a provider supplies - not on an AI score in isolation. The aim is not to replace registered managers, but to make the information they need easier to see.

Smaller providers deserve the tools to succeed

The CQC's report describes a sector expanding into greater complexity, where the providers carrying the most regulatory responsibility often do so with the least administrative support.

Their size should not prevent them from building resilient, well-managed services. The future of adult social care depends less on how many providers enter the market than on whether the providers already in it can deliver good care sustainably - and that depends on whether they can see their own position clearly enough to act.

No care provider should need the back office of a large organisation to demonstrate quality, maintain compliance and pursue growth.

Run your care business with greater clarity

ELSA brings care management, compliance intelligence and business growth support together in one platform.

Meet ELSA at elsacareai.com.

Sources

• CQC - State of Care 2025/26: Adult social care
• CQC - Fragmentation in community adult social care
• CQC - Pressures on the adult social care market
• Homecare Association - response to State of Care 2025/26