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1% national insurance increase could raise over £10bn for adult social care in a year, LGA says

1% national insurance increase could raise over £10bn for adult social care in a year, LGA says

By Valeria Fiore
3 August 2018

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Increasing national insurance contributions would generate over £10bn to pay for adult social care, the Local Government Association (LGA) has suggested.

Councils could raise as much as £10.4bn if an additional 1% was added to the national insurance that all employees pay.

This is based on LGA’s estimates, which calculate that a 1% increase on national insurance contributions could raise over £10bn in 2024/25.

An LGA spokesperson said that while they are not suggesting a particular year for the increase to be introduced, they made their estimate based on the year 2024/25 ‘so that the timescale matches our funding gap analysis’.

The LGA estimates that overstretched adult social care services face a £3.5bn funding gap by 2025, and that councils spend more than £15bn on social care every year.

Eight-week consultation

This is only one of the LGA’ solutions for the long term financing of adult social care, as proposed in a green paper published earlier this week.

The LGA green paper also launched an eight-week consultation in a bid to start a ‘nationwide public debate’ on how to provide for adult social care in the long run.

The organisation said it will respond to the findings of the consultation in the autumn ‘to inform and influence the Government’s own green paper and spending plans’ for adult social care.

Breaking point

A Department of Health and Social Care spokesperson said they have provided local authorities access to £9.4bn in dedicated social care funding over three years and that they will present their own plans to reform the social care system in their own green paper ‘due in the autumn’.

LGA’s Community Wellbeing Board chairman Cllr Izzi Seccombe said ‘we cannot duck this issue [funding adult social care] as a society any longer’, as adult social care services have now reached ‘breaking point’.

How could we pay for adult social care?

The LGA said that at present, adult social care is funded through a ‘mix of national government funding, local government funding and individuals’ own contributions’.

However, the funding is not ring-fenced, which means it can be spent on services other than social care.

In a comment in the LGA’s green paper, NHS Providers deputy chief executive Saffron Cordery said: ‘Social care and health are two sides of the same coin. Gathering views from the frontline about how we change has never been more important.’

The LGA’s proposed solutions for long-term funding for adult social care are:

  • Increasing the rate of income tax. A 1% increase to all income tax rates could raise around £6.4bn in 2024/25
  • Introducing a social care premium. Over-40s and working pensioners would be charged an earmarked contribution
  • Means testing universal benefits (such as winter fuel allowance and free TV licences). These are currently available to people over a certain age but if they were limited to those with smaller levels of income and savings, the Government could raise £1.9bn in 2024/25
  • A council tax increase. A 1% rise would generate £285m in 2024/25

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