Health & social care levy

The government has set out its plans to finance health and social care through a new levy, amid noisy scenes in the House of Commons.

Prime Minister Boris Johnson announced a 1.25% rise in National Insurance and on share dividends from April 2022. From April 2023, the rise will be separated so that it appears on payslips as ‘Health and Social Care Levy’, indicating it is ringfenced for health and social care. Working adults above pensionable age will pay the levy from April 2023.

The government forecasts the levy will raise nearly £36 billion over three years for frontline services. It intends to reform social care and bring health and social care provision closer.

An individual’s contributions to their own care will be capped at a lifetime contribution of £86,000, applying to anyone starting care after October 2023. The rest will be paid by public funds. Responding to a question from Jeremy Wright MP, Johnson confirmed the cap would apply to all those with care needs, regardless of age.

Those with assets of less than £20,000 will pay nothing (an increase of the threshold from £14,000), and those with less than £100,000 worth of assets will have their costs subsidised.

The changes will apply to England only. However, Johnson promised Scotland, Wales and Northern Ireland would get an extra £2.2bn per year.

Johnson acknowledged he was breaking a manifesto commitment but said ‘a global pandemic was in no-one’s manifesto’.

Opposition leader Keir Starmer QC said the funding issue predated the pandemic.

Currently, there is no ceiling on costs an individual must pay for social care in England, although those with less than £23,250 savings and assets are eligible for help from their council.

Under the new tax, about 6.2m people earning less than £9,568 will pay nothing extra. The government calculates about 40% of small businesses will pay nothing extra.