Good intentions aren’t enough: implementing a Fair Pay Agreement that works for social care

Social care in England is struggling on many fronts, from inconsistent access, provision and quality to spiralling care costs for individuals. At the very heart of the sector’s struggles is the issue that current pay and terms and conditions compete poorly within the broader economy. As need has grown, so has the number of people working in the sector, but this has been propped up by large numbers of international recruits (since Brexit, predominantly from outside the EU), while the number of British nationals working in social care has fallen in recent years.

While a significant influx of workers from abroad to fill social care roles was encouraged for some time by the previous government, social care is now on the receiving end of attempts to drive down net migration. This has included moves to end the main visa route, and the recent announcement that it will now take social care workers 15 years (up from five) to achieve settled status in Britain. The Migration Advisory Committee recognises the risks of overreliance on international recruitment in social care, but also the vital role it has played in filling gaps in the sector.

The government’s ambition is to instead make pay and terms and conditions in social care more attractive to the domestic workforce. This is to be achieved through the development of a sector-specific, first-of-its-kind, collectively bargained Fair Pay Agreement (FPA). The Employment Rights Act contains legislation that creates the infrastructure around the FPA, alongside the direct changes to workers’ rights the act introduces.

Policymakers, as well as the people from across social care who have been asked to contribute to the consultation, must use evidence to understand what is feasible, and what the main barriers to success are. While it does not hold all the answers, evidence exists from pay reform in other social care systems, as well as from the pay review process in the English NHS. This briefing draws together evidence to facilitate an informed, critical approach from policymakers and groups affected by the FPA process. ¹

What do we know about the negotiating process so far?

Following the current FPA consultation, which is set to wrap up in January, the intention is to pass secondary legislation detailing the process by the autumn of 2026. The first round of negotiations will start in autumn 2027 and the first FPA should take effect in April 2028.

Negotiations are to be cyclical and annual. These are to cover pay, terms and conditions, and ‘wider employment matters’ for people working in social care. Inclusion criteria are intentionally broad to begin with, stretching to all staff in formal employment arrangements. It is proposed that people employed by local authorities and the NHS are not in scope, but this decision is being consulted upon.

Negotiations will be conducted by workforce unions and employer representative bodies in equal numbers, convened by the Trades Union Congress (TUC) and the Care Provider Alliance respectively. The negotiating body will be supported by a civil service-staffed secretariat which is expected to operate as an advisory non-departmental public body. The Secretary of State for Health and Social Care will set an annual remit and funding envelope, and must ratify any agreement before it takes effect.

What could determine the success or failure of the FPA?

Much rests on the dynamic between the negotiating body and government

The relationship between the Secretary of State and the negotiating body is vital to a well-functioning process. For example, if a Secretary of State were to repeatedly pass down financial envelopes deemed unreasonably small, alongside the perception that remits and expectations set for the negotiating body are excessively broad, this could fray relations with the negotiating body. The Secretary of State will have ultimate say over whether the negotiating body’s agreements become law through the ratification process. They can decline to ratify, and pose issues back to the body for reconsideration, if an agreement does not reflect the remit letter or is deemed unaffordable.

A dispute resolution process is proposed for scenarios in which the body cannot reach an agreement. If the body still fails to reach an agreement after independent mediation (carried out by the Advisory, Conciliation and Arbitration Service), the Secretary of State, with powers granted by the Employment Rights Bill, can make an independent determination on matters outlined in the original remit letter. This determination would then need to be approved by parliament. In short, despite some limitations, the Secretary of State holds considerable power at both ends of the negotiation process.

On the one hand, this process appears to protect the FPA process from becoming deadlocked in disagreement between negotiators. On the other, it raises questions around the dynamic that could emerge if a government that is less supportive of the principles of the FPA process enters office. Our previous look at New Zealand outlined how an uncooperative government can derail social care pay reform that is vulnerable to changing political tides. On the positive side, the FPA is cyclical, forcing continued engagement from government, while time-limited legislation used in New Zealand meant inaction was enough to halt further pay increases.

