close

Social care funding plans expected this week but NI hike faces backlash

Commons

Plans for social care funding reform are expected to be announced as soon as tomorrow, according to press reports.

The Government has come under pressure from within its party and from the opposition over reported plans to increase National Insurance to pay for reform, however.

Tory MP Marcus Fysh told the Sunday Telegraph: “I don’t think they should use National Insurance contributions, I think that’s a regressive way of doing it.

Story continues below
Advertisement

“I would rather do it in a straightforward and honest fashion and put it on taxation.”

Similarly, the Labour Party and unions voiced their opposition to an increase in National Insurance.

Shadow Foreign Secretary Lisa Nandy told the BBC that the “burden of the social care crisis” shouldn’t fall on “supermarket workers and delivery drivers”, while Labour leader Sir Keir Starmer is facing pressure to back an increase in capital gains tax to pay for the reform.

Rachel Harrison, GMB National Officer said: “We all know our crumbling social care system desperately needs more cash.

“But raising regressive national insurance  – which takes money from the pockets of the lowest paid workers, is not the way to do it.

“However the cash is raised, a portion of it must be ring fenced cash to improve the pay, terms and conditions of workers across social care to reflect the skilled and valued job they do.

“The largely women workforce in social care deserve no less than the average UK wage, £15 an hour. Government and employers must make this a priority.”

Stewart Stretton-Hill, Tax, Trusts and Estates senior associate at Irwin Mitchell, said increasing National Insurance was “a spectacularly unpopular method to raise the staggering sums needed to reform social care”.

The senior associate said it would break a Conservative Party manifesto commitment and was likely to affect most those low earners who found it hardest to save for later life.

Stewart said it appeared a large proportion of the funds may be used to support the NHS, making the free care cap too high for most to afford.

He suggested the proposal put forward in a Irwin Mitchell report in February 2020 of expanding existing automatic pension enrolment with tax incentives could provide a long-terms savings scheme accessible at the point of care need.

Tags : FundingLegislation
mm

The author Lee Peart

1 Comment

  1. The obvious solution is to extend NICs to pensioners, not employees and employers. The average pensioner income apparently now exceeds that of the average working-age person, so why are retired people exempt from contributing to National Insurance? They benefit from NHS and other welfare expenditure, and what’s on offer is a New Deal for social care: insurance against the cost of needing care services at home or having to move into a care home. Today’s pensioners ought to be biting the hand off the Government to get this deal, as it will protect them from the potential cost of losing their most of or their entire wealth in care fees.

    This option was never available for pensioners when current retirees were working, so let’s have none of this nonsense about “I’ve paid my fair share”. Current pensioners’ taxes were paying for a far cheaper version of the NHS and negligible care services, compared with the current health system where far more services and treatments are available.

    Anyone on low pension income would be protected by NIC thresholds, in the same way as workers.

    There is still an argument that people should not be paying out of their incomes to protect the wealth of rich people by relieving them of care fees, but then why is this argument not extended to the NHS: rich people are still allowed to use that. The welfare state is meant to be based on a social contract in which everyone contributes out of income, relative to their ability to pay, and everyone takes benefits when needed. Care fees are not a special case: they should never have been excluded from the welfare state in the first place, and insurance against their heavy cost should be available to all.

Leave a Response