Social care: government announces £500 million funding for Fair Pay Agreement

The Government has announced a £500 million investment in the first-ever Fair Pay Agreement for adult social care workers in England to boost pay and conditions for a workforce it says has been “undervalued and underpaid” for too long.

A new body will also be created to bring together employers and trade unions to negotiate changes to pay and terms and conditions for care workers. It will also seek to address recruitment and retention across the sector.

The Fair Pay Agreement will be backed by law, currently progressing in Parliament through the Employment Rights Bill, and will empower employers and unions to negotiate better terms and conditions. Following this, the Adult Social Care Negotiating Body will be established through regulations in 2026, with the first Fair Pay Agreement coming into force in 2028.

It is hoped that the Adult Social Care Negotiating Body and the new Fair Work Agency will work together to crack down on any exploitation occurring within the sector by helping employers understand their statutory duties and implementing effective enforcement measures.

The £500m forms part of an increase of over £4 billion in additional funding available for adult social care in 2028-29, compared to the 2025-26 period.

New public consultation on Fair Pay Agreement

A public consultation will also be launched to gather views on the design of the Fair Pay Agreement. This has been welcomed by The Care Provider Alliance, which says it is a positive milestone. It is urging providers to submit their views on how central government will enforce pay and benefits for their workforce.

Chair Ewan King said: “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. 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.”

The Voluntary Organisations Disability Group (VODG) agrees that the consultation presents an essential opportunity for everyone to have their say and to ensure the proposals work for the breadth and diversity of the social care sector.

Dr Rhidian Hughes, Chief Executive, added: “Disability services are almost entirely funded by the state. Without sufficient funding to ensure local authorities can cover the full costs of the workforce, we will continue to be caught in a loop of increasing costs without the funding needed to cover them.”

Social care funding could be transformative

Although extra funding has been welcomed, some sector experts say it is vital that the improvements in pay are part of a broader response to stabilising the workforce and supporting the sector to meet increasing needs.

The Health Foundation says that fair pay agreements have the potential to be transformative, but ambition must be matched by investment. It adds that the £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.

According to its analysis, shared evenly between the 1.5 million workers in the sector, for example, it could amount to roughly 20p extra per hour each. It 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).

Lucinda Allen, Policy Fellow, added: “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.

“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.”

The King’s Fund said the Fair Pay Agreement is a welcome down payment on a long-term solution. Still, it will be some time before they know what the £500 million will mean for social care workers. Unions and providers now need to negotiate how that sum of money will be spent and what level of pay increase it will fund.

Sarah Woolnough, Chief Executive, added: ‘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.”

Alison Bloomer

Alison Bloomer is Editor of Learning Disability Today.

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