Homecare Association response to the Low Pay Commission 2026

Our response sets out the acute financial pressures facing homecare providers and the consequences of minimum wage increases that are not matched by adequate public funding.

Local authorities and the NHS purchase approximately 80% of homecare but routinely pay rates far below what providers need to meet their legal obligations. In 2025/26, 29% of councils and HSC Trusts paid average rates below the direct employment costs of careworkers at the National Living Wage — nearly four times the 2023 figure. In 2025/26 only 0.5% of councils and HSC Trusts paid the Homecare Association's Minimum Price for Homecare (which was then £32.14, and is now £34.42 per hour, in England), against a weighted average rate in 2025/26 of £24.39. This represents an annual funding deficit of £1.98 billion in England alone1. In 2025/26 around 90% of independent sector providers had at least some workers paid below the April 2026 NLW rate of £12.712, with many businesses operating on margins of 0–4%.

For careworkers, persistent insecurity of hours remains the reality. The median hourly rate of £12.60 in December 2025 sat just 39 pence above the NLW, and in real terms workers were better off by only 26 pence per hour compared to March 20253. Frozen tax thresholds are silently eroding that gain through fiscal drag, removing the equivalent of up to 3.1% of pay by 2029/304. Pay differentials between new and experienced workers have collapsed. Petrol price rises driven in part by recent conflict in the Middle East, add further pressure on a workforce that is overwhelmingly vehicle-dependent.

The closure of the international recruitment route in July 2025, without a credible domestic workforce plan, risks recreating serious workforce shortages. The Employment Rights Act 2025 compounds cost pressures further, with guaranteed hours provisions due in 2027 that will be unworkable without fundamental reform of commissioning practices.

The Homecare Association calls on the Government to fully fund any NLW increase through higher fees to providers; to reform commissioning through fee-rate floors and locality-based purchasing; to invest at the scale the evidence demands; and to deliver a workforce strategy equivalent to the NHS People Plan. Ambition without funding will drive non-compliance, provider exits, and harm to the people who depend on care.

Recommended conclusions for the Low Pay Commission

We ask the Commission to reflect the following conclusions in its 2026 report:

1. Any increase in the National Living Wage must be fully funded in public-sector care contracts, so that fee rates rise in step with the wage costs they drive.
2. Government should introduce a fee-rate floor for publicly funded homecare, linked to the real cost of lawful employment, drawing on the Homecare Association’s Minimum Price for Homecare.
3. Commissioning should move from fragmented, by-the-minute purchasing to locality-based models that enable stable hours, efficient rotas and compliance with employment law.
4. Any Fair Pay Agreement must be backed by funding that reaches providers, so that higher pay does not erode differentials, training or other terms, and must close the existing funding deficit as well as covering annual uplifts.
5. Enforcement should address systemic causes of non-compliance, including low public-sector fee rates and contact-time-only commissioning, not only the practices of individual employers.