Care England has warned that frozen Income Tax and National Insurance thresholds will remove an estimated £1.4bn from care workers’ take-home pay before the Fair Pay Agreement comes into force in April 2028.
According to Care England’s analysis, fiscal drag caused by thresholds remaining frozen until 2031 will operate as a ‘silent pay cut’, leading to sub-inflation pay awards across adult social care, with a growing share of headline pay increases absorbed through higher deductions before they reach workers.
Key findings include:
- In 2026/27, frozen tax thresholds will remove the equivalent of around 0.7 per cent of pay from the adult social care workforce, costing workers approximately £230m in take-home pay that year.
- By 2027/28, the annual loss rises to around £470m, equivalent to around 1.5 per cent of pay.
- In 2028/29, the first year the Fair Pay Agreement takes effect, frozen thresholds remove around £720m, equivalent to over 2 per cent of pay. With a cumulative cost since 2025/26 of £1.4bn.
- By 2029/30, frozen thresholds will be removing the equivalent of over 3 per cent of pay each year, costing close to £1bn annually, following several years of cumulative losses that cannot be recovered with the FPA settlement.
- Alongside this, frozen employer National Insurance thresholds add an immediate £41m to provider costs in 2026/27, rising to £176m per year by 2029/30, with a £430m cumulative cost over four years.
Professor Martin Green OBE, chief executive of Care England, said: “The Fair Pay Agreement is being treated as the answer to some of the biggest challenges facing adult social care, including how we recruit and retain enough people to meet growing demand. It is being used to justify major workforce decisions on the basis that better pay will finally make care work more attractive.
“But our analysis shows that, unless government deals with the impact of frozen tax thresholds, care workers will not feel better off in reality. If pay reform does not translate into higher take-home pay, it will not rebuild trust, it will not stabilise the workforce, and it will not deliver the change the sector has been promised by the Fair Pay Agreement. The risk now is that expectations have been raised, but outcomes will not improve, leaving both care workers and the system itself less secure than before.”
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Matt Seex, Editor
