What are the Prime Minister’s National Insurance proposals to fund social care?

 What are the Prime Minister’s National Insurance proposals to fund social care?

Boris Johnson will today reveal his long-awaited proposal for solving the social care crisis, which has been twinned with plans to bring down soaring NHS waiting lists. 

What is being announced? 

To fund the moves, an increase in national insurance is expected to be announced as well as a freeze to the pensions triple lock, which protects rises in the state pension. Both of those two changes break Tory manifesto promises, complicating the politics for the Tories.

What is the plan for social care? 

The social care package is understood to include two elements. 

One is a cap on the total an individual will spend on social care in their lifetime before the state steps in to cover the costs. There has been intense debate internally about which figure to pick. At one point a figure of £50,000 was discussed. It is now expected around £80,000, which is cheaper for the Treasury. 

The second part is a so-called assets ‘floor’. That is the figure for a person’s total wealth, below which the state will start paying some social care costs. Right now the state only steps in when someone is down to their last £23,250. That is expected to become £100,000

What about the NHS?

The package of reforms will also an attempt to tackle an emerging problem: The NHS backlog which has soared during the Covid-19 pandemic.

Currently there are around 5.5 million people waiting for NHS treatment. That could increase to 13 million, according to estimates. On Monday, the Government announced an extra £5.4billion will go to the NHS for the next six months to help clear the backlog.

A chunk of extra money will continue to go to the NHS in the years to come, but it remains unclear how and when the funding will then apply to social care.

How will the money be raised? 

Details were still being finalised last night, but two moves are expected to raise the money for the new spending. 

The first is an increase in national insurance, which is paid by both employers and employees. Around 25 million people pay the tax in the UK.

The increase could be as much as 1.25p more for every pound earned. That is more than the 1p raise Tony Blair and Gordon Brown adopted to create more NHS funding in the early 2000s. 

The second is abandoning the pensions triple lock, which promises to raise the state pension each year by whichever is higher between inflation, average earnings and 2.5 per cent. 

The Government will say it will not use the earnings figure this year, given the impact of the pandemic has meant earnings have increased by more than 8 per cent in recent months. Both changes break pledges that the Tory Party put in their 2019 general election manifesto, which partly explains the backlash to the policy from Tory MPs.

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