Sector Reacts to Government’s £500 Million Fair Pay Agreement Announcement
The adult social care sector has responded with cautious optimism to the government’s announcement of a £500 million investment towards England’s first Fair Pay Agreement for care workers, though providers have raised questions about whether the funding will prove sufficient to meet the wage expectations being created.
Health Secretary Wes Streeting unveiled the landmark initiative at Labour’s conference in Liverpool, confirming that a new negotiating body comprising employers and trade unions will be established in 2026, with the first agreement coming into force in 2028.
Whilst sector leaders have welcomed government recognition of care workers’ value and the principle of collective bargaining, many have emphasised that the investment must be accompanied by sustainable long-term funding to prevent providers absorbing unmanageable cost increases – particularly given existing financial pressures from National Insurance contributions, National Living Wage rises, and the Employment Rights Bill currently progressing through Parliament.
Ewan King, Chair of the Care Provider Alliance says:
“£500 million to fund a Fair Pay Agreement is a start, but realism is required. Two-thirds of care is funded by local government and the NHS, and there are the equivalent of 1.27 million full time roles in England’s care workforce. This new funding runs the risk of being thinly spread and going largely unnoticed.
“Any commitments around pay and changes in employment rights more broadly rely on councils continuing to increase local taxes. The reality is many of the 23,000 adult social care providers in England are already battling to keep their heads above water in the face of rising costs and Local Authorities underfunding key services.
“Alongside funding, making a social care Fair Pay Agreement a success requires a properly resourced negotiating infrastructure, a shared understanding of the data needed to inform pay negotiations and for Ministers to look at how care is commissioned.
“Providers are committed to ensuring a Fair Pay Agreement delivers for care workers and the launch of the government consultation today on the Fair Pay Agreement is a positive milestone. We urge providers to submit their views on how central government will enforce pay and benefits for their workforce.
“The care and support system supports a growing aging population, disabled people and people experiencing mental ill health. It is made up of a highly-skilled, low-paid workforce that is larger than the NHS. The Fair Pay Agreement is just one piece of a jigsaw for making social care the high-status career it should be.”
Danny Mortimer, chief executive of NHS Employers, said:
“This is a positive next step in ensuring investment in the social care workforce.
Government, social care employers, and trade unions have worked diligently to get to this stage, and they will need to continue in the same spirit of partnership as they work to build a sustainable pay and reward offer for the vital social care workforce.”
Sarah Woolnough, Chief Executive of The King’s Fund, said:
‘The government today has set out its bold plans to modernise how the British public can access health care.
‘The funding for a Fair Pay Agreement for social care has been much anticipated and will make a positive difference to people working in the sector. It will also help to drive recruitment especially at a time when migration rule changes mean the sector will rely on attracting more British workers. However, it will be some time before we know what the £500 million will mean for social care workers when a fair pay agreement is implemented in 2028. Unions and providers now need to negotiate how that sum of money will be spent and what level of pay increase it will fund. While it won’t solve all long-standing recruitment issues by itself, it is a welcome downpayment on a long-term solution.
‘Social care providers will want to be sure that the funding fully covers the costs to them, otherwise there could be a risk of a range of unintended consequences such as higher fees for people buying care or a reduction in quality. It will also be vital to ensure a future Fair Pay Agreement is tied into wider sector reforms being developed by the Casey commission.’
Lucinda Allen, Policy Fellow at the Health Foundation, said: ‘It is good news that the government is looking to improve pay and conditions in social care. For too long, care workers – who are mostly women – have been underpaid, leaving many in poverty. Addressing this is not just a matter of fairness; it’s fundamental to building a resilient, high-quality care system. Underinvestment in the workforce contributes to persistent staffing shortages, which can impact the quality of people’s care. The public consultation launched today is an important step forward.
‘Fair pay agreements have the potential to be transformative, but ambition must be matched by investment. Today’s announcement of £500 million funding for the first Fair Pay Agreement in social care in England will not be enough to provide a meaningful boost in staff pay. Shared evenly between the 1.5 million workers in the sector, for example, it could amount to roughly 20p extra per hour each. Our analysis suggests £2.3 billion would be required in 2028/29 to increase pay to the level of clinical support workers and administrative workers in the NHS (Agenda for Change Upper Band 3).
‘If wages rise without more government funding, costs will fall on councils and providers – ultimately, this risks cuts to people’s services and higher fees for those who fund their own care. The government must commit to sufficient and long-term funding for its flagship social care policy and work closely with those who need and provide care as they design this policy.’
