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PM announces National Insurance hike to fund social care

PM announces National Insurance hike to fund social care

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.

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 5.5m 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 1.2m 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.’

However, 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.

Successive governments have been aware of the need to fund a long-term sustainable plan for social care and Mr Johnson promised to ‘fix’ the issue when he became prime minister in 2019.

RCN deputy general secretary and chief executive Susan Aitkenhead, said: ‘The nursing shortage in social care is even greater than the NHS and this long-term funding change will take too long to address that.

‘Ministers continue to bury their heads in the sand despite repeated workforce warnings – individuals who need it most are let down by a short-staffed care system.

‘Social care must become a more attractive place to work, with salaries for care and nursing staff that at the very least match the NHS.’

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