The state of health care and adult social care in England 2025/26

As we have discussed, the adult social care system is changing, with the care home market consolidating around fewer, larger homes owned by large businesses, and community services fragmenting into smaller, more diverse services. This divergence can be difficult for local authorities to navigate and complicates their commissioning arrangements. As we highlighted in our report, Local authority assessments 2023 to 2026, commissioning services is one of the most powerful levers in adult social care systems to drive improvement in the quality, equity and sustainability of care and support for people. However, our assessments highlighted significant variation in both the quality and practice of commissioning across England, with the better performing local authorities demonstrating:

• alignment between commissioning, prevention to support people to maintain their health, and workforce planning
• meaningful engagement with providers
• explicit consideration of both local authority‑funded and self‑funded markets.

In some others we identified weaknesses in market shaping and engagement with providers, and a lack of alignment between commissioning and outcomes from safeguarding and equity activity. These issues had increased the risk of pushing pressure elsewhere in the system and having a negative impact on people’s lived experience. After the quality statement in the local authority assessment framework on assessing needs, the care provision quality statement, which includes assessment of commissioning, was one of the 2 quality statements most likely to receive a lower score of either 1 or 2.

Within this context of a changing market, some local authorities are struggling to meet people’s needs and adult social care providers are increasingly seeking people who can self-fund their care in order to remain financially viable.

Local authority finances

On average, local authorities spend over three-quarters (78%) of their funds on social care for both adults and children, rising to 86% in county councils, and this expenditure is increasing.

In the last few years, increased spending power has enabled local authorities to spend more on social care, increase the fees they pay providers to deliver homecare, and increase the number of adults receiving long-term social care to the highest number in 2024/25 than at any point in the previous decade. Prior to the last few years, although local authorities were spending more on social care, this nearly all went towards increasing the fees paid to social care providers, who faced increasing operational and staffing costs.

Gross current expenditure on local authority-funded adult social care increased by 9% between 2023/24 and 2024/25 and was at just under £30 billion. Of this expenditure, 80% was on long-term care, which saw a 10% increase in spending between 2023/24 and 2024/25. The average cost of a week’s care in a care home and the average cost of an hour of homecare support both increased by 7% between 2023/24 and 2024/25.

However, despite increased spending power, local authorities are still struggling to meet the needs of their communities, and their financial position is deteriorating. The ADASS Spring Survey 2026 reports that they overspent on their 2025/26 adult social care budgets by £715 million – the second year running that the overspend has been near to three-quarters of a billion pounds.

The ongoing struggling financial situation in local authorities has far-reaching impacts for the sustainability of state-funded social care and beyond. There are repercussions not only around increased complexity of the social care market and inequitable access to care and quality discussed above, but also the potential for:

• increased reliance on friends and family to provide unpaid care (and the knock-on impact on their lives, as reflected in the Carer’s UK State of Caring 2025 report and the section in this report on ‘Unpaid carers’)
• increased financial costs for people during a period of sustained cost of living pressures (this includes more people fully self-funding their care as well as more people having to contribute financially to their local authority-funded care).
• an impact on local authorities’ provision of other statutory services
• increased pressures on healthcare services, especially hospitals, as a lack of access to social care not only leads to a deterioration in health but is also a leading cause of delayed hospital discharges (see ‘Causes of delayed discharges from hospital), contributing to blockages through the hospital system and longer waits for hospital admission, discussed in the Hospitals section of this report.

The King’s Fund notes that:

…although local authorities are spending more on social care, their overall financial situation is worsening. In 2024/25, external debt at English councils rose by 10% and useable reserves fell by 4%. Some councils relied on ‘exceptional financial support’ from government, which permits them to use receipts from asset sales to fund day-to-day expenditure.

We welcome the launch of the national conversation about adult social care, as part of the Independent Commission chaired by Baroness Casey of Blackstock. We will continue to contribute to this conversation and the wider work of the Commission to reform the adult social care system.

Self-funding in adult social care

Despite local authorities increasing the fees they pay to care providers, the financial pressures they are under means these fees are still below the rising costs that social care providers face in delivering care. Consequently, social care services are increasingly looking to people who will be self-funding their care, to whom they can charge higher prices.

Since 2010/11, if a person has more than £23,250 in savings and investments, they must pay the full cost of their care. This means the threshold hasn’t changed for over 15 years, which has failed to keep pace with inflation and resulted in more people having to fund part or all of their social care.

Our provider information return (PIR) defines a ‘self-funder’ as someone who pays for their own care privately. For instance, this might be either:

• a person whose savings or income are over the threshold to receive state-funded care and, as such, they privately fund their care in full
• a person who might receive care provided by a charity or nursing care funded by the NHS, while privately funding the remainder of the cost of their care.

The PIR defines any person whose social care is funded either in part or in full by their local authority or by the NHS as ‘state-funded’.

In 2025/26, estimates from our PIR show that more than a third (37%) of people in England residing in a care home were self-funders. This is a slight increase on the previous 2 years, where the proportion of people self-funding their residential care was 36%.

Broadly speaking, rates of self-funding in care homes are higher in the south of England and lower in the north.

For instance, the regions with the highest rates of self-funding are:

• the South East (47%)
• the East of England (42%)
• the South West (41%).

Whereas the regions with the lowest rates of self-funding are:

• the North East (24%)
• the North West (30%).

Given this, a person in a care home in the South East is twice as likely to be a self-funder compared with someone in the North East of England.

Rates of self-funding are lower for people accessing homecare services. In 2025/26, almost 1 in 4 people (24%) receiving homecare in England were self-funding their care (a 1 percentage point increase from 2 years before).

Proportionally, less social care is being funded by the state and yet it still accounts for over three-quarters of local authority spending.

The increased income from people who fund their own care has helped some social care providers, particularly in the care home market, to mitigate rising operating and staff costs. CQC’s Market Oversight analysis for the quarter ending March 2026 showed that, at 27%, profitability levels in care homes for older people have been broadly stable over the last 2 years, and the proportion of income from self-funders in these services has risen from 48% in March 2024 to 52% in March 2026.