Andy Cowper: So, are social care and the NHS now sorted?

The government’s tax hike for health and social care will provide extra funding, but does it go far enough?
Photo: Alamy

By Andy Cowper

15 Sep 2021

In a dramatic set of announcements, foreshadowed by a predictable War Of the Briefings between the PM and the chancellor, we learned in September’s “back-to-school” week about the government’s plans for NHS and social care funding.

This was not before time. CSW readers who’ve been paying attention (and that’s all of you, right?) will remember the PM’s promises in his speech outside Downing Street on taking office in July 2019 that “my job is to make sure you don’t have to wait three weeks to see your GP, and we start work this week with 20 new hospital upgrades, and ensuring that money for the NHS really does get to the front line”.

He went on: “My job is to protect you or your parents or grandparents from the fear of having to sell your home to pay for the costs of care, and so I am announcing now – on the steps of Downing Street – that we will fix the crisis in social care once and for all with a clear plan we have prepared to give every older person the dignity and security they deserve.”

So, what’s happened? On Monday 6 September, health secretary Sajid Javid told parliament about the NHS’s budget increase for the second half of this financial year to help address Covid pressures (which are very much ongoing, and rising as the end of holidays/back to school/work effects kick in).

He announced an additional £5.4bn for the NHS for the remainder of the current financial year. This breaks down into:

• £2.8bn for Covid-19 costs including infection control measures;

• £600m for day-to-day costs;

• £478m for enhanced hospital discharge; and

• £1.5bn for elective recovery, including £500m capital funding.

Towards a health and social care levy

On Tuesday 7 September, the prime minister announced a 1.25% increase in employers’ and employees’ National Insurance contributions and on share income dividends – branded a health and social care levy.

Starting in April 2022, the 1.25% increase in both employers’ and employees’ national insurance contributions and the 1.25% increase in share dividend tax will total an extra £12bn of taxes raised each financial year: £36bn over the three remaining financial years of this parliament. This health and social care levy will in time appear on payslips as a distinct payment from income tax and NI contributions.

An individual’s lifetime social care contributions are set to be capped at £86,000 – more than double the £35,000 Dilnot proposed in 2011 (as a mid-point figure across his suggested range of £25,000-£50,000) from 2023.

Comedy fans will have appreciated the PM’s and ministers’ repeated assertions that this new levy will be “legally ringfenced” to prevent it being siphoned off by future governments. Lawyer and writer David Allan Green is very good on why this is utter nonsense.

Is this money enough?

No. It is not enough for real delivery of improvement, in either sector.

It’s a start in the right direction for the NHS, but let’s keep it in perspective. The NHS had the lowest period of financial growth in its history between 2010 and 2019: as a direct result of this, even before Covid-19 hit, NHS waiting lists had expanded enormously.

One consequence of that 2010-19 funding squeeze was the regular transfer of NHS money allocated for capital and maintenance budgets into day-to-day spending. This led to an enormous backlog of estates and maintenance spending. In 2019-20, this backlog was £9bn: a 40% increase from the 2018-19 figure of £6.4bn.

Back in the real world, the REAL Centre of the Health Foundation issued a report assessing the actual NHS financial support required. It’ll have made the Treasury choke on their coffee to see the £17bn figure over the remainder of this parliament.

The report says this sum will be required “to clear the backlog of people waiting for routine elective care, return to 18 weeks, and treat millions of ‘missing’ patients who were expected to receive care during the pandemic but did not. In all, this would allow an additional 2.2 million extra patients to be seen a year.

“The overall funding the NHS may need could yet be significantly higher than this as the REAL Centre’s modelling does not include the ongoing impact of Covid-19 on NHS productivity, and the additional investment that may be needed in primary and community services to support the recovery.”

The proposal for the health and social care levy to largely fund clearing the NHS backlog for the coming three financial years (thereafter reverting to social care at a level to be decided by the Treasury) is at best unproven and improbable.

One of the main reasons for this is that the NHS waiting list is still growing because of Covid-19 demand pressures and extra infection control measures having reduced “regular” NHS capacity to below its pre-pandemic level.

Another main reason is that patients who may need treatment but delayed seeking it due to the pandemic are still not coming forward in the expected numbers.

Some, of course, have died from Covid-19 and will therefore not need further healthcare (or indeed social care).

The government’s plans both delay the arrival of extra funding for social care and obscure the question of a durable and post-Covid financial settlement for the NHS.

These financial plans keep social care firmly as the poor relation. Of the £36bn raised in the first three years, only £5.4bn is for social care. Of that £5.4bn, £2.5bn funds the new £86,000 lifetime cap on individuals’ contributions to the costs of their care, leaving just £2.9bn over three years for reform.

What about reform?

It’s essential to realise that what has been announced this week is a plan for tax-raising and funding. The document may be called Build Back Better: Our Plan For Health And Social Care, but there is no significant mention of actual plans for reform in either sector.

As a “plan” goes, there’s strikingly little actual planning on offer, beyond a few broad commitments: one of which is for the NHS to create a new delivery plan. Cart before horse?

Of the few new commitments, one concerning the NHS is striking: “the NHS in England can aim to deliver around 30% more elective activity by 2024-25 than it was before the pandemic”. 

This is punchy, as extra infection control protocols have reduced the NHS’s capacity to treat patients to below the level at the start of Covid-19 (when waiting lists had already grown huge).

It’s extra-punchy because the NHS still doesn’t have a real plan to increase the number of staff by anything like the amount to do this; not to increase physical sites for treatment where it could be done.

There’s also an important unresolved technical issue with the pensions taper tax, which ironically George Osborne introduced in 2015 to allow more housing wealth to be kept out of inheritance tax. Until the pensions taper tax issue is fixed, there is virtually no prospect of getting NHS clinicians, especially more senior ones, to do significant amounts of extra work at evenings and weekends as will be required to fix the backlog.

Nothing in the document remotely resembles a plan to reduce the NHS backlog. It is instead an aspiration-fest, articulated with words such as “can aim to”, “should” and “could” (where “will”, “shall and “must” would be more reassuring).

It seems that the NHS didn’t get what it wanted in funding terms, and so the Treasury and No.10 didn’t get delivery guarantees. Score one to NHS England’s new chief executive Amanda Pritchard.

Other than in warm words of rhetoric, there’s nothing substantial on how the quality of current social care provision will be raised; nor on how pay and conditions for that sector’s staff will be improved.

Nor does it address the fact that half of social care is for working- age adults: for these people, the proposals offer very little.

This social care reform is very much about doing what the PM promised: to prevent people having to sell their homes to pay for the costs of their social care. As such, it will disproportionately benefit the estates of wealthy older people.

To get a sense of the scale of missed opportunity, read 2019’s Health Foundation report on ‘What should be done to fix the crisis in social care?’ This points out that restoring the access to services caused by cuts to the central government grants to local authorities since 2010-11 (in the now-banished name of ‘austerity’) would have cost £12.5bn.

This is a significant tax raise that falls largely on working age people’s incomes: its main aim in the short-to-medium term is to help families with significant housing assets that they want to pass on to their heirs. Time will tell whether the electorate are going to notice this.

Andy Cowper is the editor of Health Policy Insight, and writes regularly on health policy and politics for The Guardian, Tortoise, the BMJ and The Spectator

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