Equal terms for outsourced workers

Procurement baseline

The model includes public outsourcing exposure because WGA records GBP 263.7bn of purchases of goods and services in 2023-24.

• Affected worker counts are not public.
• Public contracts are a major channel.
• Private-sector costs are mostly off-budget.

Core trade-offs

Outsourced workers gain pay and conditions. Employers, commissioners, taxpayers and customers bear costs. Some outsourcing becomes less attractive, reducing service flexibility.

• Outsourced workers gain terms.
• Commissioners and firms pay.
• Service volumes may fall.

Illustrative fiscal impact

+GBP 1.0bn to +GBP 15.0bn. Central estimate: +GBP 4.5bn.

• Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
• Gross costs are separated from tax, NI and benefit offsets.
• Private business costs are not automatically fiscal costs.
• Behavioural responses widen the range materially.
• This is not an official costing.

Economic impact by 2027-28

• Jobs: Likely reduces some agency and outsourced hiring; direct employment may rise instead.
• Wages: Raises terms for covered outsourced workers, especially in low-paid services.
• Prices: Higher contract prices likely where labour is a large cost share.
• GDP / productivity: Likely negative short run if contracts cost more without efficiency gains.

Assessment

The policy is more expensive where government is the buyer. It may reduce two-tier workforces, but it also raises the cost of procurement and can reduce service volumes unless budgets rise.

Confidence: Low. The largest missing data are outsourced worker counts and contract labour shares.

Main risks

• Contract repricing: Labour-intensive contracts may reprice quickly or become unviable.
• Service reduction: Fixed budgets can translate higher terms into fewer purchased hours.
• Comparability disputes: Determining comparable directly employed roles is legally difficult.

Safeguards

• Require contract-by-contract cost disclosure.
• Phase renewals rather than mid-contract shocks.
• Publish public-service volume effects.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology for equal terms for outsourced workers Internal - PolicyLens, 2026
• Whole of Government Accounts 2023-24 UK government accounts - HM Treasury, 2025
• Employment Rights Act 2025 - Economic Analysis UK government report - Department for Business and Trade, 2026
• Rates and thresholds for employers 2026 to 2027 UK government guidance - HMRC, 2026
• Labor Market Institutions and the Distribution of Wages, 1973-1992 Academic article - DiNardo, Fortin and Lemieux, Econometrica, 1996
• Does Employment Protection Reduce Productivity? Academic article - Autor, Kerr and Kugler, Economic Journal, 2007
• Workers' Charter 2026 Party policy source - Green Party of England and Wales, 2026

Other Green policies

• Raise the minimum wage to £15
• Index public-sector pay to inflation
• Add public-pay restoration premiums
• Raise low-paid public-sector wages
• Cap organisation pay ratios at 10:1
• Protect pay in transition schemes
• Create a single worker status
• Raise statutory holiday to 35 days