Rapid Consolidation in England's Care Market Threatens National Care Service, Regulator Warns

England's care regulator has used its annual report to deliver a warning about who owns the country's care homes. The Care Quality Commission says a growing share of the market for older people's care is falling into the hands of large private companies, and that this could undermine the government's plan for a universal care service.

The central figure is concentration. Over the last two years, the five biggest care home owners increased their market share by 26%. Together they now own one in seven homes in England. The regulator links much of that growth to interest from US property investors. It acknowledges that consolidation can bring benefits, but says there are concerns it can lead to higher prices and a decline in quality.

The report describes a market changing in two directions at once. In home care, the support that helps people wash and dress, services are fragmenting into more and smaller providers. Nearly a third of them now care for four or fewer people, which the CQC says could create inefficiencies. In care homes the pattern runs the other way. Small homes have always been a tiny part of the market, but their numbers have fallen significantly over 14 years. Those that combine residential care with nursing support are down by a quarter. The regulator regards few small homes as important for specialist and personalised care.

Underneath it all, the CQC says, the funding system remains fragile. People either pay for care themselves or, if they are among the poorest, receive state help with the cost. In some areas providers are turning increasingly to self-funders, which makes it harder for councils to buy the care they need for people who depend on state support.

Chris Badger, the CQC's chief inspector of adult social care, said the market was being reshaped "largely by accident rather than design". He pointed to economic pressure and to the difficulties some councils face in buying services for state-funded residents. He welcomed the government's renewed focus on social care, which Andy Burnham made a key priority on becoming prime minister, but said the market had to be shaped around what is best for people. "A clearer vision is needed," he said.

Hugh Alderwick of the Health Foundation think-tank said the report "lays bare the massive challenges" facing ministers. He argued that the prime minister's commitment to reform offers a chance to redraw the state's offer on social care, but that change is needed now to strengthen the system's fundamentals. Councils, he said, need enough funding, the right skills and strong leadership.

Prof Martin Green of Care England, which represents providers, said that if government and regulators are worried about consolidation they must take clear and tangible action to support smaller providers. He said changes to employer national insurance contributions, inflation and rising energy costs are making smaller homes unviable. Without real progress on a funding settlement, he warned, closures of smaller homes will continue.

The Department of Health and Social Care said the report showed the scale of the challenge the government inherited, and said it remains committed to overhauling social care. The question now is whether a funding settlement and a clearer plan for the market arrive before more small homes close.