Martin Green OBE, Chief Executive of Care England, said:
“While the creation of a Fair Pay Agreement represents a long-awaited acknowledgement that care work is a skilled profession deserving of fair reward, today’s announcement does little to deliver any meaningful change for our workforce. It is a shame that after so many promises, the outcome amounts to as little as 15 pence per hour if focused solely on pay; something that will make little difference in practice by the people who keep this sector running.
For a workforce of 1.6 million people, more than those employed in the NHS, yet still among the lowest paid in our economy, such a limited commitment sends the wrong message about their worth. The Government has raised expectations by branding the Fair Pay Agreement as the answer to the recruitment and retention crisis in the sector, using it to justify the restrictions placed on international recruitment, which many providers previously depended on to keep services running. But with funding this slight, it is hard to see how providers will attract or retain the staff they desperately need, undermining the very purpose of the agreement.”
The Government has confirmed that the new negotiating body will be convened in 2026, with the first round of negotiations commencing 2027, which means care workers will not see any significant improvement in their pay and benefits from this process until 2028 at the earliest.
Crucially, this figure does not account for the erosion of pay differentials that has already taken place following last year’s cost pressures, nor does it allow for inflation over the next three years. Many providers were unable to uplift wages as they would have wished because of the additional burden created by the Chancellor’s increase in Employer National Insurance Contributions.
Professor Martin Green OBE continued: “We recognise this is a journey and that multiple agreements will follow, but the scale of today’s commitment is simply not enough to tackle the immediate challenges to recruit and retain staff that lie in front of us. If the Government truly wants to value the care workforce, it must dig deeper. This announcement may mark a step forward, but without meaningful investment in the years ahead, the sector will continue to see staff leaving at a time when they are needed most.”
Nuffield Trust Deputy Director of Research Natasha Curry said:
“Care workers have been poorly paid and undervalued for too long, with many not even paid the bare minimum needed to travel and to provide support for the hundreds of thousands of people in need of care.
“So it’s absolutely right that the Secretary of State is highlighting this today and the Government’s fair pay agreement offers recognition that action is needed to improve pay and conditions of care workers.
“The bear trap in today’s announcement is – as is so often the case – the money. This extra £500m, already announced at June’s Spending review, is not new, will not arrive until 2028, and will need to come from funds already needed to keep social care afloat and meet the needs of the people that rely on it.
“The spending pressures on social care cannot be overstated: the extra needed this year for additional employers national insurance contributions more than wipes out this £500m. The agreement will also rest on extensive negotiations through the new negotiating body – which will now have to be constrained by this figure.
“As always, good intentions and sound motives cannot balance the books. The fair pay agreement is the right thing to be doing but it won’t work unless properly funded.”
Vic Rayner, CEO of NCF commented:
“After months of speculation, the government has put on the table the public funding they are making available to back their flagship Fair Pay Agreement. This announcement triggers the launch of a consultation period on key areas, including who is included in an agreement, what it covers in relation to pay, terms and conditions, how the negotiations will operate in practice, and enforcement.
“As part of the Care Provider Alliance, we have been clear all along that it is not possible for a Fair Pay Agreement to deliver without properly addressing issues associated with how care is commissioned, long term sustainable funding commitments, a properly resourced negotiating infrastructure and a shared understanding of the data needed to inform negotiations.
“As the voice of the not-for-profit care and support sector, we will be encouraging our members to engage in the consultation on the Fair Pay Agreement. Their insights, experience, and evidence are essential to building a Fair Pay Agreement that works for providers, our brilliant workforce, and the people who draw on care and support.”
Narda Ahmed Chair of the National Care Association said:
“The importance of the fair pay agreement for the adult social care workforce has long been held up by this government as a beacon of hope for an undervalued workforce.
“The announcement this afternoon of a £500 million envelope of investment can only be considered as a starting point. Substantially more money will be needed to get anywhere close to being able to deliver the visionary national care service so often heralded. Our workforce deserves a more realistic investment which will recognise the skills and contributions made by them.
“The Secretary of State must recognise the role of social care in the wider health economy which means a more realistic investment is critical, offering pennies only devalues the incredible work which has been going on behind the scenes by stakeholders throughout this process to ensure a strong path for our workforce and sector.
“As always, the devil is in the details. NCA is committed to working with government and stakeholders to ensure this agreement makes a real difference to our workforce.”
