CQC’s State of Care 2025/26: what does it mean for adult social care providers?
CQC’s latest State of Care report describes an adult social care market undergoing significant change. Demand is increasing, funding remains under pressure and the shape of the provider market is shifting.
For providers, there are some important messages.
A changing social care market
The care home market continues to consolidate. Although the overall number of beds has remained broadly stable since 2019, the number of care homes has fallen by 8%, with more capacity now concentrated in larger homes.
Interestingly, size does not necessarily determine quality. CQC found that large homes generally performed better than medium-sized homes, while small homes received the strongest ratings overall. Of almost 700 small homes supporting autistic people and people with a learning disability, 80% were rated good or outstanding.
Homecare is moving in the opposite direction, with an increasingly fragmented market of smaller providers. Supported living is also continuing to grow rapidly, increasing by a further 20% in 2025/26 to more than 4,500 registered services.
Funding and commissioning pressures
Perhaps the most significant issue for providers is funding.
Despite increased spending power, local authorities are struggling to meet the needs of their communities and reportedly overspent their adult social care budgets by £715 million in 2025/26. CQC also identifies significant variation in commissioning and concerns around under-used capacity and the sustainability of predominantly state-funded provision.
Providers are increasingly looking to self-funders to remain financially viable. CQC reports that the proportion of income from self-funders amongst older people’s care homes within its Market Oversight analysis increased from 48% to 52% between March 2024 and March 2026.
The difficulty is obvious. Providers cannot be expected indefinitely to absorb increasing staffing and operating costs where commissioning rates fail to keep pace with the true cost of delivering safe, sustainable care.
Providers should therefore be prepared to scrutinise local authority fee decisions and commissioning arrangements carefully and, where appropriate, challenge decisions which they consider unsustainable or unfair.
Workforce and leadership remain firmly in focus
Although vacancy and turnover rates have improved, CQC remains concerned about workforce stability, particularly as international recruitment declines.
Leadership is also a key regulatory concern. Around a third of care homes were rated requires improvement or inadequate under the well-led key question, particularly in relation to governance, accountability and clarity of roles and responsibilities.
Training will remain important too. CQC highlights gaps in dementia training and has confirmed its intention to co-produce statutory guidance for registered providers on delivering care for people living with dementia.
A sector under pressure
The report ultimately demonstrates that adult social care cannot be considered in isolation. Insufficient capacity affects the NHS, with around 1 in 8 people who had been in hospital for at least 14 days and were ready for discharge experiencing delays because of insufficient social care capacity in 2025/26.
For providers, the challenge is to remain financially sustainable while continuing to meet increasingly demanding regulatory, workforce and governance expectations.
Where local authority funding or commissioning decisions threaten that sustainability, providers should not assume those decisions are beyond challenge.
At RWK Goodman, our specialist Health & Social Care team supports providers with local authority fee negotiations, commissioning disputes and challenges to local authority decisions, alongside CQC regulatory and enforcement matters. If your organisation is experiencing these pressures, please get in touch with a member of our team to discuss how we can help.
