Councils warn care pay reforms risk destabilising adult social care without proper funding

A body representing England’s largest local authorities is calling for councils to be actively involved in negotiations on the first Fair Pay Agreement for adult social care, arguing they are currently being marginalised despite commissioning and funding most care services.

Last autumn, the government announced £500m to support the introduction of a Fair Pay Agreement from 2028/29, suggesting this could fund a 3% pay rise for care workers. However, the funding has only been committed for one year, and councils say there is no clarity about how costs will be met in future years.

An Adult Social Care Negotiating Body is due to be established later this year to agree improvements in pay and conditions. Under current proposals, it will bring together unions and care providers, while local government will, at best, have observer status.

The County Councils Network (CCN), however, argues this is untenable, given councils’ statutory responsibilities for adult social care and their role as the largest commissioners of care in England. It says local authorities are being asked to carry the financial risk of the policy without having a meaningful say in how it is designed.

New modelling by LaingBuisson, commissioned by the CCN, suggests that a 3% pay rise applied consistently across the care system – including what the NHS and private self-funders pay for care – would cost around £853m a year. With only £500m currently allocated, councils warn this could leave a £350m funding gap falling largely on local authorities.

The analysis indicates that if pay rises were agreed above 3%, the impact would be far greater. A 5% increase could cost almost £1.5bn in 2028/29 – three times the funding currently set aside by government.

The warning comes as councils face growing financial pressure. According to separate CCN analysis published last week, local authorities are projected to be spending £16.5bn more a year on services by 2028/29 than they are in the current financial year, even before the Fair Pay Agreement is introduced.

Councils say that without additional funding, they may be forced to reduce access to care and support, undermining outcomes for older and disabled people. There are also concerns that some providers may be unable to absorb higher wage costs and could hand contracts back, potentially leaving people without continuity of care.

Higher wages could also increase the number of people who self-fund care but later turn to councils for support, placing further strain on already stretched adult social care budgets.

Despite these concerns, the CCN has stressed that it supports the principle of improving pay and conditions in a sector that has long struggled with recruitment and retention.

Cllr Glen Sanderson, adult social care spokesperson for the County Councils Network, said the Fair Pay Agreement was “a positive and much-needed policy” but warned of “serious unintended consequences” if it is not properly funded.

“We have a statutory duty to our residents and to manage our care markets, yet we are being asked to shoulder the policy’s risk without having a meaningful say,” he said. “We do not want to be put in the position of having to cut services and reduce access to social care.”

The government’s consultation on the Fair Pay Agreement is now open, with councils urging ministers to commit to long-term funding and grant local authorities a full and formal role on the negotiating body to ensure the reforms are affordable, workable and sustainable for the care system as a whole.