Raise NI by one per cent to generate extra £5bn for social care

A rise in National Insurance contributions of one per cent would immediately raise up to £5 billion towards social care funding according to research from Independent Age, the older people’s charity, and the think tank IPPR.

The research examined four options for future funding for social care:

  • Means testing the Winter Fuel Payment
  • Scrapping the triple lock on the state pension
  • Increasing National Insurance contributions
  • An increase in inheritance tax

Key findings included:

  • An immediate increase by 1 per cent in the employers’ main National Insurance rate would see the poorest working families lose £20 per annum (0.1 per cent of their income) compared to £1,220 per annum for the richest families (1.2% of their income), making it the most progressive option.
  • Changes to benefits are unlikely to raise enough to meet the minimum amount needed to fill the social care funding gap. Means-testing the Winter Fuel Payment against Pension Credit would raise just £1.8billion, while moving from a triple lock to a double lock on pensions raises no immediate additional revenue.
  • A wealth tax, added on top of Inheritance Tax, at a 13% rate could raise up to £6.5billion a year, and would be broadly progressive, but could be the hardest option to ‘sell’ to the public.
  • No meaningful options for increased funding of social care are an easy ‘sell’ to the public, and the principle of intergenerational fairness will be an important factor as the government starts consulting on funding options as part of its promised Green Paper. Focus Groups involved in the research revealed deep scepticism remains as to whether any money raised would result in improvements to social care, even if changes to tax or benefits were introduced.

As there appears to be no consensus amongst the general public as to how to raise the funding needed to address long-term problems in social care the report recommends the government explain the extent of the crisis in social care, alongside setting out measures that can realistically be acted on in this Parliament and secure cross-party support.

Janet Morrison

Janet Morrison, chief executive of Independent Age, said: “Social care is in desperate need of a sustainable funding solution. However, for all the short-term solutions governments have introduced, the care system needs meaningful change that will work over the long-term.

“Hundreds of thousands of older people rely on the social care system, either in their own homes or in a care home, and demand for services is only going to increase. Government must face up to facts and stop kicking the can down the road. It needs to confront the difficult decisions about how to fund the social care system because the problem is not going to go away.

“A rise in National Insurance contributions represents one possible way of addressing the funding gap, but even this option has its political complications. Government must use its Green Paper to examine all the future funding options, and be straight with the public about what is needed to fund a social care system that can truly meet the demands of our ageing population”

Councillor Izzi Seccombe, chairman of the Local Government Association’s Community Wellbeing Board, said: “We need fundamental changes to the way we fund adult social care if we are to deliver a long-term sustainable system that works for everyone in society and meets their needs with safe and quality services.

“Therefore, regardless of whether or not they are the way forward, it is essential that ideas for reform of this magnitude are brought to the table for consideration, rather than piecemeal measures that merely tinker around the edges, and do not get to the root of the problem.

“This new research illustrates the difficult, brave and possibly even controversial decision-making that will be required to secure the long-term future of care and support. That is why cross-party consensus on the way forward is so essential.

“It is absolutely vital that government acts and addresses the social care crisis in next week’s Autumn Budget.

“As a minimum it should set out in further detail the intention to bring forward proposals for adult social care mentioned in the Queen’s Speech and how it proposes to fill the £2.3 billion annual funding gap that social care will face by 2020.”


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