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National insurance 1% increase could generate £5bn for social care

An increase of 1% to National Insurance (NI) contributions could bring in £5bn of funding to help bolster the struggling social care sector.

Older people’s charity Independent Age found that a countrywide increase in tax would be the most “progressive and politically achievable” option to help councils fund care.

The research, completed in association with progressive think tank IPPR, compared NI contributions to increasing inheritance tax, removing the triple lock on pensions and means-testing the Winter Fuel Payment.

According to the report, the social care funding gap could top £2.7bn by 2020/21 as demand rises and the complexity of problems within the system increase.

Increasing contributions would cost the poorest working-class families in Britain around £20 each year while the richest 10% in the country would see an extra £1,220 in contributions.

Independent Age found that means-testing the Winter Fuel Payment would raise just £1.8bn, which is not enough to plug the funding gap. In addition, moving from a triple to a double lock on pensions would create no immediate additional revenue.

Responding to the research, Cllr Izzi Seccombe, chairman of the LGA’s Community Wellbeing Board, said “fundamental changes” needed to take place to ensure the social care system was sustainable.

“This new research illustrates the difficult, brave and possibly even controversial decision-making that will be required to secure the long-term future of care and support,” she continued.

“That is why a cross-party consensus on the way forward is so essential. It is absolutely vital that government acts and addresses the social care crisis in next week’s Autumn Budget.

“As a minimum it should set out in further detail the intention to bring forward proposals for adult social care mentioned in the Queen’s Speech and how it proposes to fill the £2.3bn annual funding gap that social care will face by 2020.”

The report also found that a “wealth tax” of 13% on top of the inheritance tax could raise as much as £6.5bn a year but would be very unpopular with the public.

Janet Morrison, chief executive of Independent Age, commented: “Social care is in desperate need of a sustainable funding solution. However, for all the short-term solutions governments have introduced, the care system needs meaningful change that will work over the long-term.

“Hundreds of thousands of older people rely on the social care system, either in their own homes or in a care home, and demand for services is only going to increase. Government must face up to facts and stop kicking the can down the road. It needs to confront the difficult decisions about how to fund the social care system because the problem is not going to go away.”

The charity also suggested the government use a Green Paper to examine future funding options and come up with a solution before the gap grew any wider.

Last week, the LGA revealed that social care could grow to take up 60% of council tax by 2020, with decisions being forced about whether to spend the money on care or other vital services.

Top image: CQC

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