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The government has laid out its plans to increase national insurance to help boost NHS spending and to pay for a cap on the costs people face if they need social care (including help at home or a move to a care home).
The plan for England is that, from 2023, nobody will pay more than £86,000 for the care they need for daily tasks such as dressing, eating and washing.
This, the government hopes, will ensure that “catastrophic” care costs become a thing of the past.
While the cap will limit how much anyone pays for their care, the government has said that the daily living costs in a care home (covering, for example, food and accommodation) will not count towards the cap.
Previous social care proposals have suggested people’s contribution to these living costs should be fixed at £12,000 a year. That would mean when even when someone reaches the cap they could still face £1,000 monthly bills for living costs.
With the average care home costs currently around £36,000 a year, and only £24,000 of that spending counting towards the cap once the £12,000 living costs are taken off, it would take the average care home resident more than three and a half years to hit the £86,000 figure.
However, according to the BBC, half of people who move to care homes die within a little more than a year, with only around a quarter surviving longer than three years.
In addition, spending on care will count towards the cap only for people assessed by the local council as in need enough to be eligible; with only the very frailest people likely to qualify.
Councils are concerned that funds raised by the increase in National Insurance will be swallowed up by reducing NHS backlogs and paying for the cap. The Institute for Fiscal Studies has also expressed similar concerns.
If this is indeed the case, council leaders fear the care system will remain under pressure, with insufficient staff to provide the care people need. That opinion has also been shared by the Nuffield Trust think-tank, which has warned that the care system will be “short-changed” by the government’s plans.
In addition, officials at HMRC have warned of the possible consequences to families of the impending tax rise, which in 2022-23 will mean a worker on the median basic rate taxpayer’s income of £24,100 paying an additional £180 per year.
In a report, HMRC stated: “There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”