Councils: Care Pay Plan Must Be Affordable and Workable

Councils have today called for a collaborative role in negotiations to improve the pay and conditions for care workers, with local authorities fearing they are being asked to ‘shoulder the policy’s risk without having a meaningful say’.

Last Autumn the government announced £500m for its first Fair Pay Agreement, designed to improve pay and conditions for care workers, allocated from 2028/29 to councils. The government suggests this could fund a 3% pay rise but has only committed to fund the Fair Pay Agreement for a year.

Ahead of the agreement being introduced, an Adult Social Care Negotiating Body is to be constituted this year to begin negotiating improvements in wages and terms. However, this will platform unions and care providers only, with local government to be at best offered an ‘observer role’, despite councils being responsible for commissioning and funding the majority of care services in England.

The County Councils Network argues local government should have a full and formal role in negotiations, with local authorities the largest commissioners of adult social care in England and holders of responsibilities to local care markets.

New modelling by LaingBuisson commissioned by the CCN shows rolling out a 3% increase across all parts of the social care system, including what the NHS and private ‘self-funders’ pay for care, could cost £853m a year. Unless government fully funds these costs, a 3% increase could create a £350m shortfall, which would be likely to fall on already-stretched councils.

With no commitment beyond the initial £500m and growing concern that this sum will be insufficient by the time the agreement is introduced in 2028, the CCN warns that unless the government commits to fully funding Fair Pay Agreements – and future governments funding them beyond this Parliament – there could be ‘serious unintended consequences’ to what is a well-intentioned policy.

Local authorities would be footing the bill at a time when their adult social care budgets are under significant strain. Last week, the CCN released new analysis revealing that councils will be spending £16.5bn more a year on services by 2028/29 when the first Fair Pay Agreement is set to be introduced, compared to what they are spending this current financial year.

With scarce local government funds to pay for these increases, councils may have little choice but to reduce provision of and access to services, leading to poorer experiences for those who draw on care.

There are also concerns that some providers may hand contracts back to councils if they cannot afford higher wages, leaving vulnerable people in limbo. Higher wages could also push more private self-funders to seek council support earlier, adding further pressure to public finances.

If pay rises were negotiated above 3%, the financial impact of a Fair Pay Agreement would be even greater. LaingBuisson’s modelling for CCN shows a 5% increase could cost nearly £1.5bn in 2028/29 – three times the funding currently set aside by government.

Cllr Glen Sanderson, Adult Social Care Spokesperson for the County Councils Network, said: “The Fair Pay Agreement is a positive and much-needed policy. The care sector has long struggled to recruit and retain staff, and improving pay and conditions for care workers who do a brilliant job is absolutely right.

“With negotiations set to begin this year, it is incomprehensible that councils, the largest commissioners of care services are effectively spectators. We have a statutory duty to our residents and to manage our care markets yet we are being asked to shoulder the policy’s risk without having a meaningful say.

“Unless central government fully funds these pay increases, there could be serious unintended consequences, with councils unable to absorb the costs involved, even at a 3% wage rise. We do not want to be put in the position of having to cut services and reduce access to social care. Rather, we want to collaborate to make Fair Pay Agreements a success, but we need councils to have a full and formal role on the negotiating body to do so”.