PM caps care costs at £86,000 using National Insurance hike to fund social care

Care leaders are concerned the Prime Minister’s announcement of a 1.25 per cent increase in National Insurance will do nothing to address the “immediate crisis” in social care and warn the sector will need to be a priority rather than “playing second fiddle” to the NHS.

The social care reforms mean that from October 2023, no one in England will have to pay more than £86,000 in care costs over the course of their lifetime. This is equivalent to around three years in care.

Those with assets less than £20,000 will have all their care costs fully covered by the state.

Boris Johnson announced that a health and social care levy of 1.25 per cent will be introduced through National Insurance raising £36 billion for health and social care over the next three years with money from the levy going directly to the frontline.

From April 2022, the government will create a UK-wide health and social care levy on earned income, with dividend rates increasing by the same amount.

Boris Johnson said: “Our new levy will share the cost between individuals and businesses and contribute according to their needs including those above state pension age.”

There will also be subsidised care costs for people owning between £20,000 and £100,000 in assets. This will be based on a means test.

From April 2023, this extra payment will become a separate tax, called the Health and Social Care Levy, on earned income.

The changes will cost £255 a year for someone earning £30,000, and £505 a year for someone on £50,000.

The government said 70 per cent of the money raised from businesses will come from the largest one per cent, while 40 per cent of mainly small businesses will not pay extra.

Mr Johnson also said Scotland, Northern Ireland and Wales are to benefit from an extra £2.2 billion pound (15 per cent) extra funding per year. He said: “This will create a union dividend worth 300 million pounds.”

’We hope these plans will address the issues across the whole adult social care sector’

Care England and ADASS have welcomed the long-awaited plans and "hope" measures will help "tackle the many challenges" social care faces today.

Professor Martin Green, chief executive of Care England, said: “We have been waiting for a very long time for any concrete plans on the long term sustainability of adult social care reform and as such we welcome the Prime Minister’s announcement today.

“It is our hope that social care will be rewarded and recognised rather than playing second fiddle to the NHS. It is essential that money reaches the frontline. We hope these plans will address the issues across the whole adult social care sector, including younger adults with learning disabilities and autism [and] recruitment and retention of workforce.”

President of ADASS, Stephen Chandler, said: “This welcome announcement feels like a significant step forward and we hope this will be the start of a new chapter for those of us with care and support needs, or who care for family members who do. "We hope 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.”

'We are outraged only a small proportion of the money will go to social care'

However, the National Care Forum (NCF) is concerned that the announcement will do nothing to address the “immediate crisis” impacting social care.

Vic Rayner, chief executive of the NCF said: “Bringing more money into the health and care system is crucial, the balance of how that money is apportioned is the thorn in the side. Social care needs significant additional funding now and the initial apportionment falls well short of the additional £7bn funding requirements.

“Social care needs urgent action now to support the social care workforce that forms an essential part of the social care system.”

The Care Workers’ Charity (CWC) is also worried as to how much of the money raised by the levy will go to directly to frontline social care and is disappointed the statement was predominantly centred around the NHS, healthcare and health needs.

Karolina Gerlich, chief executive of CWC said: “We are outraged that it appears only a very small proportion of the money promised will in fact go to social care. The sector urgently needs clarification and confirmation with regards to how much money will be directed to social care.

“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.”

'The NHS is urgent, but social care is urgent too'

The Independent Care Group (ICG) says the majority of the extra money would immediately be swallowed up by the NHS, leaving social care to “pick up the scraps.”

Mike Padgham chair of the ICG said: “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.”

He said this would not “address the 120,000 vacancies” or fund recruitment and training of staff the social sector needs urgent, root and branch reform and we need it now.

“The NHS is urgent, but social care is urgent too and if we do not get the support we need, more and more damage will continue to be inflicted upon the crumbling social care sector and the NHS will be left to pick up the pieces anyway.”

The Voluntary Organisations Disability Group (VODG) has warned that the social care reform must be examined through “the lens of disability” if it is to be inclusive and fit for purpose.

Dr Rhidian Hughes, chief executive of VODG said: “The government’s thinking around reform of social care has been older people’s care and selling family homes to pay for care. Yet the dominance of this focus has distracted from working-age disabled people rights and entitlements, as set out in the Care Act.

“VODG believes that the needs of disabled people and older people must be considered equally and not reduced to decisions about levels of private wealth.

“We need the detail on the reform packages to enable disabled people and their families, and support providers, to plan.”

Labour leader Sir Keir Starmer said the plan was a "sticking plaster" and will oppose the plans. He said: “The taxes that pay for social care should be fair across the generations and all forms of income.

"It would hit working people hard, including low earners and young people, and would place a huge burden on businesses just as they're trying to get back on their feet."

The Department of Health and Social Care will be bringing forward a white paper on integration later this year.