“Huge opportunity missed” – Johnson’s tax hike will mostly benefit the NHS, say care leaders

Prime Minister Boris Johnson has announced a rise in national insurance contributions to increase funding of the NHS and social care.

While the news was welcomed across both sectors, many fear that care will miss out with the health service pocketing the lion’s share of the new money as it struggles to restore services decimated by the Covid-19 pandemic.

From April 2022, national insurance contributions for employees and employers will rise by 1.25%, combined with a 1.25% rise in dividends tax to ensure those with unearned income also contribute.

From April 2023, while the rises will stay the same, the tax rise will be rebranded as a health and social care levy, which will appear separately on payslips.

Under the new system, anyone with assets below £20,000 will not have to pay towards their care while those with greater assets will contribute up to a maximum of £86,000, ending the current situation where individuals can face unlimited costs.

The new tax was greeted with caution by social care leaders, with some questioning if the extra cash will be enough to address the crisis engulfing the system

Independent Care Group chair, Mike Padgham, said “a huge opportunity has been missed” claiming that the lion’s share of the new cash will go to the NHS, leaving social care to “pick up the scraps”.

“If reports are to be believed, of the £36bn promised over three years for health and social care from the new levy, only £5.8bn will be for social care. That isn’t going to touch the crisis in the sector and will certainly not address the 120,000 vacancies in staffing, which is sending the sector into meltdown on a daily basis as care providers struggle to cover shifts,” he said.

“It will not fund the proper recruitment and training of the thousands of staff we need, nor will it allow the sector to properly reward those staff who have played such a vital, life-saving role during Covid-19. It is too little and, it looks like being, too late.

Richard Murray, chief executive of The King’s Fund, agreed that social care would not be getting the funding it needs and the cap on care costs was too high.

“Social care will only see £5.4bn over three years, with no guarantees of sustainable funding beyond this. The cap on care costs – which will consume nearly half of the funding – will protect people from the very high costs of long stays in residential care, but setting it at £86k means it will help relatively few people. The changes to the means test are very welcome and will bring thousands more people into the publicly funded system. There is a real risk this will leave inadequate funding to bring about meaningful change in areas such as workforce, access and quality.”

Steven Cameron, pensions director at Aegon, warned that the increase in NICs means that younger people with pay a higher proportion of care than older invididuals who place greater demands on the NHS and social care.

“The Government’s plans to increase employer and employee NI by 1.25% to pay for the state’s share will no doubt continue to prove controversial, with accusations of younger often lower paid workers paying a disproportionate share of the costs of care for today’s elderly, many of whom seem comparatively wealthy. Choosing to collect the extra funding through NI rather than income tax may make sense for the NHS boost but for social care looks more like spin. But using NI as the collection mechanism ensures businesses also contribute,” he said.

The Care Workers’ Charity said it was “extremely disappointed” that the government’s plans were “predominantly centred” on the NHS.

“The Prime Minister greatly praised the role and work of the “amazing” NHS and healthcare staff during the pandemic, but appeared to have forgotten the social care sector and its workforce who have given their all with very little recognition, respect and appreciation received in return, said CWC chief executive Karolina Gerlich.

“Unfortunately, this set the tone for content of the rest of his statement, and once again healthcare remained the focus and primary beneficiary of the proposed plans and policies. We would encourage the Prime Minister, and the Department of Health and Social Care, to make additional statements to clarify its position and plans for the social care sector with the utmost urgency.”

Date Published: September 7, 2021