Social Care Reforms 2021: What is happening?
Last week plans that originally appeared in Johnson’s first speech as Prime Minister in 2019 to reform the health and social care sector have materialised in the social care reforms 2021.
Last Tuesday, 7th September 2021, the Prime Minister announced plans to raise investment for the health and care system over the next three years by way of tax changes. The main aim of this plan is to allow the NHS to recover from COVID-related backlogs as well as preventing people in the care system having to sell their assets to cover the cost of social care.
Currently, if a person has savings and assets worth more than £23,250, inclusive of any land owned, they will receive no subsidy from the government and will have to cover all care expenses including care home costs with no cap; the effect of this for many is that they are forced to sell their homes to cover the rising costs of care homes.
Under the new plan, the aim is to prevent this from happening. From April 2022, those with savings and assets from £20,000 to £100,000 will have to contribute to care costs, but not more than 20% of their assets each year. Those with assets worth above £100,000 will have to meet all costs until their assets fall to below £100,000 and there will be a lifetime cap at £86,000, which ministers estimate equates to around three years’ worth of full-time care.
What does this mean?
The plan is to raise £36bn for three years of investment, around £12bn a year. This will come from tax changes known as the Health and Social Care Levy starting from April 2022, including a 1.25 percentage-point increase in National Insurance, as well as a rise of 1.25 percentage-point increase in rates of dividend taxation to limit gains for owner-managers of companies.
What will this be spent on?
– £16bn direct NHS funding in England
– £8.9bn for health-based COVID response in England
– £5.4bn for social care in England – of which £500,000 is on training
– £5.7bn for devolved nations (mix of health and social care)
What is the material effect?
The material effect of this levy for many is that National Insurance will go up and working pensioners will also have to pay National Insurance contributions.
People with care needs will need to approach their Local Authority to request a needs assessment, which will determine how much social care is necessary and what will be funded if they have no resources.
As aforementioned, there will be an £86,000 cap, but this will not include hotel costs, food, or accommodation, which will need to be self-funded.
What does this mean politically?
This announcement comes as a controversial decision politically. The reform is partly funded by an increase in National Insurance. This comes as a contradiction to the Conservatives’ guarantee that there would be no change to the rate of Income Tax, VAT, or National Insurance in their 2019 general election manifesto.
The U-turn threatens the red wall seats won for the Conservatives in 2019 and many are nervous about losing the trust of new voters.
This has stoked the fire for unrest across Parliament with criticisms from within the Conservative party, as well as opposition MPs.
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What’s next?
Despite backlash across Parliament, the plans were set to go ahead subject to a vote on the social care reforms 2021 in the Commons on Wednesday 8th September 2021. MPs have backed the health and social care levy, voting 319 to 248.
This change is still relatively new however and the finest details are still to come; the government has said they will announce further information in the coming weeks to clarify these finer points.
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Sources
Government press release, “Blueprint launched for NHS and social care reform following pandemic” (https://www.gov.uk/government/news/blueprint-launched-for-nhs-and-social-care-reform-following-pandemic)
Government press release, “Record £36 billion investment to reform NHS and Social Care” (https://www.gov.uk/government/news/record-36-billion-investment-to-reform-nhs-and-social-care)
BBC news article, “Boris Johnson outlines new 1.25% health and social care tax to pay for reforms” (https://www.bbc.co.uk/news/uk-politics-58476632)
FT article, “How will reform of social care in England work?” (https://www.ft.com/content/11e7bf23-1dc5-4dc6-8135-3079f558ce98)
The King’s Fund article, “Fixing social care is not all about a cap on costs” (https://www.kingsfund.org.uk/blog/2021/09/social-care-cap-on-costs)
Guardian article, “What has Boris Johnson announced in his social care plan?” (https://www.theguardian.com/society/2021/sep/07/what-has-boris-johnson-announced-social-care-plan)
*Notice: This blog does not constitute legal advice*