Representation really matters for outcomes of the FPA

Nationwide pay-setting processes already exist in other sectors in England. A key example is the NHS’s Pay Review Body (PRB), which is an expert non-departmental public body that provides annual recommendations for uplifts to Agenda for Change pay rates. However, the PRB has been criticised by many relevant unions, who feel sidelined and that they have no negotiating power. Scotland has even abandoned its PRB process in recent years to instead engage with unions directly.

It is positive that attempts have already been made to start convening actors for the FPA, to ensure the correct voices on both the employer and workforce representative sides are included in the negotiating process. However, we have raised before that representing the 1.6 million staff and 18,500 providers in this diverse and fractured sector is no easy feat.

Additionally, unionisation among care workers in England is low. While access to the FPA will not depend on union membership, it may affect how representative of the entire workforce union negotiators are. The Employment Rights Act includes provisions to ease access to union membership.

Looking internationally, we see divergent approaches to the involvement of workforce representatives in ongoing decision-making on pay in social care.

In New Zealand, a pay structure was originally negotiated with unions and covered five years of increases. Unionisation is comparatively high among care workers, and the initial settlement offered a major improvement to pay and progression. However, without unions embedded in an ongoing process, it was easier for governments to disengage from workforce demands once the initial settlement expired.

In Australia, decisions on pay within a complex framework are made by the Fair Work Commission, an independent expert body that does not contain direct workforce representatives. This is more similar to the NHS PRB but has delivered substantial pay rises since the first pay award was delivered in 2023. The short timeframe makes it challenging to judge the long-term viability of this approach for social care. However, the Commission manages pay awards across many sectors, and has prompted recent concern regarding how industry lobbying may roll back the ambition of pay awards elsewhere, suggesting that this approach could result in workforce interests being subjugated to those of other groups.

In France, meanwhile, national minimums for each band of the new sectoral pay structure are renegotiated between unions and provider federations on a rolling basis, with separate settlements for different provider types. Implementation was staged across different workforce groups. This approach may be a route to settlements that fit each specific context better. On the other hand, the staged approach meant that domiciliary care workers received pay uplifts after those in residential care. This created significant discontent, even leading to large numbers of resignations in domiciliary care.

It is notable that none of these countries have attempted a single, rolling process where a few parties undertake negotiations on behalf of the whole sector. Each offers its own successes, alongside cautionary tales. Unifying adult social care in England around a shared vision of pay and reward could deliver a settlement of strength not seen elsewhere, but does it overestimate the ability of key actors to convene and cooperate?

Data and evidence are vital, but elusive

Plans to evaluate the impact of the first FPA, and to conduct subsequent ongoing evaluation and monitoring, are welcome. Skills for Care will be the main source of data on how new settlements impact key indicators such as average pay and vacancy rates in England. However, any evaluation will also be limited by workforce data gaps. England, unlike the other UK nations, has not implemented a national register for this workforce, limiting the granularity with which we can understand how specific sub-groups interact with the FPA.

Additionally, it is a stated aspiration that negotiations will be “based on comprehensive evidence”. As discussed in our report on options to improve pay in social care (which are largely reflected in the options put forward in the consultation), the evidence base on the impact of specific policies on key issues like recruitment and retention is limited. Unfortunately, evaluations have not been published on many key attempts to reform social care pay internationally.

Those involved in the FPA process should be aware that an evaluation has recently been published on the introduction of the Real Living Wage for social care workers in Wales. While this points to some positive effects of the policy upon the workforce, its findings suggest that a sector-specific minimum wage policy of this type is insufficient to differentiate social care work from other parts of the labour market. Leveraging the limited evidence that is available is vital for matching policy design to intended outcomes.

