Social care plans

What does Boris Johnson’s social care plans mean for you

The prime minister has announced controversial reforms to England's social care system which will mean a national insurance rise across the UK.

Boris Johnson has announced tax hikes for millions of people to fund social care and the NHS – and the move has not proved popular.

The prime minister announced the national insurance rise in parliament on Tuesday, but Labour leader Keir Starmer has ruled out backing the hike, and so too have members of the prime minister’s own party. Here’s everything we know so far.

So, what’s happening? Boris Johnson announced an overhaul of the social care system in England to MPs on Tuesday. It follows the £5.4bn cash injection announced on Monday to tackle the NHS backlogs caused by Covid, which will be spread out over the next six months. The PM wants to raise £36bn through increased national insurance contributions, rising by 1.25 percentage points as a health and social care levy. It’s a decision that goes against his manifesto “guarantee” and has angered members of his own party. Meetings to discuss the plans apparently took place between the PM, Chancellor Rishi Sunak and Health Secretary Sajid Javid over the weekend, and Downing Street confirmed on Tuesday morning that the Cabinet had approved the proposals. The proposals, to take effect in April 2022, will include a cap of around £86,000 on how much a person will pay, but might not include accommodation costs for those in residential care homes.

Johnson also announced that people with assets worth less than £20,000 will not have to pay for their social care, while those with assets worth between £20,000 and £100,000 could qualify for some means-tested financial support. Cash raised will be focused on the NHS, the prime minister said, but highlighted the need to integrate health care and social care.

“You can’t fix the Covid backlogs without giving the NHS the money it needs, and you can’t fix the NHS without fixing social care,” he said.

“You can’t fix social care without removing the fear of losing everything to pay for social care, and you can’t fix health and social care without long-term reform.”

What’s the problem? Unlike the rate of income tax, which rises once you earn £50,000, national insurance falls at the same point. That means increasing it will have a proportionally smaller impact on the highest earners.

It is not currently paid by pensioners, but the plans involve a new system which requires pensioners who are in work to start paying the health and social care levy from April 2023, a year after the tax hike will first be introduced. It is at this point national insurance payments and the levy will start appearing separately on pay slips. Some critics warned the proposals will mean young, low-paid workers paying for the care for wealthy elderly people. But it is important to note an estimated 2.1 million people above state pension age are already living in poverty, and young people with long-term health problems and disabilities are also cared for through the system.

The national insurance hike means an extra £100 a year to be paid by aound two million households on low incomes who receive universal credit or working tax credit, the Joseph Rowntree Foundation (JRF) said. The extra cost “adds insult to injury” for families facing a “historic” reduction in their benefit payments when the government cuts universal credit by £1,040 a year on October 6, said Peter Matejic, deputy director of evidence and impact for JRF.

“With inflation rising, the cost of living going up and an energy price rise coming in October, many struggling families are wondering how on earth they will be expected to make ends meet from next month,” he added.

The social care reforms will only apply to England, but everyone across the UK will be hit by the national insurance rise. Scotland, Wales and Northern Ireland will get an extra £2.2bn for health and social care, Johnson told MPs.

The 2019 Conservative manifesto promised a “long-term solution” to issues in the social care system. But it also said: “We promise not to raise the rates of income tax, national insurance or VAT.

“This is a tax guarantee that will protect the incomes of hard-working families across the next parliament.” How much will it cost me? The 1.25 percentage point increase in national insurance payments will take it from 12 per cent to 13.25 per cent for low to average earners. People on higher incomes pay less national insurance, meaning their payments would rise from 2 per cent to 3.25 per cent. Someone earning £20,000 per year currently pays £1,251 annually in national insurance payments. The proposals would add £130 to their bill each year. This rises to an extra £505 for people on salaries of £50,000, making their annual national insurance payments £5,356.

Are there any alternatives? Opposition MPs and trade unions want the government to tax the rich more before asking lower earners to contribute more from their pay packets. The Trades Union Congress called for a rise in capital gains tax – a fee paid on the profit someone makes from selling assets worth £6,000 or more, such as property – which the organisation said could raise £17bn per year for social care and go some way to funding a £10 per hour minimum wage for staff.

The prime minister said capital gains tax raises less in total than this new levy will raise, adding that the highest earning 14 per cent of people will pay around half of what is raised through the tax increase. Lisa Nandy, Labour’s shadow foreign secretary, told Sky News the party was open to a so-called wealth tax to plug the gap in social care funding.

Increasing tax paid by millionaires by one per cent would raise £260bn within five years, according to the London School of Economics.

Removing the upper earnings limit on national insurance contributions – meaning the wealthiest 15 per cent of tax payers contribute more – could raise £11.1bn for the NHS, the New Economics Foundation said.

But what do you think should happen to reform our social care industry? After all we all pay taxes throughout our working lies, so shouldn’t we all get the benefits. Rather than pointing the finger at the wealthy or the poor. Why can’t the government step up this time? 7