Create a social-care pay agreement: calculation note

Central fiscal result

+£4.5bn - Net public-finance impact in 2027-28

Low case: +£1.0bn. High case: +£15.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Set adult social-care pay and core terms through a statutory sectoral negotiating body.
• Baseline is current law and published official data unless stated.
• Private business costs are excluded unless they affect tax or procurement.
• Target year is 2027-28, with later years shown separately.

Affected population

• Unit is adult social-care posts.
• Skills for Care estimates 1.60m filled posts in England.
• Central affected count is 1.0m low-paid posts.
• UK-wide and childcare spillovers are excluded.

Gross impact

• Skills for Care estimates 1.60m filled posts in England.
• Central affected count is 1.0m worker posts.
• £1.50 hourly uplift times 28 hours times 52 weeks equals £2.18bn.
• Compression, on-costs and commissioning pass-through raise fiscal cost.

Fiscal build-up, central case

• Base pay uplift pass-through: +£2.20bn
• Compression and terms: +£2.80bn
• Employer on-costs and fees: +£1.20bn
• Administration and negotiating body: +£0.15bn
• Tax and benefit offsets: -£1.85bn

Central net impact: +£4.5bn in 2027-28.

Behaviour and pass-through

• Low case assumes modest wage floor and partial funding.
• Central assumes £1.50 hourly uplift and 85% pass-through.
• High case assumes £3.00 uplift plus wider terms.
• Providers may exit if unfunded.
• Retention gains are not netted off.

Phasing

• 2026-27: +£0.4bn. Negotiating body setup.
• 2027-28: +£4.5bn. First pay agreement.
• 2028-29: +£6.0bn. Terms and compression rise.
• 2029-30: +£7.0bn. Funding gap persists.

Main source groups

• Skills for Care, "The state of the adult social care sector and workforce in England" (2025): Skills for Care estimates 1.60 million filled adult social-care posts in England in 2024-25; sets the sectoral bargaining workforce scale.
• Skills for Care, "Pay in the adult social care sector in England" (2026): Skills for Care reports care-worker pay close to the statutory wage floor; explains why a care pay agreement is fiscally exposed.
• Department for Business and Trade, "Employment Rights Act 2025 - Economic Analysis" (2026): The ERA economic analysis estimates around £1bn annual direct business cost before social-care bargaining; provides official baseline costs and affected groups.
• HMRC, "Rates and thresholds for employers 2026 to 2027" (2026): HMRC thresholds define income tax, employee NI, employer NI and statutory-pay recovery; used for tax and statutory-payment offsets.
• Farber, Herbst, Kuziemko and Naidu, "Unions and Inequality Over the Twentieth Century" (Quarterly Journal of Economics, 2021): Unionisation historically reduced wage inequality, partly by compressing pay within and across workplaces; explains who may gain from collective-bargaining reforms.
• Frandsen, "The Surprising Impacts of Unionization" (Journal of Labor Economics, 2021): Unionisation can raise earnings for covered workers while shifting costs to employers; relevant to bargaining reforms and incidence, but not a fiscal costing.
• Green Party of England and Wales, "Workers' Charter 2026" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.