An increasing reliance on very small home care services poses risks to provision, the Care Quality Commission (CQC) has warned.
The proportion of domiciliary care services providing care to four people or fewer grew by seven percentage points to more than 28% over the past two years, the CQC reported in its latest State of Care report, published last week.
The increasing numbers of micro-providers helped drive an 11% rise in the number of home care services in England, from 2024-25, in contrast to the stability in the number of care home beds registered with the regulator over that time.
These trends were in line with longstanding policy intentions, and local authority commissioning plans, to promote more care in at home.
Very small providers 'may lack resilience'
However, the CQC warned that very small providers "may be less financially resilient", for example, due to a lack of reserves or diversification in the services they offered.This risked limiting future growth in domiciliary care provision and further shifts in provision from care homes to people's homes, it added.
The regulator also said that micro-providers may be "more likely to come and go from the market, which has implications for people receiving care".
Providers increasingly handing contracts back to councils
At the same time, the CQC found that providers within its market oversight scheme - for services that would be difficult to replace if they failed - were increasingly handing back contracts to council commissioners due to fees not covering their rising costs.An analysis of a subset of these providers found there had been a reduction of 3% in the volume of care they were delivering at the start of 2025 compared with the beginning of 2023.
Since the start of the year, providers' costs have increased, with the rises in employee national insurance contributions and the national living wage (NLW) that came into force in April 2025.
£1.6bn deficit in council fees, according to provider body
The Homecare Association, which represents providers, has calculated that there is a £1.6bn deficit between council home care fees and the minimum price required by providers in England to operate sustainably.In response to the CQC's report, the association's chief executive, Jane Townson, said: “The CQC has reinforced concerns raised by the Homecare Association that poor commissioning of homecare, characterised by hyper-fragmentation of provision and inadequate fee rates, is creating the conditions for unsafe and unsustainable services, risking harm to individuals."
She added: “The rapid growth of very small providers is leading to market instability, weakening oversight, and inefficient delivery."
The association has called on the government to invest at least £1.6bn to address “historic underfunding in home care” and also legislate to create a national contract for care, with sustainable minimum fee rates that commissioners would be required to pay.
