Labour has dismissed as “fiction” a think tank report claiming its fair pay agreements in social care could cost taxpayers £4.2 billion a year. As part of its new deal for working people, the party plans to empower adult social care professionals and trade unions that represent them to negotiate a sector-wide agreement for pay, terms and conditions. In a report that also prompted a backlash from unions, the centre-right Policy Exchange think tank said the total cost to the care industry of this wage rise in 2023-4 would have been at least £9.9 billion per year. The calculation is based on the assumption the sector-wide minimum wage was set at £15 per hour. Some £4.2 billion of those costs would fall on the taxpayer, funded via local authorities, according to Policy Exchange. The study also assumes Labour would follow New Zealand’s model, where a recently-legislated sectoral collective bargaining system has now been scrapped. The think tank argues Labour’s policy would damage productivity growth and fuel inflation, with head of the policy programme for prosperity Roger Bootle calling it an “act of economic self-harm”. However, the party denied it is proposing following New Zealand’s model. Labour’s fair pay agreement would...