Statement on government social care and health proposal
September 8, 2021
I support the broad principles and intentions behind the government’s plan for a reformed social care system, funded by a new 1.25% Health and Social Care Levy based on a National Insurance rise, but have some serious questions about how this will work in practice, which I would like to see answered.
I know how concerning the current social care system is to many York residents making provision for loved ones, and therefore think the government deserve credit for squarely addressing the issue at last, even at the risk of unpopularity. However, I have substantial problems with the motion immediately authorising the tax rise they are asking us to vote on tonight, which is both rushed and vague as to the details of the increase. Given the small print of future care and health funding will have to be outlined in next month’s Budget anyway, and the Budget process represents the best way to carefully go through the detail of this plan, I fear Ministers seem to be trying to bounce MPs into instantly approving these proposals before they can be thoroughly scrutinised.
I am glad to see Ministers commit to a consultation on this in October, and would invite all York Outer constituents to share their feedback and any relevant experiences of the current system with me, so I can best represent our community as this long-awaited reform proceeds.
I have some concerns about the fact this represents a departure from the 2019 Conservative manifesto on which I was elected, which pledged no rise in National Insurance. However, it also pledged long-overdue action to tackle social care, and the shattering impact of the pandemic has entirely changed the circumstances we now face.
Before coronavirus, there was already a huge long-term challenge in finding the resources to meet rocketing demand for health and care services driven by the UK’s ageing population, which means there are larger numbers of longer-lived people with complex health conditions than ever before in our history.
The devastating impact of covid in terms of delayed treatment or undiagnosed conditions has now made this situation acute, and no one disputes very significant new money has to be found for health and social care now. Covid has added 900,000 people to NHS waiting lists, with waiting times doubling to 44 weeks, and it is essential that we rapidly catch up with this.
I have been incredibly concerned about the impact of the covid backlog on York residents, and have been raising this with our local NHS and Ministers since early in the pandemic. The £36 billion over 3 years that this targeted tax rise will raise for the NHS and social care is therefore very attractive, with the government planning to use this to provide 9 million more NHS procedures, checks and scans, meaning 30% more elective healthcare than before the pandemic. I know channelling this money into our NHS could make a huge difference to the lives of York residents, and therefore feel obliged to give these proposals careful consideration.
On the surface, there are many good points to the government’s outline plans for a new social care funding system for York Outer. Current estimates show that 1-in-7 65-year olds will face lifetime care costs of over £100,000, which is especially damaging for our constituency, where nearly a quarter of the population is already over 65. Under the current system, someone unlucky enough to need care because of an unexpected condition like Alzheimer’s faces having their lifetime savings wiped out by care costs, with anyone with assets over £23,250 currently required to pay for their care in full.
The government’s plan to cap lifetime personal care costs at £86,000 from October 2023 therefore seems very welcome, providing relief to families currently facing unlimited costs stretching into the future. It quadruples the upper capital limit to qualify for state support to £100,000 of assets, and increases the assets floor below which people will have their personal care provided entirely free to £20,000, thus protecting senior citizens after lives of hard work across a range of income brackets. Government help with the serious costs of care will be extended, with some financial assistance made available to those with assets worth between £20,000 and £100,000, and the protection of the lifetime costs cap even for those with assets over £100,000. However, given the differences in house prices across regions, I also think there is a lot to be said for exploring an alternative solution based on the state covering care costs once a certain proportion of assets is used up, which might be fairer across wealth brackets, rather than a cash cap and floor.
I do have some reservations about increasing taxes on mainly working age people to fund care for the older generation, some of whom are in a better financial position than working families, which is why I really want to see a clearer impact assessment. However, I am to some extent reassured by the fact that taxes on share dividends will also rise (except for shares in ISAs) and the NI rise will also be paid by pensioners in employment. The initial evidence that the tax rise will be progressive, and reflect the ability of workers to pay is also encouraging. I understand that the top 14% of earners will pay about half of all this increased taxation, and a full 70% of the revenue derived from the rise for 2022-23 will come from higher band taxpayers.
The process the government are starting with this plan must proceed, as no one has so far produced a fully worked-out credible alternative to the government’s proposals, not least the Labour Opposition, who are now opportunistically attacking using an NI rise to fund our NHS and social care, when they were very happy to do this when they were last in government. However, the need for more detail and more time for calm consideration mean I feel I have to abstain from voting with the government on this tonight.
I will examine the government’s case with an open mind in the lead-up to the Budget in October, and will carefully consider what is best for York in the meantime. Local residents can certainly rely on me to engage carefully with concerns and suggestions as our country sets out to tackle this vital challenge in sustaining our shared welfare state.