As a local Councillor I try to keep my weekly articles focused on local issues. However, in this article I want to consider what’s been going on this week in Parliament, namely the big vote on raising National Insurance to pay for Social Care. This is one of those moments when a decision taken in Westminster will have a very direct impact on our lives.
A lucky few of us may get through our lives without needing the support of the Adult Social Care system. But most people, either directly or in their extended family, require support at some point in their life. Spending on providing support to people in need of care is the single biggest item in our council’s budget (£55 million, roughly 37%). The money pays for a range of services geared towards older people who are becoming frail and living with conditions that make everyday life very difficult. It also pays for the support needed by adults living with disabilities, learning difficulties and various chronic health conditions.
Providing personal care services to a large, and growing, proprtion of the population is very expensive. For this reason “means tests” exist to determine who qualifies to receive free services, and who has to contribute out of their own “means” i.e. savings, home equity etc. And so we come to the heart of the matter, the design of a social care system that is fair to all. It’s an extremely difficult task that has vexed the Government for a long time. It is widely recognised that the current set up hasn’t got the fairness equation right. Stories abound of people racking up vast bills to pay for their care, burning through their life savings and even having to sell the homes they love and feel secure in.
This week the Prime Minister chose to bite the bullet on the issue and pitched a new funding plan to Parliament, no doubt you’ve heard about it in the news. The headline was that an additional 2.5% of all our earnings will be extracted by the Government to put tens of billions of extra money into health and social care every year. That 2.5% is paid half by the employee and half by the employer (1.25% each). It is being called a “levy” because Conservatives are allergic to the word “tax”. Over the last couple of days I’ve been poring over the post-vote analysis and have chatted to other councillors about it too. Here are some of my takeaways, I hope you find them helpful:
About the new spending cap of £86,000… This is intended to be the maximum amount that any of us will pay for Social Care. But…
- It does not include the accommodation aspect of time spent living in a residential care setting. So there will be lots of people who do still end up spending more.
- It is also a per person cap, which means a couple aging together could still spend £172,000 on care between them.
- It is not regionally balanced. This means that the North East will, as usual, be the worst hit. So much for “levelling up”. The chart below explains how, because of the lower value of propoerties in our area, homeowners in North Tyneside will spend a greater proportion of any equity they have on care, compared to those in other parts of the country.
About the additional 1.25% being added to the National Insurance rate… For for employees this means a rise from 12% to 13.25%. The rate for employers contributions is even higher, with 1.25% being added onto the existing rate of 13.8% taking it over 15%.
- The Labour Party has argued, rightly I believe, that this does not meet the fairness test. It places too much of the burden on those in the workforce least able to cope with it.
- Prior to the vote there was a lot of agro behind the scenes in Westminster because Conservative MPs, especially those in Northern seats, recognised it and took the Prime Minister to task about it. In response he cooked up a deal with the Chancellor to extend the levy to those people who receive income via share dividends, and also people who continue to work beyond the state pension age. This is just tinkering round the edges and doesn’t make much difference to the overall sums of money raised. It’s window dressing to make an unpopular policy a little easier on the eye.
- People have asked what Labour would do differently, which is fair enough. I’ve seen lots of good ideas being discussed on Labour websites and podcasts. I believe that our leader Keir Starmer will be saying more about this in a speech tomorrow (Sunday). I’m looking forward to what he has to say.
Ultimately, the biggest problem I think we will come to see emerging from this poorly thought through plan is that it won’t work. The Prime Minister has already admitted to the House of Commons that for the first three years the vast majority of the money raised will go to clearing the NHS backlog. So if you were looking for a quick injection of cash into Social Care that isn’t coming. This then brings the very real prospect that the NHS will become dependent on the extra cash, meaning that in three years time we’ll be facing the crisis all over again, that’s three years of lost time and God knows how many more lost homes.
As always, let me know your own thoughts on the subject by leaving a comment on my Facebook page.