• PENSIONSANDSAVINGS.COM

    From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Social care funding reform cannot be achieved equitably or sustainably with a National Insurance rise

    Social care funding reform cannot be achieved equitably or sustainably with a National Insurance rise

    • Social care funding reform cannot be achieved equitably or sustainably with a National Insurance rise – and even worse if the extra money just goes to the NHS.
    • Increasing National Insurance is socially inequitable for funding desperately needed social care improvements which were supposedly finalised in 2019, pre-pandemic.
    • The lowest earners pay National Insurance of 12.8% on £3,000 more of their income than other taxpayers. NI starts around £180 a week, but tax only starts around £240 a week.
    • Pensioners, pensions, property investments, dividends, and other unearned income pay no NI, so millions of people who could be contributing to a dedicated health and care premium on all income would be excluded.
    • Rumours of revenue being initially used for the NHS would mean this plan would not help with social care at all.

    I do hope the rumours of a rise in National Insurance to pay for social care reforms prove incorrect. This would be a social inequitable means of trying to raise money to pay for social care and, indeed, the rumours suggest it would not even be used for care funding at all for a few years.  Diverting money to the NHS simply compounds the injustices of the present system, in which people who become unable to look after themselves due to some specific illnesses are fully funded by taxpayers, while other illnesses receive no state help at all.

    Even with a care cost cap, the arbitrary distinction between dementia care and cancer care will not be resolved and the problems of inadequate resourcing for social care, relative to healthcare, will not be tackled.

    The need for help with daily living among the disabled members of our population is a social issue, which society itself has not resolved. The entire burden of paying for care falls on those individuals who are unwell and their families, rather than being spread across the whole population.  The principle of everyone paying into a system that insures against care needs and an inability to live independently is the right way forward. If everyone pays something, rather than only those who  need care and have no savings or homes, then the cost per person would be far less.

    But it is also important that older generations pay into this system too.  There is a  massive demographic bulge of babyboomers just entering their seventies.  Millions of them are no longer working and would not pay any National Insurance if that was chosen as the revenue-raising strategy, again placing an inordinate burden on younger generations. If the very people who will be in need of care soonest contribute nothing at all to this new system, then they will have to be supported by younger people to a far larger extent than if there was an insurance premium levied on everyone’s total income, whether or not from work.

    The way forward is, in my view, a social insurance arrangement, covering health and care needs together, so that we have a unified system which does not distinguish between different ways of being disabled, but treats all those who need care with dignity and meets their basic needs. A new system that raises funds each year from all age groups can bring in more money, more quickly, to ensure better standards of care, higher pay, more qualified staff and more financially sustainable care homes.  I do hope the Government will not make a historic mistake this week.


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