Social Care Funding: Intergenerational Impact

Lord Howarth of Newport Excerpts

Thursday 16th September 2021 Lords Chamber

[Lord Howarth of Newport (Lab) [V]]

My Lords, I thank the noble Baroness, Lady Greengross, with whom it has been a pleasure to work on this issue in the past, for tabling this Question for Short Debate and for setting forth her constructive proposals.

The failure of successive Governments over many years to reform the social care system has done as much as anything else to bring government and Parliament into disrepute. Now this Government have made a stab at the funding aspect of the problem. But the solution —though we cannot properly call it that—which they have come up with is enough to make one weep. Indeed, it will make many younger, lower-paid workers weep.

Of the various possible ways to raise money for social care, to increase national insurance contributions on their existing basis is the most regressive, unjust and destructive. The cynicism of the Government’s approach is chilling. They did some polling and found that the public think, wrongly, that national insurance pays for the National Health Service. They concluded that they could get away politically with raising national insurance contributions rather than raising income tax, which would have spread the burden fairly. Here the noble Baroness and I may disagree.

Presumably, those polled did not understand that employees’ national insurance contributions kick in at earnings of £184 per week, equivalent to £9,568 per year, far below the £12,570 per year at which income tax starts. Presumably, they also did not understand that national insurance contributions are levied at a higher rate on lower earners and that retired pensioners who are comfortably off do not pay national insurance contributions at all. Therefore, the policy means that miserably paid care workers will be more highly taxed, while affluent retirees will pay no more tax. The Government’s cunning plan is that young workers, struggling on low wages to save for a mortgage, will pay the new levy to enable pensioners who need social care to retain their homes and the bulk of their wealth through the cap on personal care costs of £86,000.

While it is far from certain that more than a derisory part of this national insurance increase will end up improving funding for social care, what we do know is that social care providers, paying higher employers’ national insurance contributions, will find it harder to employ staff and those staff will find it harder to make ends meet. In seeking to ingratiate themselves with elderly homeowners at the cost of the young and low-paid, the Government will not commend themselves to the country. A far cry from one nation conservatism, this politics of division exposes the fatuity of the Prime Minister’s levelling-up rhetoric. The policy drives a wedge between the generations, while it will fail to provide the resources required to address the social care crisis, by increasing the availability of social care to match actual need and developing the social care workforce.