Cash is rising, but resilience is falling: new report exposes government blind spot over smaller care homes

This major joint report, using the Care England’s SMART Care Intel analysis of 2,299 care-home companies, in conjunction with Care Association Alliance (CAA) and National Care Association (NCA), finds estimated wage bills rose more than twice as fast as average net cash, leaving the typical provider with only 1.23 months of estimated wage cover.

The report warns that government does not have a clear national view of the financial pressure building across England’s smaller care-home providers, even though smaller organisations make up the majority of adult social care organisations, as emphasised by the Skills for Care Report last week.

The Financial Health of SME Care Homes, led by Care England, and published jointly with the Care Association Alliance and the National Care Association, examines 2,299 care-home companies and provides a new view of the part of the market that sits outside CQC’s financial Market Oversight scheme for large or difficult-to-replace providers.

The report does not say that cash has disappeared or that every provider is failing. It shows something more subtle but serious: cash has not kept pace with the estimated wage bills providers must meet each month, leaving less scope to absorb a late payment, an urgent repair or another unexpected cost. The key findings of the report are:

• Estimated monthly wage bill rose by 22.3%.
• Average net cash rose by only 9.9%.
• Cash cover for the typical provider fell from 1.33 months to 1.23 months of estimated wages.
• Current assets other than cash rose by 32.6%, suggesting more financial resources were sitting outside the bank.
• The collection indicator lengthened at both average and middle levels. It is not measured invoice-payment time and does not identify which payer caused any delay.

In summary, smaller care homes still have cash, but it is not increasing quickly enough to keep pace with growing wage bills. At the same time, more of the money recorded in their accounts appears to be taking longer to become usable cash in the bank.

Skills for Care reports that 84% of adult social care organisations employ fewer than 50 people. Yet CQC’s Market Oversight scheme is designed around providers whose individual failure would be difficult to replace, not the financial health of the wider sector where any unexpected failure could destabilise local and regional health economies.

The three organisations are using their collective voice to say government therefore needs two views: detailed oversight of the largest providers, and a proportionate national picture of the many smaller providers whose collective deterioration could also damage local care capacity.

Almost two-thirds of the main group’s latest accounts end before the April 2025 employer National Insurance changes. None of the separate accounts used to estimate wage costs includes a period after the April 2026 Statutory Sick Pay reforms. Further Employment Rights Act changes and the first adult social care Fair Pay Agreement, intended for April 2028, are also outside the data and could create additional pressure for SME care homes.

The report should therefore be read as a historical baseline, not evidence that providers have already absorbed the latest cost increases. The organisations collectively warn that, without sufficient funding, prompt payment or other improvements, future accounts are more likely to show further pressure than a recovery in resilience.

The report also highlights a practical failure in some local-authority and NHS payment systems. Where a purchase order or individual placement agreement expires, funding responsibility changes, or fee uplifts are delayed, care may continue while the provider continues to support the person and paying staff. In some cases, the provider may not even have a clear route to submit an invoice or resolve a formal payment claim for care already delivered.

The organisations are calling for every commissioner to provide a clear route to bill for care delivered and to pay valid, undisputed claims within 30 days. They also want fee decisions and backdated uplifts completed before, or alongside, statutory workforce cost increases. They say the payment clock cannot work if a provider is prevented from starting it.

Professor Martin Green OBE, Chief Executive of Care England

“This is not a story of cash suddenly disappearing. It is a warning that smaller providers have less room to absorb shocks, while government cannot see the full picture. We monitor the largest providers because one failure can create national pressure. We must also monitor smaller providers because deterioration across hundreds of services could have an equally serious impact locally. Government should use this report as the starting point for a proportionate national view of SME financial resilience, so that action can be taken before pressure becomes lost investment, restricted admissions or closure.”

Melanie Weatherley MBE, Co-Chair of the Care Association Alliance

“Smaller care homes are not simply businesses on a spreadsheet. They are local employers, long-standing community organisations and, in many places, care capacity that would not be easy to replace. When their financial room for manoeuvre narrows, the effects can appear long before a service closes: refurbishment is delayed, recruitment becomes harder and difficult decisions are made about future investment. Protecting these providers means protecting local care, jobs, choice and continuity for families.”

Nadra Ahmed CBE, Executive Co-Chair of the National Care Association

“Care providers are often put in a position where they are subsidising the state as they wait months for payments, they are not an interest-free credit facility for the state. If care has been delivered, providers need a clear route to bill for it and should be paid within 30 days. It is unacceptable for a provider to continue caring for someone and paying staff while waiting for commissioners to renew a purchase order or decide who is responsible. The system fails the individual and the sector as a whole. Prompt payment alone is not enough. Fees must reflect the real cost of care, and funding for any new regulatory workforce obligations must reach employers before or alongside the bill they are legally required to meet.”

Four actions the report calls for

• Fund the actual cost of care through predictable, multi-year, sustainable funding investments that keeps pace with workforce and other running costs.

• Guarantee a route to submit an invoice or equivalent formal payment claim for every day of care delivered, and pay valid, undisputed claims within 30 days.
• Ensure funding for employment-rights changes and the Fair Pay Agreement reaches providers in full before or alongside the new costs.

• Create a proportionate national SME resilience dashboard to complement CQC Market Oversight, using existing data wherever possible rather than placing a new burden on smaller providers.

The report is intended to establish a repeatable baseline. The joint organisations want the analysis to be updated regularly until government has a reliable national way to monitor the financial resilience of smaller providers alongside the largest organisations already covered by Market Oversight.