Social care  

Altmann: It's not too late for govt to reverse NI hike

Altmann: It's not too late for govt to reverse NI hike
Ros Altmann, former pensions minister [Photographer: Simon Dawson/Bloomberg]

It is not too late for the government to reverse the National Insurance hike it announced in September, according to former pensions minister Ros Altmann.

According to Altmann, while the government claims the hike will solve the social care crisis once and for all, it is actually “going to make things worse”.

In a blog post, published today (February 21), Altmann said: “It is not too late to reverse this terrible decision and reconsider how best to raise extra funding.”

Last year, prime minister Boris Johnson set out the government's long-awaited plans for social care reform, announcing a 1.25 per cent 'health and social care levy' to cover a cap on care costs.

The cap on the cost paid by any one person for social care in their lifetime will be set at £86,000 for people entering care from October 2023, with a floor of £100,000 in assets.

At the time, the industry highlighted the “regressive” nature of the tax hike, which they said will see younger workers shouldering the cost of seniors’ care.

The levy is designed to fund both the NHS and the incoming social care cap. Altmann said the levy will hit social care employers with higher costs, and “leave them worse off” because money collected through the levy is to go to the NHS first.

“Sadly, it seems social care is being treated with disdain, while the NHS remains protected,” she said.

“The money raised will initially help the NHS, while actually penalising social care operators, particularly the smallest ones and charities or not-for-profit operators. 

“The move follows on from a series of official blunders that have weakened the sustainability of the sector.”

Altmann called the tax hike the "fourth policy" blow to social care since the pandemic. She listed premature hospital discharges leading to residents and staff deaths as a blow, as well as council funding not being able to keep up with cost increases facing care homes.

She also cited the mandatory vaccination cut off for the NHS leading to “worsened long-standing staff shortages” to the tune of 40,000, according to government figures. The government is reportedly reviewing this last policy.

Altmann added: “And now National Insurance hikes will be a fourth blow – increasing employment costs, reducing staff pay, aggravating staff shortages and driving more care home closures.

“Knowingly worsening a staffing and inflation crisis, reducing staff take-home pay and adding to employer costs, seems bound to damage social care, not help it as care homes will suddenly have to find even more money to pay higher National Insurance contributions for their staff.”

Altmann added that the NI hike is an example of social care being “neglected” in the UK’s health system, while the primary focus remains on the NHS.

She said: "The sector is more at risk now than before the supposed ‘fix’ from higher National Insurance. Claiming to be improving things for the long term while making them even worse in the short term is certainly not a solution.