Methodology note
Raise statutory holiday to 35 days: calculation note
Scenario estimate showing gross costs, offsets and behavioural uncertainty; not an official costing.
Central fiscal result
+GBP 5.0bn - 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
- Increase minimum paid annual leave from 28 to 35 days including bank holidays.
- 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 workers near the statutory leave floor.
- Most five-day workers currently have 28 days minimum.
- Central fiscal exposure is public and commissioned workers.
- Private employer costs are outside direct fiscal score.
Gross impact
- Baseline statutory entitlement is 28 days for five-day workers.
- Policy adds seven days, about 2.7% of working days.
- Central public/procurement exposure is GBP 6.0bn.
- Tax offsets and lower profits reduce net fiscal cost by GBP 1.0bn.
Fiscal build-up, central case
- Public-sector cover and downtime: +GBP 3.30bn
- Commissioned-service pass-through: +GBP 2.50bn
- Administration and disputes: +GBP 0.10bn
- Tax and NI offsets: -GBP 0.80bn
- Profit and receipt effects: -GBP 0.10bn
Central net impact: +GBP 5.0bn in 2027-28.
Behaviour and pass-through
- Low case assumes many workers already receive 35 days.
- Central assumes cover costs for exposed public services.
- High case assumes broad statutory-floor coverage.
- Some firms reduce hours or hiring.
- Productivity offset is not assumed.
Phasing
- 2026-27: +GBP 0.2bn. Guidance and systems.
- 2027-28: +GBP 5.0bn. Full leave increase.
- 2028-29: +GBP 5.5bn. Rosters adjust.
- 2029-30: +GBP 6.0bn. Steady-state cover costs.
Main source groups
- S1: S1 GOV.UK: statutory leave is 5.6 weeks or 28 days.
- S2: S2 WGA: public staff and procurement costs anchor exposure.
- S3: S3 ERA analysis: rights costs concentrate in flexible employers.
- S4: S4 HMRC: tax and NI offsets.
- S5: S5 Autor/Kerr/Kugler: employment protections can reduce productivity.