Q&A: the increase in NI and the funding for the NHS and social care

What are the government’s funding plans for the NHS and social care?

In early September 2021, Boris Johnson announced a hike in National Insurance in order to raise funds for the NHS and "fix" social care.

Starting in April 2022, there will be a 1.25% increase in employers’ and employees’ national insurance contributions, and a 1.25% increase in share dividend tax. The government has calculated that the increase will total an extra £12bn in taxes raised each financial year: £36bn over the three remaining financial years of this parliament. The government has called this a “health and social care levy”.

How much money has the government promised for the NHS?

The NHS is due to get to £15.6bn spread over three years: an additional £6.5bn in 2022-23, followed by an additional £3.6bn in 2023-24, and £5.5bn in 2024-25. This is shown in the tables published alongside the headline announcements.

For the latter part of this financial year, 2021-22, the government confirmed £5.4bn funding above the NHS long term plan settlement for the NHS, including for covid costs, elective recovery, discharge-to-assess, and £500m capital to support elective capacity.  This had been previously announced.  

The government believes that this increase in funding is enough “to deliver around 30% more elective activity by 2024-25” than it was conducting before the pandemic and “once the NHS has recovered from the pandemic, activity should be the equivalent of ten per cent higher than under the NHS long term plan.”

Is this funding really enough to cope with the waiting lists?

The £6.5bn in 2022-23 falls significantly short of what NHS leaders say is necessary. A few days prior to the announcement, NHS Providers and NHS Confederation, the two organisations representing providers in the NHS, such as hospital trusts, said a £10bn annual rise was needed for NHS-specific budgets in 2022-23, to avoid service cuts and placing patients at increased risk. 

In a joint statement responding to the funding announcement, NHS Providers and NHS Confederation said: 

“No one should be in any doubt that this extra funding is welcome. But the government promised to give the NHS whatever it needed to deal with the pandemic, and, while it makes a start on tackling backlogs, this announcement unfortunately hasn’t gone nearly far enough. Health and care leaders are now faced with an impossible set of choices about where and how to prioritise care for patients.”

The Health Foundation, a think-tank focused on health services, notes that:

“the scale of the care backlog means that even with this funding, the waiting list will almost certainly be longer at the end of this parliament than it is now. To meet the 18-week standard by 2024/25 would have required closer to £17bn over this parliament.” 

“Overall, the funding announced for the NHS is not sufficient for an ambitious recovery programme. If COVID-19 continues to require enhanced infection control beyond this year, there is a real risk that the NHS will be forced to make very hard trade-offs between tackling the elective care backlog and delivering on the planned investment to improve primary, community and mental health services, while delivering services that are safe for patients and staff.”

The government is emphasising the effect of Covid on the NHS, when in reality waiting lists were at an all time high before the pandemic (4.4 mn in February 2020) and money that should have been used for the upkeep of NHS infrastructure (buildings, clinics, etc.) was used for day to day running costs. As a result, the total cost of 'backlog maintenance', a measure of how much would need to be invested to restore a building to a certain state based on a state of assessed risk criteria, stood at £9bn at the start of 2021.

There is still the issue of staff; there is still no workforce plan that will help solve the issue of staffing shortages. The NHS is short of around 85,000 staff.


But what about the rest of the £36bn?

From the headline figure of £36bn of additional funding spread over the three years, £6bn will go to the devolved nations, around £10bn to non-NHS ‘health’ budgets (probably things like test and trace), and £5.4bn for social care services. 

What will £5.4bn do for social care?

The government announcement was “sold” by it as a way to solve many issues in social care, but the funding announced would only lead to £5.4bn for social care services. This amounts to £1.8bn in each of the three years. Of that £5.4bn, £2.5bn will fund the new £86,000 lifetime cap on individuals’ contributions to their care costs, leaving just £2.9bn over three years for reform.

At present social care is means tested and those with assets above £23,000 in value are charged for their care. The reform was billed as preventing people from having to sell their homes to pay for their care. The new lifetime cap of £86,000 paid out for care, however does not include what are known as ‘hotel’ costs - food, cleaning etc., provided in a care home. The cap disproportionately benefits wealthy older people.

The reform also does not address the fact that half of social care is for working-age adults: for these people, the proposals offer very little.

As with the NHS, the government emphasis is on the effect of the pandemic, yet social care has been struggling for many years. With councils hit by falling funding during years of austerity cuts.

A new report from the Association of Directors of Adult Social Services indicates a rapid worsening of social care, with nearly 300,000 people awaiting social care assessments, care and support or reviews, up by just over a quarter (26%) over the last three months: 11,000 of them have been waiting for more than six months, up by over 50% in 3 months.

Care leaders say the funding is meagre and the whole announcement was not about fixing social care at all.  Nadra Ahmed, the executive chairman of the National Care Association, which represents independent care operators, told The Guardian:

“Boris Johnson’s claim that this was about ‘fixing’ social care was misleading because the body of the plan was about NHS recovery. This is a recovery plan for the NHS and that is very obvious. The funding pot being talked about for social care is not sufficient to even address the issues of today.”

Anita Charlesworth, director of research at the Health Foundation, has said that the £1.8bn each year for three years  would not “fix” social care; social care will need as much as an extra £9.3bn a year by 2024/25 to meet the growing demand for care caused by the ageing population, improve the quality of care, “stabilise” the care home market and pay care staff better.

Natasha Curry, deputy director of policy at the Nuffield Trust, said the government’s plan had left social care “feeling short-changed and bitterly disappointed at the proposed funding levels and timing of reform”.