Raise low-paid public-sector wages

Affected workers

The central case applies a GBP 1,500 annual uplift to about 2.4 million lower-paid public-sector employee jobs.

• Unit is employee jobs, not households.
• Central direct cost is GBP 3.6bn.
• Pay compression adds further pressure.

Core trade-offs

Lower-paid public workers gain most. Costs fall on taxpayers, departments and pay structures above the threshold. Compression can spread the bill beyond the target group.

• Low-paid staff gain directly.
• Departments face compression pressure.
• Output gains are not assumed.

Illustrative fiscal impact

+GBP 0.8bn to +GBP 8.0bn. Central estimate: +GBP 3.2bn.

• Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
• Gross costs are separated from tax, NI and benefit offsets.
• Private business costs are not automatically fiscal costs.
• Behavioural responses widen the range materially.
• This is not an official costing.

Economic impact by 2027-28

• Jobs: No direct job creation; unfunded costs can reduce vacancies and overtime.
• Wages: Raises low-paid public workers more than higher-paid colleagues.
• Prices: Low direct CPI effect; public procurement and local fees may rise.
• GDP / productivity: Distributional gain, but GDP effect likely small or negative.

Assessment

Targeting low-paid public workers is more defensible than a universal premium, but the estimate still depends on pay distribution and compression. It can improve living standards while increasing pressure on departmental budgets.

Confidence: Medium-low. The uplift is easy to calculate; affected counts and compression are weaker.

Main risks

• Compression pressure: Workers just above the threshold may demand equivalent rises.
• Boundary gaming: Departments may reclassify roles or hours to control eligibility.
• Budget squeeze: Unfunded costs can reduce headcount, overtime or service quality.

Safeguards

• Use ASHE/RTI distribution data.
• Limit compression through explicit pay bands.
• Fund public-service employers transparently.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology for raise low-paid public-sector wages Internal - PolicyLens, 2026
• Public sector employment, UK: December 2025 Official statistics - Office for National Statistics, 2026
• Whole of Government Accounts 2023-24 UK government accounts - HM Treasury, 2025
• Economic Evidence to the Pay Review Bodies 2026-27 Pay Round UK government report - HM Treasury, 2025
• Rates and thresholds for employers 2026 to 2027 UK government guidance - HMRC, 2026
• Recent trends in public sector pay Research briefing - Institute for Fiscal Studies, 2024
• Labor Market Institutions and the Distribution of Wages, 1973-1992 Academic article - DiNardo, Fortin and Lemieux, Econometrica, 1996
• Does Employment Protection Reduce Productivity? Academic article - Autor, Kerr and Kugler, Economic Journal, 2007
• Workers' Charter 2026 Party policy source - Green Party of England and Wales, 2026

Other Green policies

• Raise the minimum wage to £15
• Index public-sector pay to inflation
• Add public-pay restoration premiums
• Cap organisation pay ratios at 10:1
• Protect pay in transition schemes
• Create a single worker status
• Equal terms for outsourced workers
• Raise statutory holiday to 35 days