The government's pledge of £500m to deliver the first fair pay agreement for adult social care staff in England "barely scratches the surface" of what is needed, providers have warned.
The money will be allocated to councils in 2028-29 to finance the first agreement reached by the new Adult Social Care Negotiating Body, which - with ministerial sign-off - will set the sector's terms and conditions in the future.
Announcing the money yesterday, health and social care secretary Wes Streeting said it meant that the government would "no longer accept a system based on poverty pay".
However, think tank the Health Foundation estimated that it would be worth about 20p per hour, if spent only on pay and divided evenly among England's roughly 1.6m adult social care workers, while provider bodies warned that it was far too little to make a meaningful difference to wages.
At the same time, council leaders raised significant concerns that the money would not be sufficient to fund the fair pay agreement, loading further pressure onto local authorities already struggling to manage their adult social care budgets.
Also, the £500m will be taken from the £4bn increase in adult social care funding by 2028-29 announced in the government's latest spending review, reducing money available to meet other pressures.
'We will no longer accept poverty pay'
The funding is designed to back up the first agreement developed by the Adult Social Care Negotiating Body, which will be set up by regulations made under the current Employment Rights Bill.The Department of Health and Social Care (DHSC) said that the body, which will have representation from unions and sector employers, would be established in 2026 and conduct its first set of negotiations in 2027, implementing the first fair pay agreement the following year.
Alongside the funding, it has also launched a consultation on how the body should work and its processes for reaching agreements.
Announcing the funding at the Labour Party conference yesterday, Streeting said: "We will no longer accept a system based on poverty pay and zero-hour insecurity.
"We will back the first ever fair pay agreement for care workers, not just in law but in practice, starting with half a billion pounds to improve pay, terms and conditions for care workers across our country because the people who care for our loved-ones should never have to struggle to care for their own."
The state of pay in adult social care
As of December 2024, median pay for independent sector care workers in England was £12 per hour, less than the average for over 80% of jobs in the whole economy, according to Skills for Care's latest report on the issue.Pay has risen significantly in recent years, due to significant real-terms increases in the national living wage (NLW), the minimum rate for those aged 21 and over, which rose by 6.7% from £11.44 to £12.21 per hour in April this year.
However, while the NLW has increased salaries at the bottom end, pay progression across the sector has been squeezed. Experienced care workers earned just 4p per hour more on average than newcomers to the sector as of December 2024, compared with 33p per hour more in 2016.
Low pay and lack of pay progression, among other issues, have been linked to adult social care's significant recruitment and retention challenges.
While the vacancy rate in the independent sector fell from 10.5% in 2025 to 7% earlier this year, this was still three times the rate in the wider economy, according to Skills for Care.
'Funding worth about 20p per hour on average'
Against that backdrop, sector bodies warned the the £500m, while welcome, was significantly below what was required to make a difference.The Health Foundation said that, if spent only on pay on shared evenly among the sector's workforce, "it could amount to roughly 20p extra per hour each".
Policy fellow Lucinda Allen said the foundation had calculated that £2.3bn would be needed in 2028-29 to increase pay for care workers to the level of that of NHS workers in clinical support roles, at the top of band 3 of the Agenda for Change pay framework (£13.60 an hour).
Provider leaders were particularly critical of the level of funding provided.
Money provided 'barely scratches surface'
Care England's chief executive, Martin Green, said the money would do "little to deliver any meaningful change for our workforce", adding: "With funding this slight, it is hard to see how providers will attract or retain the staff they desperately need, undermining the very purpose of the agreement.”Fellow provider body the Homecare Association has previously calculated that council fees for providers in England this year fall £1.6bn short of what services require to pay staff the NLW, meet other costs and turn a "small" profit of 7% a year.
Its chief executive, Jane Townson, said that the £500m "barely scratches the surface of the multi‑billion‑pound gap in home care," adding: "Most public bodies continue to commission home care at rates far below the cost of delivering it and that simply isn’t sustainable."
She said delivering a fair pay agreement required "national investment and a national approach to commissioning that ensures providers are resourced to deliver on their obligations as good employers".
Pay agreements 'best way to make staff feel valued'
From a union perspective, UNISON general secretary Christina McAnea said a fair pay agreement, "backed by proper funding", was the "best way" to begin tackling the "years of low wages and poor conditions" that had "left the sector with huge holes in its workforce, unable to deliver the support that’s needed".“The higher wages that result will help make staff feel more valued, boost recruitment and encourage care workers to stay in their jobs for longer," she added.
However, she warned that while the money announced by the DHSC was "a start", it would have to be increased "at the earliest opportunity" to end the sector's "staffing crisis".
Underfunded pay deals 'risk deepening service pressures'
The Association of Directors of Adult Social Services (ADASS), while welcoming the funding, also raised concerns about it being insufficient to deliver more than a small uplift in pay.However, president Jess McGregor also sounded the alarm about the costs of pay agreements outstripping the resource provided to councils to implement them, in the context of councils' having overspent their adult social care budgets by by £774m (3.46%) last year, the highest level in a decade.
“If the additional costs are not fully met for publicly funded social care, there will be unintended consequences - either councils will not be able to pay the required uplift to provider organisations and their staff, or they will have to tighten who is eligible for adult social care or makes cuts elsewhere in other public services to pay for them," she added.
"There may also be knock-on impacts on those people who fund their own care, as higher costs to pay will mean they deplete their assets quicker so many more of them will need to turn to their council for help."
The Local Government Association issued a similar warning, with health and wellbeing committee chair Wendy Taylor saying: "If costs do fall on the sector, they will compound existing pressures and the consequences of those pressures for people drawing on care and those providing it."
Funding to come out of spending review settlement
Meanwhile, think tank the Nuffield Trust raised concerns about the funding coming from the resource allocated to adult social care in the spending review, under which councils will have £4bn a year more available to spend on adult social care in 2028-29 than 2025-26.Its deputy director of research, Natasha Curry, said this meant it would come from "funds already needed to keep social care afloat and meet the needs of the people that rely on it".
"The fair pay agreement is the right thing to be doing but it won’t work unless properly funded," she added.
Concerns had been raised about the spending review settlement even before this week's announcement.
The projected increase in resource is only slightly higher than the £3.4bn extra annually that the Health Foundation has calculated would be needed by the sector by 2028-29 as a “bare minimum” to deal with rising costs and increased demand.
Also, the funding is reliant on significant - 5% - year-on-year increases in council tax, while it is not clear how far delivering the boost to adults' services funding requires a squeeze on the resource available to children's social care. This is because a key source of funding for councils is the social care grant, which can be spent on either service.
