Health and social care reform: how far will an extra £12 billion a year really go?

Boris Johnson has announced the government’s plan to reform health and social care, which will be paid for by a UK wide increase in National Insurance (NI) and tax paid on share dividends by 1.25%. These changes will come into effect in April 2022.

The tax hike is set to provide health and social care with an extra £12 billion a year, and promises to be the “biggest catch-up programme in the NHS’ history”.

One of the biggest changes will see a limit on how much people pay for social care, after figures recently found that one in seven people pay more than £100,000 for care throughout their lifetime.

From October 2023, Johnson says no one will pay more than £86,000 over their lifetime, and people with assets worth less than £20,000 will not have to make any contribution towards their care.

People with assets worth between £20,000 and £100,000 will receive some help based on a means test, although the details of how this will work are yet to be announced.

Although the extra funding is welcome, there are concerns over whether the money will create real, tangible change to health and social care and improve the lives of older and disabled people.

Professor Adam Gordon, British Geriatrics Society (BGS) President Elect said: “The commitment to state funding, a cap on care costs met by individuals, better support for the social care workforce and better integration between health and social care provision, are positive first steps. These reforms will not, though, be sufficient to solve the chronic underfunding of long-term care or the substantial staffing shortages that undermine current provision.”

How will the money be spent?

For the first three years, all the money raised from the ‘Health and Social Care Levy’ will go towards easing the NHS backlog, before being used to tackle the social care crisis.

Boris Johnson said that the £36 billion will go directly into the health service to fund things like better screening equipment, designated surgical facilities, faster access to GPs, and new digital technology to remotely monitor patients.

He also said that hospital capacity will increase by nine million more appointments, scans and operations and pledged that by 2024/25 the NHS would be able to help 30% more elective patients than before the pandemic.

From 2025 onwards, the money will be pumped into the social care system, although it is not yet clear exactly what this money will be used for. This is an issue which has confused charities and campaigners alike.

Morgan Vine, Head of Policy and Influencing at Independent Age, said: “We are concerned by the lack of a clear plan for how social care will be reformed. The Government has made no firm commitments on how the new money will be spent, and it is disappointing that social care is once again being treated as an afterthought.”

He added that the government needs to bring in a “packet of measures” to address the underfunding crisis as well as the “dire levels of understaffing” in order to offer a “sustainable vision for the future of the social care system.”

The two organisations representing the NHS frontline (NHS Confederation and NHS Providers) have similarly warned that the funding provided falls far short of what is needed to recover from the pandemic.

The two organisations warn that frontline health and care leaders now face “impossible choices”, and with the waiting list expected to spiral to 13 million, this shortfall means the threat of long delays remain.

Dr Chaand Nagpaul, BMA chair of council, said that in a recent paper, the BMA estimated that an extra £12bn a year was needed in social care alone.

He continued: “While [the] announcement of increased funding has been a long time coming, it’s extremely important that there is also additional funding on top of this to ensure equitable and better access to care, by providing more services free at the point of need. Widening access to care services can reduce the need for costly long-term care services and NHS care.”

A tax on young workers and those in lower-paid jobs

The Prime Minister admits to breaking his manifesto commitment, in which he said he could fix the social care crisis “without raising our income tax, VAT or national insurance contributions”, but said that that “a global pandemic was in no one’s manifesto”.

As a result, the government has received a great deal of backlash from the public, the opposition, and conservative MPs over their choice to increase NI contributions, which has been labelled as a tax on young workers and those in lower-paid jobs.

Similarly, there is concern that the levy will fall heavily on businesses, which is of particular concern for small businesses who are at a crucial moment in recovery from the pandemic. This could also mean that employers are more reluctant to take on new employees, holding back job growth.

However, Johnson said that the plan is designed so that everyone contributes within their means, and that those who earn more will pay more, with the highest earning making the most contribution.

Some Labour MPs have suggested that instead of increasing NI contributions, a wealth tax should be introduced to tax those earning the most.

The leader of the Liberal Democrats, Sir Ed Davey similarly said the tax was “unfair”, and that the government’s plan missed out solutions for staffing shortages, care for working age adults and unpaid family carers.

The plans will help “fewer people than hoped”

The Labour party are also concerned that simply capping care costs will not fix the crisis, as reform and change are what is urgently needed.

Jonathan Ashworth, Labour’s health and social care spokesperson, said: “A cap will not fix the deep-rooted problems in social care. It’s not really a care cap, it’s more of a care con.”

Others have criticised the cap for not doing enough to prevent pensioners from having to sell their house and other assets to pay for their care. This is of particular concern for those who are already in care or start being cared for before 2023, as these people will not be eligible for government support.

The older people’s charity, Age UK, agreed that although the cap will provide some certainty and remove the fear of care bills “spiralling into infinity”, the new plans “will help fewer people than many had hoped”.

The charity is also concerned that social care will not receive the same funding that the NHS will. In a statement, they wrote: “The NHS is being given extra funding upfront and social care desperately needs that too. Unless the Chancellor delivers substantially more investment into councils’ budgets in the autumn Spending Review, there’s a real risk that the Prime Minister’s announcement will fall flat.”

The charity further warns that unless care workers are offered a pay rise, there is a real risk that many will continue to “drift away for better jobs elsewhere.”

“Any credible plan for the future of social care must give a proper pay rise to the people doing the work”

GMB, the union for care workers, has similarly voiced their concerns about the staffing crisis, as well as the three-year waiting period for the funds to reach social care.

Rachel Harrison, GMB National Officer, said: “The workforce looks set to plummet to 170,000 vacancies – 10% of all roles – by the end of the year. The highest ever staffing black hole, with up to 70,000 more set to leave thanks to the Government’s mandatory vaccination rules.

“Now it seems like social care will have to wait three years for a what is paltry sum in terms of reforming the service. It’s beyond a joke.

“Any credible plan for the future of social care must give a proper pay rise to the people doing the work – that’s how you start tackling the massive understaffing crisis.

“GMB is campaigning for a £15 an hour minimum as the centre-piece of any National Care Service.

“Regardless of how we fund social care – and a pitiful amount raised by flawed National Insurance hike is not the best way ‐ the system will continue to fail unless cash is ring-fenced for workers.”

Now, charities and campaigners are eagerly awaiting the publication of the government’s White Paper, which will detail the proposed reform to health and social care. As the BGS say: “Only then will we get a sense of whether government proposals will make a real and lasting difference to older people.”

MPs are set to vote on Johnson’s tax rise later today (8th September).