Why Funding and Local Voices Matter in Adult Social Care

In September 2025, the Labour government announced a landmark Fair Pay Agreement (FPA) for adult social care workers.
Ministers proposed establishing a new negotiating body of employers and trade unions in 2026, conducting negotiations in 2027, and bringing the first agreement into force in 2028.

The policy’s intent is bold: to improve pay and conditions for a workforce of about 1.6 million people who often face poor wages, insecure hours and limited training opportunities.
A government press release described the FPA as “a major £500 million investment in fair pay” that would “boost pay and conditions for a workforce that has for too long been undervalued”.
The new body, the announcement said, should enable care workers to see a boost in their wages by 2028 and is part of the government’s wider commitment to building an NHS “fit for the future”.

While the principles behind the FPA, collective bargaining and fair remuneration are widely welcomed across the sector, concerns have mounted about whether the policy is adequately funded, appropriately designed, and inclusive of those who will have to deliver it.

On 16 January 2026, the Local Government Association (LGA) submitted its response to the Department of Health and Social Care’s consultation, warning that the FPA model is “unworkable” without proper funding and local government involvement.
This blog explores why the FPA has generated anxiety among councils, providers and policy experts, and what changes are needed for the policy to succeed.

Why local government is worried

Local authorities are the single largest commissioners of social care.
In 2025/26, they spent £26.7 billion on adult social care, about 40% of their overall council budgets.
At the same time, many councils are under severe financial strain, having already faced a decade of funding cuts.

The LGA points out that although the government has earmarked £500 million for the first FPA, this pot will have to be spread across 1.6 million workers, leaving councils to pick up any additional costs.
Cllr Pete Marland, Chair of the LGA’s Local Government Resources Committee, praised the focus on improving pay but said the current funding proposal is “not likely to be sufficient to cover the full cost of a Fair Pay Agreement and councils cannot be expected to fork out for the additional costs associated with implementation”.

The LGA is urging ministers to guarantee that all costs arising from the FPA are covered by central government and to ensure direct council representation on the Adult Social Care Negotiating Body (ASCNB).
Without such assurances, the LGA fears the FPA could jeopardise the supply of care and further strain council finances.

A key issue for councils is that the proposed negotiating body gives them only a limited voice.
The LGA notes that local government has over a century of experience in national collective bargaining and already manages pay negotiations for around 120,000 council‑employed care staff.
Yet the consultation envisages employers and trade unions negotiating without mandatory local government representation.
The LGA warns that if councils are sidelined, they may face new legal and bureaucratic obligations without being able to shape the agreements.
Because councils purchase a substantial proportion of home‑care services from independent providers, any uplift negotiated in the FPA would directly increase the fees councils have to pay.
Without extra funding, councils would either have to cut services elsewhere or reduce the amount of care they commission.

Providers and sector leaders raise similar alarms

Care providers, unions and think‑tanks broadly support the idea of raising wages but echo the LGA’s concerns about funding.
Ewan King, Chair of the Care Provider Alliance, welcomed the government’s recognition of care workers’ value but cautioned that £500 million may be spread too thinly.

With about 1.27 million full-time equivalent roles and over 23,000 providers in England, King argued that funding commitments rely on councils increasing local taxes and risk being “thinly spread and going largely unnoticed”.
He stressed that making the FPA a success requires a properly resourced negotiating infrastructure and better commissioning arrangements.

Care England, which represents many independent providers, also believes the funding falls short.
Chief Executive Prof. Martin Green OBE noted that if the £500 million were directed solely to raising the pay floor, it would amount to just 15 pence per hour per worker.

The organisation warns that such a small uplift is unlikely to attract or retain staff and could even undermine the rationale for limiting overseas recruitment.
The Fabian Society, in a 2025 report, estimated that raising care workers’ pay to £13.17 per hour (equivalent to NHS band 3) and providing occupational sick pay and improved pensions would cost around £2 billion, including £1.5 billion just to align pay with NHS health care assistants.
These figures suggest that £500 million would cover only a fraction of an ambitious FPA.

