PolicyLens

Methodology note

Create a social-care pay agreement: calculation note

Scenario estimate showing gross costs, offsets and behavioural uncertainty; not an official costing.

View main policy page: Create a social-care pay agreement

Central fiscal result

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

Low case: +GBP 1.0bn. High case: +GBP 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.
  • GBP 1.50 hourly uplift times 28 hours times 52 weeks equals GBP 2.18bn.
  • Compression, on-costs and commissioning pass-through raise fiscal cost.

Fiscal build-up, central case

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

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

Behaviour and pass-through

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

Phasing

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

Main source groups

  • S1: S1 Skills for Care: 1.60m filled adult-care posts in England.
  • S2: S2 Skills for Care: care-worker pay is close to wage floor.
  • S3: S3 ERA analysis: social-care FPA excluded from main GBP 1bn cost.
  • S4: S4 HMRC: tax and NI offsets.
  • S5: S5 Farber/Frandsen: bargaining can raise covered wages.