The announcement that extra taxation measures would be introduced for the whole of the UK (the Health and Social Care Levy Act 2021) was made on 7 September 2021, with a call for its implementation at the earliest opportunity so as to increase funds for the NHS and equivalent bodies. The levy proper, which will come into effect in April 2023, is a tax of 1.25% on earnings, the proceeds of which are payable to the Secretary of State towards the cost of health care and social care. In the meantime, for the fiscal year 2022/2023, National Insurance (NI) contributions for employers and employees will increase by 1.25% temporarily (HM Revenue and Customs, 2021). The self-employed are also subject to the increase. From April 2023, when the levy starts, contributions will return to the current rate. Those above state pension age will not be affected by the NI increase but will be subject to the levy next year.
The funds generated will be, in theory, ring-fenced. The estimated £12 billion raised will be used directly to fund increases in health and social care spending (Winchester, 2021). Initially, the money raised will go towards easing pressure on the NHS, and then a proportion of this will be moved into the social care system. Total spending on health and social care in England alone equates to around £235 billion, with the gap covered by some of the roughly £800 billion a year that the government receives from other sources (Pope and Hourston, 2022).
The plans for a new ‘health and social care levy’ to fund increases in spending on health, alongside reforms to the provision and funding of social care, follow the Prime Minister's pledge in 2019 to ‘fix the crisis in social care once and for all’ (Johnson, 2019). This was said to be once-in-a-generation transformation of adult social care and how it is funded, and would better integrate it with health care. However, the bulk of the funds will go not to social care but to health, so how this will ‘fix’ social care and its crises remains to be seen. Over 3 years the sum dedicated to social care is £5.4 billion, while the NHS takes the larger share (Murray, 2021).
It is anticipated that the extra money generated will be used to reduce the post-COVID backlog, and to put the NHS back on a sustainable footing, acknowledging the challenges that face general practice, mental health and other services.
As regards funding of social care, in England, if a person has assets worth more than £23 250, they currently have to pay for their social care and there is no cap on costs—some people have to sell their homes to cover these. Under the new system, anyone who has assets below £20 000 will not have to pay anything from these assets, although they might have to make a contribution from any income.
It is likely that there will be an impact on family formation, stability or breakdown as individuals who are currently just about managing financially will notice their disposable income reduce as a result of the increased contributions. There have been calls to put on hold or reconsider the introduction of the higher NI contributions as household budgets are under pressure as a result of soaring energy prices and food bills—inflation is at its highest level in 30 years. The concern is that the increase will adversely impact younger and lower paid people.
The challenge will be to make this reform work. If there are new hospitals and hospital upgrades a bigger workforce will be needed, and more investment in nurse education. Any meaningful attempts to address, for example, the backlog of people needing care and support will mean an increased need for skilled staff. Failing to invest in the nursing workforce will result in waiting lists that will continue to grow and not decline.