A summary of today’s health and social care announcement

The NHS is getting £36bn over the next three years “to fund the biggest catch-up programme in the NHS’s history, tackling the Covid backlogs.”

Prime Minister Rt Hon Boris Johnson, MP, said:

“The pandemic has illuminated chronic problems in our health and social care system, and made many of them worse. For instance, when COVID-19 broke out, there were thousands of hospital beds filled with people that could have been better cared for elsewhere. Around seven million patients in England did not come forward for treatment during the pandemic – and it is right that they should now be seen and given the treatment that they need.

We will provide significant new investment – reducing long waits for the tests and treatment that people need. We will bring the health and the social care systems more closely together – so that people are cared for in the most appropriate place for their needs, whether at hospital, in care or at home. We will protect individuals and families against unpredictable and potentially catastrophic care costs – so that from October 2023, no eligible person starting adult social care will have to pay more than £86,000 for personal care over their lifetime. We will recognise the extraordinary contribution that health and social care staff made in helping the country through the pandemic – in part by making sure that they have the support that they need.” Continue reading on page 4 here.

How it will be funded

  • A new UK-wide 1.25% “health and social care levy” will come in from April 2022, based on national insurance contributions. It will be paid by working adults, including people over the state pension age (unlike normal national insurance, which is not paid by pensioners).
  • Initially from April 2022 national insurance contributions rates will go up by 1.25%. But from April 2023, once tax systems have been updated, the levy will be separated, so that the levy will appear as a separate line on pay slips. At this point working adults above state pension age will start contributing.
  • The Government will also increase the rates of dividend tax by 1.25% from April 2022.

How much will people pay (government analysis)

  • 40% of all businesses (mostly small business) will not have to pay anything extra due to the Employment Allowance.
  • ‘Big businesses will pay the most’ most of the extra revenue coming from the increase to employers NICs, with 70% of the money coming from the biggest 1% of employers
  • The changes are progressive. (i.e., those who earn more will pay more) – a typical basic rate taxpayer earning £24,100 will pay £180 a year, or £3.46 per week. A typical higher rate taxpayer earning £67,100 – in the top 15% of earners – will pay £7.15 a week.
  • Higher rate taxpayers – 14% of the total – will pay half the revenue. 6.2 million people earning less than £9,568 will not have to pay.

The full document can be read here.