Fair pay won’t be possible without adequate funding

Anna Dabek, an employment law partner at Anthony Collins, talks about why the Government’s funding commitment to a Fair Pay Agreement falls well short of what is needed in the care sector

The Government’s proposal to establish an Adult Social Care Negotiating Body to negotiate new minimum standards for pay and conditions from 2028–29 sounds promising.

But, without adequate funding, this initiative risks becoming an expensive exercise in bureaucracy rather than a meaningful step toward fair pay. 

Implementing a Fair Pay Agreement (FPA) for the adult social care sector is a laudable aim.

Yet the Government has allocated only £500m to support a workforce of about 1.5 million people – a figure the Homecare Association warns falls ‘well short’ of what is needed.

Its analysis suggests councils should be paying at least £32.14 per hour in 2025-26 to deliver sustainable, high-quality homecare.

Without addressing the multi-billion-pound gap in funding, the negotiating body will lack the resources to make any real impact.

Adult social care providers in England are already facing the double challenges of higher labour costs, due to recent increases in Employer National Insurance Contributions (NICs), and a labour shortage, exacerbated by the abolition of the Health and Care Visa in July 2025, which has limited providers from sponsoring workers from overseas.

If the Government truly wants to recognise the value of care workers, it should redirect resources toward guaranteeing the Real Living Wage for all care staff and fund publicly-commissioned services accordingly

The proposed agreement excludes council and NHS-employed care workers, many of whom already earn more than those in the independent sector.

Most providers want to pay staff more and achieve parity with NHS colleagues, but without a significant uplift in fees, this is simply unaffordable.

Excluding public sector workers from the FPA perpetuates pay disparities and undermines the principle of fairness.

Meanwhile, the Government is reinstating the two-tier code in public sector outsourcing, requiring equalisation of terms, yet acknowledges in its own consultation that parity cannot be achieved under the FPA.

This contradiction raises serious questions about the policy’s coherence. 

Beyond funding, the introduction of a new FPA could bring other legal issues for employers in the sector.

Greater complexity in ensuring wage compliance is a risk, especially at a time when the Government’s new enforcement body, the Fair Work Agency, will be established and increasing pressure on employers for compliance. 

In a sector with a varied workforce structure, settling a minimum pay level for all would disincentivise promotion and weaken career pathways

There could be HR-related issues, too. For example, it isn’t clear if the new FPA would set a minimum pay level for all or provide graded frameworks.

In a sector with a varied workforce structure, settling a minimum pay level for all would disincentivise promotion and weaken career pathways.

As FPAs will be negotiated by different bodies in England, Scotland, and Wales, this will provide a challenge to providers managing a cross-border workforce.  

If the Government truly wants to recognise the value of care workers, it should redirect resources toward guaranteeing the Real Living Wage for all care staff and fund publicly-commissioned services accordingly.

This would deliver immediate, tangible benefits without creating another layer of bureaucracy.

While the Government’s intention of recognising the value that adult social care workers bring to society is admirable, a new FPA won’t be achievable without the funding needed to award pay increases.