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Five Key Details From Boris Johnson’s New National Insurance Levy To Fix Social Care

Five Key Details From Boris Johnson’s New National Insurance Levy To Fix Social Care

Boris Johnson revealed his long-awaited plan to fix social care with a levy to pay for the NHS backlog and to place a cap on care costs (Alamy)

5 min read

More than two years after he first announced he had a plan to fix social care, Boris Johnson finally unveiled a new 1.25% levy on National Insurance to go towards paying to fix the crisis in the sector.

It also places a cap on costs and a floor on a person’s assets before they start paying for care, but both figures are higher than those recommended by Andrew Dilnot, whose proposals the prime minister has based his on.

But there has been criticism over how much of the £36billion raised over the next three years will go to fixing the backlog in the NHS caused by the pandemic, rather than adult social care.

Johnson has admitted this breaks his manifesto commitment in 2019 not to raise the main forms of taxation, however it is also suggested it breaks another election promise that nobody will have to sell their homes to pay for care.

Here are the key details from today’s announcement:

Cap delay

The £86,000 cap on care costs only comes into force in October 2023, as Johnson told MPs "no eligible person starting adult social care” after that will have to pay more than that over their lifetime.

That means that any spending made on care before then does not count towards it, so therefore the almost one million people already receiving care will not benefit from it, or the thousands more who will start care in the next two years.

Manifesto breach

Johnson admitted he was breaking his pledge to voters not to increase the main forms of taxation.

Appearing in the chamber after him work and pensions secretary Therese Coffey then broke another manifesto commitment by temporarily ditching the pensions triple lock, blaming the pandemic for that too.

The government is also being accused of a third breach, after they said in 2019 one condition of a plan to fix social care “is that nobody needing care should be forced to sell their home to pay for it”.

Today’s plans, with the costs capped at £86,000 and the asset floor at £100,000, many people will be left with no choice but to do so. The government has suggested they will still stick to their promise by allowing people to defer the issue until after their death.

DHSC confirmed under the plans nobody will be forced to sell their home to pay for their care “in their lifetime”, as people can take out a Deferred Payment Agreement so the money can be deducted from their estate after they die.

Much more an NHS levy than a social care one

The institute for fiscal studies (IFS) said the amount of money allocated for care will still mean “many people with care needs not considered severe enough will continue to miss out”.

Analysing figures from the government, they say with £5.4billion going on social care from 2023 to 2025, at an average of £1.8 billion per year, it is a funding boost equivalent to around 9% of what councils spent on services in 2019–20.

But they added: “The early-to-mid 2010s saw big cuts in spending, despite an ageing population and rising numbers of people with learning disabilities.

“And as a result, adult social care spending per person was 7.5% lower in real-terms in 2019–20, the latest year for which we have data, than in 2009–10. 

“While the precise path for spending – and hence for the availability and quality of care – is unclear, it is clear that the extra funding will not be sufficient to reverse the cuts in the numbers receiving care seen during the 2010s.

Tax burden higher than ever

The IFS also say that today’s announcement will see a further tax rise of £14billion or 0.6% of national income, which on top of an income tax rise of £8billion and corporation tax of £17billion set out in the March Budget will “raise the tax burden in the UK to the highest-ever sustained level” if delivered.

Its director Paul Johnson said: “Both spending and tax will ratchet upwards over the next few years. Taxes will reach their highest sustained level in the UK.

“This was always going to be an inevitable consequence of ever growing demands on health and social care, and would have happened eventually irrespective of the pandemic.”

He added: “It is disappointing that the government did not find a better package of tax measures to fund these spending increases.

“A simple increase in income tax would have been preferable. But overall much needed reforms to social care are being introduced and unavoidable pressures on the NHS are being funded through a broad based and broadly progressive tax increase. That is better than doing nothing.”

The public are unsure about it

Snap polling has revealed almost half of the public (46%) say the government’s decision to break its manifesto pledge to raise National Insurance is acceptable, slightly more than those who think it is unacceptable (42%).

The survey by Savanta ComRes show the sentiment is generally consistent by age, but overall 45% say they would have raised income tax to the 30% who say they would have raised national insurance to pay for social care.

Chris Hopkins from the polling firm said:  “On this evidence, breaking a manifesto commitment is unlikely to have a huge electoral impact, particularly within the context of an electorate that’s willing to be forgiving due to the pandemic.

"Although time will tell on whether Labour drive home a message of tax rises and broken promises from the usually fiscally prudent Conservatives.”

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