Do National Insurance and social care gel together? – Birmingham Post article 26.08.2021

The Government has floated the idea of putting one per cent on National Insurance (NI) in a bid to tackle the social care crisis.

It has thrown the spotlight on NI, often described as the ‘forgotten tax’ because few people understand it.

Any such move also poses questions as to whether NI and social care are natural bedfellows and whether such a combination would be fair to all.

Most care is provided unpaid by families and friends.

For those on their own, or whose needs loved ones can no longer meet, the average weekly cost of living in a residential care home is £704, while the average weekly cost of a nursing home is £888.

Social care provision is means tested. People pay for all their own care if they have £23,250 of assets or more, meaning any lengthy stay will often see savings decimated, family homes sold, and hopes dashed for passing an inheritance to the children.

Those with less than £14,250 do not have to pay anything.

A total of 838,530 adults were receiving long-term social care in England last year, according to think tank, the King’s Fund.

Detailed figures are hard to come by but it is thought around 45 per cent are ‘self-funders’ with the majority dependent on the largesse of councils. Local authority spending on care last year was £23.3 billion.

Those self-funding their care pay on average 41 per cent more than the local authority does for residents’ support. This means that self-funders end up effectively subsidising council places.

According to the British Geriatrics Society, the average life expectancy in care homes is 24 months for those without nursing and 12 months for those with nursing.

But it adds: “This belies a much more complex picture, where some residents enter a home with one or more rapidly deteriorating medical conditions. Many of this group die shortly after admission, while another group of residents live in care homes for much longer.”

David Lloyd George launched NI in 1911 to cover the likes of sickness and unemployment. Its scope was further developed in the 1940s by Sir William Beveridge as a bulwark against the “five major ills” – disease, want, ignorance, squalor and idleness.

There are six national insurance classes. The class you contribute to depends on your employment status and how much you earn.

NI is very lucrative – it is expected to produce £147 billion for the Treasury in the 2021-22 tax year, compared with £198 billion from income tax and £128 billion from VAT.

One per cent extra could raise £10 billion a year with the proposed quid pro quo being nobody would pay more than £50,000 for their care needs.

Such a ceiling would be a welcome outcome.

Professor Len Shackleton, editorial and research fellow at the Institute of Economic Affairs, told Sky News that a rise would be “yet another burden on working age people at a time when jobs are insecure, inflation is rising and wages are squeezed”.

He said: “Much of the public believe that National Insurance pays for the NHS, and social care would just be a natural addition. But NI is not ring-fenced and is simply an income tax by another name, albeit with different exemptions, starting points and arbitrary changes in rates which don’t coincide with tax bands.”

Any attempt to address social care is likely to experience plenty of potential brickbats.

Those we value most should receive a quality of care that is both affordable, worry-free and deserved.

We owe it to them to get it right.

Let’s see if NI plays a part in achieving this.