The Office for National Statistics (ONS) published its provisional findings in its Annual Survey of Hours and Earnings (ASHE) in October. This yearly report details the earnings of the working population, including salary details for many job roles and employment sectors. In this article, Jonathan Binns examines how the increase in carers’ wages as revealed by the ASHE dataset will affect compensation in catastrophic personal injury claims.

According to the ASHE dataset, carers’ wages have seen the largest increase of all sectors, at 7.6% for weekly median gross pay. Median hourly pay for carers and similar roles increased by 7.3%, reflecting the rise in the National Living Wage, which increased by 6.7% in April 2025 to £12.21 per hour for employees aged over 21. In comparison, median weekly pay across all sectors rose by only 5.3% from the same time last year, meaning carers’ wages rose 34% faster than average.

The care sector is heavily exposed to significant increases, as these roles are often performed at or close to the National Living Wage. Therefore, any increase in the living wage will have an immediate consequence on care costs. Consequently, the care sector has seen significant fluctuations in its pay increases over the past five years, as shown in the table below.

This year’s 7.6% increase in gross weekly earnings is in line with the average over the past five years (which was 7.66% before this year’s report). This trend is expected to continue. However, as the National Living Wage is unlikely to rise by as much in April 2026 as it did in April 2025, the reasonable expectation is that the rate of increase in care costs may slow over time, although this is impossible to predict.

The contribution of care costs in calculating compensation

Care can often be the largest contributor when calculating compensation for a catastrophic injury claim and can stretch into the millions of pounds for young claimants or those with extensive support needs. It is essential that solicitors attribute an accurate value to this aspect of a claim to ensure that the funds recovered for future care costs will sufficiently cover the required care package for a claimant’s lifetime. The natural consequence of rising care costs will be that they must be factored into future compensation settlements.

Periodical Payment Orders

Periodical Payment Orders (PPOs) are a way around this problem, as they can ensure claimants have the funds available to afford the care they require. The majority of PPOs agreed are linked to the 80^th percentile figure in the ASHE index, which rose from £15.03 in the 2024 revised report to £16.12 in the recently published provisional report, an increase of 7.25%. This increase will be reflected in periodical payments. Even factoring in the 4.5% rise in the retail prices index, this means an increase of 2.75% in real terms to periodical payments linked to ASHE statistics.

This highlights one of the key benefits of PPOs and why they could be an attractive option for claimants compared to a lump sum. This is particularly the case for younger claimants with care needs, who could have decades of ASHE adjustments to their compensation, or claimants with significant care needs.

These changes will also affect already settled cases that rely on PPOs indexed to ASHE statistics on care costs. As a result, those in receipt of periodical compensation payments will note a welcome increase in their next instalment of compensation.

Historically, insurers have been reluctant to agree to PPOs, preferring the certainty and finality of a lump-sum settlement. A PPO means uncertainty for an insurer, as they can no longer be certain of the total extent of their liability. It may also expose an insurer to the risk of a claimant’s condition deteriorating, leading to higher payment costs.

PPOs are not always suitable

PPOs are not suitable for every case, however, particularly where accommodation and adaptation claims require a large lump sum. In cases where there is a reduction for contributory negligence, it may be more practical for claimants to retain as much of the compensation as possible to attend to their immediate needs. However, a lump sum requires expert financial management and investment to beat inflation and account for the salary increases identified in the ASHE report.

Conclusion

The statistics set out in the ASHE report and the effect these will have on current ASHE-indexed payment orders indicate that for many claimants in catastrophic injury cases, PPOs could be a far better option. The responsibility falls to claimants’ solicitors and insurers to recognise the benefit of including PPOs in the compensation discussion and advise their clients accordingly.

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