PolicyLens

Methodology note

Raise statutory holiday to 35 days: calculation note

Scenario estimate showing gross costs, offsets and behavioural uncertainty; not an official costing.

View main policy page: Raise statutory holiday to 35 days

Central fiscal result

+GBP 5.0bn - Net public-finance impact in 2027-28

Low case: +GBP 1.0bn. High case: +GBP 15.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Increase minimum paid annual leave from 28 to 35 days including bank holidays.
  • Baseline is current law and published official data unless stated.
  • Private business costs are excluded unless they affect tax or procurement.
  • Target year is 2027-28, with later years shown separately.

Affected population

  • Unit is workers near the statutory leave floor.
  • Most five-day workers currently have 28 days minimum.
  • Central fiscal exposure is public and commissioned workers.
  • Private employer costs are outside direct fiscal score.

Gross impact

  • Baseline statutory entitlement is 28 days for five-day workers.
  • Policy adds seven days, about 2.7% of working days.
  • Central public/procurement exposure is GBP 6.0bn.
  • Tax offsets and lower profits reduce net fiscal cost by GBP 1.0bn.

Fiscal build-up, central case

  • Public-sector cover and downtime: +GBP 3.30bn
  • Commissioned-service pass-through: +GBP 2.50bn
  • Administration and disputes: +GBP 0.10bn
  • Tax and NI offsets: -GBP 0.80bn
  • Profit and receipt effects: -GBP 0.10bn

Central net impact: +GBP 5.0bn in 2027-28.

Behaviour and pass-through

  • Low case assumes many workers already receive 35 days.
  • Central assumes cover costs for exposed public services.
  • High case assumes broad statutory-floor coverage.
  • Some firms reduce hours or hiring.
  • Productivity offset is not assumed.

Phasing

  • 2026-27: +GBP 0.2bn. Guidance and systems.
  • 2027-28: +GBP 5.0bn. Full leave increase.
  • 2028-29: +GBP 5.5bn. Rosters adjust.
  • 2029-30: +GBP 6.0bn. Steady-state cover costs.

Main source groups

  • S1: S1 GOV.UK: statutory leave is 5.6 weeks or 28 days.
  • S2: S2 WGA: public staff and procurement costs anchor exposure.
  • S3: S3 ERA analysis: rights costs concentrate in flexible employers.
  • S4: S4 HMRC: tax and NI offsets.
  • S5: S5 Autor/Kerr/Kugler: employment protections can reduce productivity.