Warnings as new health and care tax comes into force

The new Health and Social Care Levy takes effect today, increasing the tax payments of millions of workers in order to raise £39bn over the next three years for the health and social care system.

In 2022/23 it will raise National Insurance for employers, employees and the self-employed by 1.25 percentage points. From 2023/24 the levy will become a standalone tax at 1.25% of earnings, while National Insurance will fall to its previous rate.

Most of the money will go towards the NHS, which the government says will help deliver:

• Around 30% more elective activity in three years’ time than before the pandemic
• 17 million more diagnostic tests over the next three years
• The expansion of operating theatres and diagnostic centres for cancer and other conditions

However, Health Secretary Sajid Javid admitted in February that even with the new money, NHS waiting lists may grow for the next two years.

The levy will also plough £5.4bn over three years into the adult care system, accompanied by reforms that will increase the number of people who receive free council-funded care, and cap the lifetime care costs for primarily wealthier homeowners.

It also increases the number of people who will qualify for partial support for their care costs, but ministerial changes to the initial plans mean homeowners in lower-cost housing are unlikely to see much benefit from the costs cap.

Prime Minister Boris Johnson said: ‘We must be there for our NHS in the same way that it is there for us. Covid led to the longest waiting lists we’ve ever seen, so we will deliver millions more scans, checks and operations in the biggest catch-up programme in the NHS’ history.  

‘We know this won’t be a quick fix, and we know that we can’t fix waiting lists without fixing social care. Our reforms will end the cruel lottery of spiralling and unpredictable care costs once and for all and bring the NHS and social care closer together. The Levy is the necessary, fair and responsible next step, providing our health and care system with the long term funding it needs as we recover from the pandemic.’

However, care provider organisation The Independent Care Group (ICG) warned that social care’s share of that funding won’t get through quickly enough to save some providers.

ICG Chair Mike Padgham said: ‘Reports suggest social care won’t see much of this new fund for some years when many providers need it right now.

‘A lack of investment, the crippling cost of living rises, the pandemic and the slow recovery of care take-up and occupancy levels are combining to create a perfect storm and some care and nursing homes and homecare providers will not survive it. Then the vital role social care and its staff perform, alongside NHS care, will be under severe threat.’

Photo by Josh Appel