Do not underestimate the complexity of the task ahead

It is difficult to overstate the size of the task of delivering a successful FPA in social care in England, especially on an annual basis. The NHS’s pay review process is plagued by delays and strike action, with new pay rates regularly announced long after the date (1 April) on which they are supposed to enter into force. This is despite the process being well-established and having a comparatively narrowly defined purpose.

The remit of the adult social care negotiating body, meanwhile, goes far beyond the calculation of pay increases. In the absence of the infrastructure and experience that exists around the PRB process, those involved will also be responsible for reviewing evidence and making decisions regarding which policy (or, possibly, phased policies over time) will be introduced to reform pay. On top of this, they must consider terms, conditions and other employment matters. A realistic perspective must be taken on what time, resource and infrastructure will be required to keep this process running smoothly and on time, especially given that it is being constructed from scratch.

Money talks

Of course, the funding for implementing the FPA will be pivotal to its success. Smaller funding envelopes will decrease the level of ambition (and, hence, affect whether the FPA can deliver on its key objective of driving domestic recruitment into the sector). Analysis by the Health Foundation suggests that the £500 million envelope allocated for the first FPA in 2028/29 would only cover approximately 20p extra per hour if applied across the social care workforce and spent entirely on pay – far from a revolutionary shake-up of pay in the sector.

This £500 million appears unlikely to have been committed with specific outcomes in mind, either within the sector or in the broader economy. We have previously noted that assessments of affordability by the NHS PRB are more influenced by departmental budgets than by their interaction with the broader public purse or any intentions to support a sustainable workforce.

Because, unlike in the case of the NHS, costs will be shared between central government, local authorities and providers, underfunding relative to ambition will increase the financial burden upon local authorities, care providers and self-funders. This could have the grave unintended consequence of further degrading the availability and stability of care provision in England’s provider market, and the affordability of care for self-funders.

Given the complexity of the task ahead, the funding of the negotiating body itself should be an important consideration. This includes how much funding will be available for employing civil servants, who will be integral to tasks such as evidence gathering. The impact assessment of the FPA assumes the cost of funding six full-time-equivalent secretariat staff, as well as other administrative costs. However, there is no guarantee that this will be sufficient for the successful operation of the FPA process, or of the actual amount of funding that will be made available. The enforcement of a wage policy through the new Fair Work Agency also needs to be properly funded.

Conclusion

Reforming pay in adult social care is absolutely the right thing to do, and it is clear that substantial time and effort has been dedicated by DHSC to try and design a mechanism that can deliver this. However, the road ahead is laden with challenges. While some bumps are inevitable, it is vital that the FPA is given the tools upfront for the best chance of longstanding success.

The FPA consultation is an opportunity for the diverse, and underheard, voices in social care to put their perspectives forward. DHSC should consider responses carefully, and appreciate the importance of generating buy-in from across the sector, despite the inevitable broad range of needs and viewpoints that will be presented. 

In straitened financial circumstances and with ever-looming political uncertainty, a realistic perspective on what is achievable will be necessary. While there are potentially massive consequences for social care, the FPA is also intended to be the “first of many” such agreements across the economy that this government implements. Failure could have far-reaching consequences and would be a waste of the time, effort and political capital that has been invested in this process.

The government must prioritise maintaining a positive relationship with negotiators, and this group must represent the entirety of social care as well as possible. There is no doubt that funding will be a constant source of friction. The government should be mindful that the size of its financial commitments will signal the levels of goodwill it has towards the process and its broader ambition to make serious improvements to social care. Financial envelopes must support serious pay reform that is financially sustainable. Providers and staff in England may well look to Scotland and Wales’s FPAs to judge the generosity of their own. Both of those countries already offer at least the Real Living Wage in social care, and continuing to lag behind will do the government’s image no favours.

To end on a positive note, work towards the FPA so far appears to be driving collaboration and consensus across broad parts of a sector that is often the victim of its own disunity. This could mark the start of a journey towards a social care system that is more coherent, and kinder to those upon whose hard work it relies.