The Government has made a series of important announcements this month as it seeks to address the two biggest issues in its in-tray – the need to start paying down the debt incurred as a result of the pandemic and, secondly, the social care crisis.
The requirement to tackle how social care is funded has challenged governments for years, but on becoming Prime Minister, Boris Johnson made it a key priority.
The plans he has announced will limit the amount people pay for their actual care (rather than accommodation) to a maximum of £86,000 over their lifetime from October 2023. After this cap has been reached, the costs will be picked up by local authorities.
Anyone who has assets under £20,000 will have their care costs covered in full by the state.
Those with assets between £20,000 and £100,000 will be expected to contribute to their costs, but will also get some support from the state.
The changes will be funded in a number of ways:
- From April 2022, National Insurance (NI) will rise by 1.25%;
- From April 2023, this extra payment will become a separate tax – called the Health and Social Care Levy – on earned income. It will show up separately on payslips;
- The levy – unlike NI – will also be paid by people who continue to work beyond retirement age;
- Shareholders will also have to pay 1.25% more in tax on the profits they make.
The Government says the changes to NI will cost £255 a year for someone earning £30,000, and £505 a year for someone on £50,000.
The increased NI contributions are expected to raise an extra £12bn a year which, for the first 3 years will go towards easing the NHS backlog before being switched to social care.
What the Government has not addressed is the way in which care is delivered.