PolicyLens

Methodology note

Protect pay in transition schemes: calculation note

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

View main policy page: Protect pay in transition schemes

Central fiscal result

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

Low case: +GBP 0.1bn. High case: +GBP 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 GBP 8,000 per worker.
  • Gross support equals GBP 0.80bn.
  • Tax receipts offset around GBP 0.20bn.

Fiscal build-up, central case

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

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

Behaviour and pass-through

  • Low case assumes narrow eligibility.
  • Central assumes 100,000 workers and GBP 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: +GBP 0.1bn. Scheme setup.
  • 2027-28: +GBP 0.7bn. First full cohort.
  • 2028-29: +GBP 1.1bn. Two cohorts overlap.
  • 2029-30: +GBP 1.2bn. Steady-state cohorts.

Main source groups

  • S1: S1 CCC: 8k-75k jobs may not continue in current form.
  • S2: S2 Green Jobs Taskforce: transition needs worker engagement and skills plans.
  • S3: S3 OECD: green transition reallocates jobs between sectors.
  • S4: S4 HMRC: taxes offset part of protected pay.
  • S5: S5 Acemoglu/Restrepo: technology transitions can displace tasks.