Protect pay in transition schemes: calculation note

Central fiscal result

+£0.7bn - Net public-finance impact in 2027-28

Low case: +£0.1bn. High case: +£3.5bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Guarantee two years of pay protection for workers moved through publicly supported transition schemes.
• 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 entering transition schemes.
• CCC net-zero job-loss range is 8k to 75k.
• Central includes broader industrial transition.
• Private employer-funded protection is excluded.

Gross impact

• Central affected count is 100,000 workers yearly.
• Average pay protection is £8,000 per worker.
• Gross support equals £0.80bn.
• Tax receipts offset around £0.20bn.

Fiscal build-up, central case

• Pay-protection grants: +£0.80bn
• Administration and retraining checks: +£0.10bn
• Tax and NI receipts: -£0.20bn
• Deadweight and leakage: +£0.00bn

Central net impact: +£0.7bn in 2027-28.

Behaviour and pass-through

• Low case assumes narrow eligibility.
• Central assumes 100,000 workers and £8,000 support.
• High case assumes 300,000 workers and larger gaps.
• Deadweight rises if workers would move anyway.
• Productivity depends on retraining success.

Phasing

• 2026-27: +£0.1bn. Scheme setup.
• 2027-28: +£0.7bn. First full cohort.
• 2028-29: +£1.1bn. Two cohorts overlap.
• 2029-30: +£1.2bn. Steady-state cohorts.

Main source groups

• Climate Change Committee, "A Net Zero workforce" (2023): The CCC estimates 8,000 to 75,000 existing jobs may not continue in current form; bounds transition-pay exposure.
• BEIS and Department for Education, "Green Jobs Taskforce report" (2021): The Green Jobs Taskforce emphasised skills plans and worker engagement in transition; supports targeting pay protection with retraining.
• OECD, "OECD Employment Outlook 2024" (2024): Used to support the baseline, affected-population sizing or behavioural assumptions in the illustrative scenario.
• 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.
• Acemoglu and Restrepo, "Robots and Jobs: Evidence from US Labor Markets" (Journal of Political Economy, 2020): Automation can displace tasks and workers even when it raises output in some firms; supports caution on AI rules that trade protection against productivity.
• Autor, Kerr and Kugler, "Does Employment Protection Reduce Productivity?" (Economic Journal, 2007): Employment-protection changes can reduce productivity where firms face higher firing and adjustment costs; supports caution on policies that raise dismissal, scheduling or adjustment costs.
• Green Party of England and Wales, "Workers' Charter 2026" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.