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Government Launches £500m Fund For Social Care Using Controversial National Insurance Hike

Government Launches £500m Fund For Social Care Using Controversial National Insurance Hike
4 min read

The government is launching a £500million fund intended to improve the social care workforce as a controversial levy to pay for it comes into force this week.

The Health and Social Care Levy includes the cash dedicated to “train and retain talent as well as attracting new staff” to help ease the burden in the sector.

But Labour have criticised the pledge as simply a “re-announcement” of funding set out in the social care white paper last December, which they say is equivalent to just £150 per carer.

However the care and mental health minister Gillian Keegan said the announcement showed "rather than kicking the can down the road, this government is taking action" to deal with a complex and longstanding problem.

Writing exclusively for The House, she said "words are not enough" for those working in social care, saying the new fund "means a higher standard of care will be available".

"This investment will help to level up the quality and safety of care received, wherever you are in the country," she added. 

Overall the levy will generate £36 billion over the next three years, with the vast majority of it intended to go to the NHS to reduce patient waiting times and speed up diagnoses, as well as clearing the backlog built up during the Covid-19 crisis.

The number of people waiting for elective care in England was at 4.4 million even before the pandemic, it now stands at 6 million and is expected to rise to as many as 10 million.

It will be paid for by an increase in National Insurance, a move criticised by opposition parties as well as a number of Conservative MPs, who said it should be deferred until next year or scrapped altogether amid the current cost of living crisis.

The hike of 1.25% on NI payments will appear on this month’s payslips, just as the energy price cap jumps up by £693 from £1,277 to £1,971 per year, along with inflation rising at its fastest rate for 30 years.

Dubbed “bleak Friday”, April 1 also saw the rate of VAT paid by some businesses like hospitality return to 20% and council tax go up by 3.5%, while air passenger duty and vehicle excise duty rates are also increasing this month. The cost broadband, phone and TV contracts, as well as stamps and water bills will also increase.

But both the Chancellor Rishi Sunak and health secretary Sajid Javid have insisted implementing the levy is the right thing to do.

Javid said: "This critical investment in our nation's future will be paid for by those with the broadest shoulders, whilst those on low and middle incomes are protected.”

Sunak also defended the plans, but responded to pressure to ease the burden on the lowest paid by increasing the threshold before which people pay National Insurance by almost £3,000 to £12,570.

It means that anyone earning less than around £34,000 over the next 12 months will pay less NI than they did last year, while those earning more than that will see their contributions increase.

Unveiling the new fund to improve the social care workforce, Keegan added: “I am incredibly proud of all the social care staff who have worked so hard, particularly during the pandemic.

“As we recover from Covid, we must look to the future and to reform – this £500million package of support will boost workforce recruitment, allow staff to progress in their careers in the sector and very importantly, ensure staff wellbeing is better supported.

“The type of genuinely transformational change cannot be accomplished overnight. We know staff will need continued support, but we hope this package will level up opportunities for current and future social care staff.”

But Labour’s Karin Smyth, the shadow social care minister, said: “Social care workers are quitting their jobs because the work is insecure and the pay is so low.  

“The government are making this worse, scrapping the fund for carers’ sick pay, so workers have to choose between putting dinner on the table or staying home if they fall ill. 

“Labour’s New Deal for workers will provide care workers with fair pay, secure contracts and sick pay from day one on the job.”

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