Independent experts at the Health Foundation and Nuffield Trust have emphasised that money is the “elephant in the room”.
A Nuffield Trust briefing published in December 2025 notes that misalignment between funding and ambition could financially destabilise large parts of the sector and that the FPA process itself needs strong, consistent financial support. The briefing highlights that negotiations will be cyclical, with the Secretary of State setting an annual remit and funding envelope, which could constrain future pay increases.
Analysts warn that if funding envelopes are too small or the FPA fails to attract a broad coalition of employers and unions, the policy could replicate flaws seen in New Zealand’s fair pay reforms.

The Living Wage Foundation welcomed the £500 million investment but pointed out that 43 % of adult social care workers are paid less than the real Living Wage and that there were over 152,000 vacancies in 2023.
Research from Cardiff Business School suggests that raising wages to the real Living Wage could cost £415 million, less than the FPA allocation.
This implies that the FPA funding could close the gap only if it were targeted effectively and distributed quickly.
The Foundation argues that paying the real Living Wage is crucial to recruitment and retention and would provide a broader economic boost, especially in regions where low pay is prevalent.

Funding gap: what evidence shows

Several analyses quantify the potential shortfall.
The Institute for Government’s Performance Tracker 2025 observed that a £500 million FPA funding allocation is roughly 2% of the £ 25.4 billion spent on adult social care in 2023/24.
Using modelling from the Fabian Society, the Tracker noted that aligning care worker pay with that of NHS health care assistants would cost local authorities an additional £1.5 billion per year, equating to a 5.8% increase on 2023/24 social care spending.

Without central government funding, councils would have to absorb this cost or cut services.
The Tracker suggests that simpler approaches, such as enforcing the existing National Living Wage, establishing a social care pay review body, or creating an institution similar to Australia’s Fair Work Commission, might deliver pay improvements without the complexities of an FPA.

Beyond wage levels, pay differentials and conditions require attention.
Home care workers often are not paid for travel time and are more likely to be on zero‑hours contracts than staff in other sectors; in 2023/24, about 21.5 % of staff were employed on zero‑hours contracts.

HomeCareDirect’s model, however, is somewhat different from that of a standard care provider.
Personal Assistants (PAs) typically work for a single client and are paid for all working time.

Addressing these issues would increase costs but could reduce turnover and improve care quality.
The Fabian Society report argues that improved pay and conditions would reduce turnover by 27,000 care workers a year and save providers £163 million in recruitment costs.
Thus, while more expensive upfront, a comprehensive FPA could yield longer-term savings by stabilising the workforce and improving continuity of care.

A way forward: what should be considered next?

The principle of fair pay in adult social care is widely supported.
HomeCareDirect recognise that its PAs provide essential, skilled support and deserve reflective wages and conditions.
However, to avoid unintended consequences, the FPA must be properly designed and funded.
The evidence suggests several steps:

Secure realistic funding
The government should match its ambition with adequate funding.
If the goal is to align pay with NHS equivalents, then budgets closer to £2 billion will be necessary.
Even a smaller goal, ensuring all care workers are paid the real Living Wage, may cost around £415 million, but this must be distinct from funds earmarked for training, pensions and sick pay.
Central government should cover these costs rather than expecting councils, many of which already spend 40 % of their budgets on adult social care, to absorb further increases.
Include local government in negotiations
Councils not only commission the majority of social care but also employ social workers and other staff who the FPA may cover.
Without council representation, agreements risk imposing unfunded mandates.
The LGA’s call for direct local government representation on the negotiating body should be heeded to ensure agreements are deliverable and reflect local realities.
Ensure broad sector representation
To prevent the FPA from being skewed toward large providers or unionised parts of the workforce, the negotiating body must include voices from small and medium-sized care providers, the voluntary sector and people who employ personal assistants.
Low unionisation rates and the fragmented nature of the sector demand a proactive approach to inclusion.
Invest in data and evidence
Negotiators need reliable data on pay, hours, conditions and cost structures.
The government should fund the secretariat of the negotiating body to gather and analyse data and support evidence-based bargaining.
Without this, negotiations risk being guided by anecdote or outdated information.
Consider complementary reforms
The FPA is just one lever. Enforcing payment of the National Living Wage, expanding training programmes and creating a pay review body could provide more immediate improvements.
Policies should also address travel time pay and zero-hour contracts, which have long undermined home care workers’ earnings.

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