Government’s new Employment Rights Act (ERA) and plans for a fair pay agreement (FPA) in adult social care aim to enhance pay and employment conditions. Professional care workers deliver skilled, emotionally demanding work that enables people to live independently, yet frequently receive little more than the legal minimum. Improving pay and conditions is essential for improving recruitment, retention and quality and reducing reliance on immigration. Vacancy rates in homecare remain around 9.9%, four times the UK average, with workers moving to sectors offering higher, more predictable pay.
The question for commissioners and care providers is not whether fair pay is right, but who will pay for it – and what happens if citizens can no longer access the care they need. The Department of Health and Social Care’s impact assessment put the 10-year cost at £6.4bn. In 2028/29, the Treasury cost is £660m – £500m for councils and £160m for the NHS. Government expects self-funders to bear a further £300m through higher private fees. Whilst HM Treasury estimates recovery of £2.6bn through tax receipts and reduced benefits, this hardly eases pressure on providers or citizens funding their own care.
The Homecare Association calculates that the cost of regulated homecare in England is now £32.14 per hour, whilst the average fee councils pay providers is just £24.35. Many NHS bodies also commission homecare at unsustainable rates. The shortfall across England to pay wages in homecare on a par with equivalent roles in the NHS is £2.64bn. This year, councils increased fees by around 5% on average, whilst providers’ costs rose by around 10%. Many providers rely on private clients to make up the difference.
In homecare, at least 70% of costs are employment related. Homecare costs could climb by another 10-12% if public funding does not match pay rises under the new agreement. For older homeowners on fixed pensions or using savings to remain independent, that may feel unsustainable. Some could cut back on hours or delay help, leaving unpaid family carers to fill the gap. Age UK estimates that 2.5 million people have unmet needs, whilst 5.8 million unpaid carers provide support worth £184bn annually. Half cut back on essentials, whilst 600 daily give up work to care.
The Care Quality Commission’s (CQC’s) State of Care 2024/25 report highlighted that areas with more self-funders experience fewer unplanned hospital admissions and faster discharges. Where local authority fee rates are lowest, delays are longest. If self-funders withdraw because of unaffordable prices, local care economies will weaken and NHS pressure will rise. When people awaiting homecare occupy hospital beds, others needing treatment must wait, increasing the risk of harm.
Faster asset depletion will shift more people to publicly funded care, increasing local authority costs. Councils already face significant financial strain: 81% expect to overspend on adult social care this year.
The Casey Commission provides an opportunity to address these structural problems. Without a clear funding plan, the FPA risks creating pay expectations without the means to deliver them. Fair pay for professional care workers is morally and economically justified. But fairness must extend to citizens who rely on care and councils operating on the brink. Full public funding and a national minimum contract price must accompany reform. Without these safeguards, the ERA could reduce access to health and care services, worsening the nation’s health and wellbeing and damaging the economy.
Dr Jane Townson OBE is Chief Executive Officer at the Homecare Association. Email: [email protected] X: @homecareassn