This site is intended for health professionals only

PM announces National Insurance hike to fund social care

PM announces National Insurance hike to fund social care
By Mimi Launder and Jess Hacker
7 September 2021

National Insurance contributions will rise by 1.25% from next April to pay for the social care system and tackle the NHS backlog, Prime Minister Boris Johnson has today announced.

The social care plan, which Mr Johnson called ‘the biggest catch-up programme’ in UK history, will mean no one in England will have to pay more than £86k for care over their lifetime. National Insurance (NI) contributions and tax on share dividends will rise by 1.25% to fund it.

However, some health bodies have criticised the move, saying it will increase costs for local authorities and will have ‘enormous implications for councils and providers’.

Announcing the tax increase, Mr Johnson said the levy would raise almost £36bn for frontline services in the next three years. The majority from the tax increases in the first three years will be spent on improving the NHS waiting list, which is currently at 5.5 million people.

He added there were ‘30,000 patients occupying patients that could have better cared for elsewhere’ when the Covid-19 pandemic hit last year, which was ‘costing billions every night’.

The changes will come into effect from April 2022. The NI increase will appear on people’s payslips as a separate Health & Social Care levy from 2023.                                  

Anyone who has assets of less than £20k will also have their care costs fully covered by the state, while those with assets between £20k and £100k will receive some means-tested state support.

As part of the reforms, working pensioners – estimated at around 1.2 million people – will also be asked to pay NI contributions for the first time.

A growing proportion of the revenue raised will go to social care, as the NHS recovers from the Covid-19 pandemic. Health services in Scotland, Wales and Northern Ireland would receive an extra £2.2bn a year, the Government said.

Mr Johnson continued: ‘I accept this breaks a manifesto commitment. It is not something I do lightly, but a global pandemic wasn’t in anyone’s manifesto.’

But Labour leader Sir Keir Starmer said the plan was ‘a sticking plaster over gaping wounds’, claiming many of the problems in social care had existed before the coronavirus pandemic.

Increasing costs for councils

The County Councils Network (CCN), which represents county councils in England, has said the new plan will increase costs for local authorities.

Its spokesperson Martin Tett said the network ‘recognises the need to address the unfairness in the fee levels paid for care by self-funders compared to local authority clients, but today’s commitment to make them fairer will have enormous implications for councils and providers’.

He said that there is currently a market fee gap of £670m in England’s counties alone, and that significant investment will be needed ‘in order to make private and council fees fairer’.

He added: ‘Councils want to work with government to understand the implications on this commitment and ensure that it does not further destabilise local care markets.’

Commenting on the plans, Christina McAnea, general secretary of UNISON which represents NHS staff, said that general taxation should be the solution for the social care crisis, rather than hiking NI.

Criticising the approach, she said: ‘A detailed plan is needed first to mend and future-proof a sector broken by years of neglect. Only then will the cost of making good the damage become clear.

‘A care blueprint must outline the government’s vision for a national service that matches NHS principles and values.’

Similarly, in responses to reports of the tax increase, GMB’s national officer Rachel Harrison yesterday cautioned that the money raised ‘must be ring fenced cash to improve the pay, terms and conditions of workers’ across the sector, she said.

However, the Association of Directors of Adults Social Services (ADASS) said the sector has waited ‘a quarter of a century’ for a Government to deliver on the promise of sustainable funding and reform, and that this announcement ‘feels like a significant step forward’.

Stephen Chandler, ADASS president, said: ‘We are keen to look at the detail, but we hope that this package of measures can begin to help us to tackle the many challenges we face today, whilst transforming care and support for the future.’

A version of this story first appeared on our sister title, Nursing in Practice.

Want news like this straight to your inbox?

Related articles