Lee Peart 27 October 2025

Councils to fund half of increased labour costs under fair pay agreement

Councils to fund half of increased labour costs under fair pay agreement image
© Ink Drop / Shutterstock.com.

Local authorities are projected to fund over half (52%) of increased labour costs passed on by providers as a result of the fair pay agreement for social care, analysis has fund.

An impact assessment carried out by the DHSC found the NHS would cover 17% of the increased labour costs with self-funders paying for almost a third (31%).

The assessment forecasts a 2.8% wage increase in 2028/29 is possible given the £500m made available for additional local authority expenditure, which, on top of the increase in the National Living Wage, would mean a pay uplift of 5.1% between 2027/28 and 2028/29.

The DHSC said that on the basis of current funding an adult social care negotiating body could introduce a pay floor that is 68p above the expected NLW in 2028/29.

Speaking to Healthcare Management this month, Professor Martin, chief executive of Care England, said the policy was ‘completely unfunded'.

‘With only £500m on the table, when the funding gap is over £4bn, it won't touch the sides,' Green said.

Prof Green warned segmenting the funding only to publicly funded care risks deepening disparities between services that already operate on tight margins.

‘Providers with mixed client bases are being asked to find the extra money themselves. It's disingenuous,' he said.

Lee Peart is editor of Hemming Group’s Healthcare Management magazine.

SIGN UP
For your free daily news bulletin
Highways jobs

Senior/Principal Regeneration Officer

Fareham Borough Council
£45,465 - £55,379
Our town centre regeneration is moving from planning to delivery, and we're looking for someone who wants to help make regeneration happen. Fareham, Hampshire
Recuriter: Fareham Borough Council

Service Manager for the Multi Agency Child Protection Team

Nottingham City Council
£58,602 - £62,109
You will play a pivotal role in leading and shaping child protection practice across Nottingham Nottingham, Nottinghamshire, Hybrid
Recuriter: Nottingham City Council

Head of Regulated Services

Nottingham City Council
£75,323 - £84,396
You will provide strategic leadership for our Residential Children’s Homes, our Fostering Services, and our, Permanence service Nottingham, Nottinghamshire, Hybrid
Recuriter: Nottingham City Council

Head of Children's & Education Services Transformation

Nottingham City Council
£75,323 - £84,396
You will play a critical leadership role in driving Nottingham's ambition to deliver outstanding services for children, young people and families. Nottingham, Nottinghamshire, Hybrid
Recuriter: Nottingham City Council

Assistant Head of Legal Services (Regeneration & Property)

Royal Borough of Greenwich
PO9 - £71,181 - £74,802
The role will involve legal advice and support to committees, members and senior officers, and taking any appropriate measures London (Greater)
Recuriter: Royal Borough of Greenwich
Linkedin Banner