Give 603,000 Care Workers a £2050 Pay Rise to Tackle the Social Care Crisis

• The proposed Fair Pay Agreement in social care should align pay with similar roles in the NHS, giving a pay rise averaging £2,050 to 603,000 workers.
• Research finds this pay rise would attract 90,000 care workers to the sector, eliminating staff shortages, and saving employers £163m a year in recruitment and training costs.
• The Fair Pay Agreement would cost £2bn. This could be paid for by increasing tax on private health insurance to match VAT and cutting tax-free pension lump sum to £100k.

A new report from the Fabian Society – supported by Unison – today calls for an ambitious and fully funded Fair Pay Agreement in social care in order to tackle the workforce crisis and deliver a much-deserved pay rise for over half a million care workers.

This Fair Pay Agreement (binding sectoral collective agreements which aim to improve pay and conditions) is the first one to be legislated by the government. It’s scope and ambition should set the standard for any to follow.

It is particularly important to get this right in the social care sector which has been in crisis for decades. Social care is one of the most important and yet most undervalued sectors in our economy.  Workers in care suffer from endemic low pay and poor conditions, with half of care workers earning below the real Living Wage, and one in three on zero hour contracts. There are 120,000 vacant roles in the sector.

The report calls for the Fair Pay Agreement to set a higher minimum wage for care, equivalent to pay for NHS healthcare assistants (£13.17/hr).

This increase in pay would benefit 603,000 care workers, with the average pay rise being £2,050. This would reduce the number of people paid below the Living Wage across the economy by 10%; the biggest reduction in the number of low paid workers since the inception of the real Living Wage in 2011.

Increasing pay would help make social care more attractive, and tackle the workforce crisis in the sector cutting vacancies by 90,000. It would reduce turnover saving providers £163m in recruitment and training.

The total cost of the pay rise and other measures would be £2bn per annum. This must be covered by the Treasury as neither cash-strapped councils nor care providers have the capacity to absorb the costs.

The pay rise would deliver a £600m boost for the Treasury from higher tax and lower Universal Credit payments.

The costs can be funded by:

• Increasing tax on private health insurance to the rate of VAT. People with private health insurance pay only 12% in insurance premium tax, significantly below the rate of VAT. Closing this tax loophole would raise £500m – £1.5bn a year.
• Reducing the tax-free pensions lump sum. People can draw down a tax-free lump sum of up to £268k from their pension on retiring. This tax break is expensive and disproportionately benefits the wealthiest savers. Reducing the tax-free lump sum to £100k would save £1.3bn a year.

Joe Dromey, General Secretary of the Fabian Society and co-author of the report, said:

“The treatment of the social care workforce is a national scandal. Care workers deliver vital support, yet they face poverty pay, chronic insecurity, and few opportunities for progression.

“The Fair Pay Agreement has the opportunity to transform social care. Through delivering a much-deserved pay rise, it would tackle the workforce crisis, improve the quality of care, and narrow inequalities.

“The ambition of the Fair Pay Agreement must meet the scale of the workforce crisis in social care. The Government must seize this opportunity, and deliver a bold and fully-funded Fair Pay Agreement.”