National Insurance and dividend tax rises announced for social care reform

Written by EKWilliams Team

October 7, 2021

Record £36 billion investment to reform NHS and Social Care

  • Prime Minister pledges to tackle NHS Covid backlogs and cut waiting times with new £36 billion investment for health and social care
  • Responsible, fair, and necessary action taken to provide biggest catch-up programme in the history of the NHS and reform the adult social care system
  • NHS capacity to increase to 110% of planned activity levels by 2023/24, offering more appointments, treatments, and operations
  • Social care reform plan will end catastrophic costs for people across the country, and include extra investment in care sector to improve training and support
  • Funded by a new Health and Social Care Levy on working adults and an equivalent rise in the rates of dividend tax to make sure everyone pays their fair share

The Prime Minister set out changes to tackle the Covid backlogs, reform adult social care, and bring the health and social care system closer together on a long-term, sustainable footing.

£36 billion will be invested in the health and care system over the next three years, to ensure it has the long-term resource it needs.

Patients will benefit from the biggest catch-up programme in the NHS’s history, so people no longer face excessive waits for treatment.

Successive governments have failed to provide a long-term solution for social care. The system will finally be reformed, ending unpredictable and catastrophic care costs faced by thousands, and making the system fairer for all.

From April 2022, the government will introduce a new, UK-wide 1.25 per cent Health and Social Care Levy, ringfenced for health and social care. This will be based on National Insurance contributions (NICs) and from 2023 will be legislatively separate.

To ensure everyone contributes fairly, all working adults, including those over the state pension age, will pay the levy and the rates of dividend tax will also increase by 1.25% to help fund this package.

Every individual will contribute according to their means. Those who earn more pay more, with the highest earning 14 per cent of people paying around half the revenues.

Employers, who benefit from a healthy workforce and a tax-payer funded health service, will be asked to contribute so the costs are more widely shared.

This will raise around £12 billion in extra funding per year, to be invested in frontline health and social care across the UK over the next three years.

The pandemic put unprecedented pressure on the NHS. The number of patients waiting for elective surgery and routine treatment in England is now at a record high of 5.5 million. This could reach 13 million by the end of the year if left unchecked. Before the pandemic, nine out of ten were waiting fewer than 25 weeks in England. This has now risen to 44 weeks.

To fix this, the NHS needs to be able to offer more appointments, operations, and treatments. Rather than simply plugging the gaps, new, innovative practices must be pushed forward so patients continue to receive the best possible care.

The new funding is expected to fund an extra 9 million checks, scans, and operations. The NHS long term plan committed to increasing activity year on year. In recognition of pressures from Covid, this will now increase to 110% of the planned activity levels by 2023/24.

This is in addition to our historic settlement for the NHS in 2018, which will see it’s budget rise by £33.9 billion a year by 2023/24.

Call a member of the team today to find out more on 01942 816 512.

Source: GOV.UK