Boris Johnson has confirmed that there will be a 1.25% rise in national insurance to fund social care as part of a long-delayed plan to reform the system.
From April 2022, the government will create a UK-wide health and social care levy on earned income, with dividend rates increasing by the same amount.
The Prime Minister told MPs this will raise almost £36bn over the next three years, with money from the levy going directly to the frontline.
“There can be no more dither and delay,” he said. “Governments have ducked this problem for decades …. This is the right and reasonable and fair approach.”
Johnson said the new levy would share the costs between individuals and businesses, and everyone will contribute according to their means, including those above state pension age.
The Prime Minister added that there will be a cap of £86,000 on what people will be asked to pay for care over their lifetime, and said that anyone with assets of less than £20,000 will not have to make any contribution from their savings or housing assets, up from £14,000 today.
“Meanwhile anyone with assets of between £20,000 and £100,000 will be eligible for some means testing support,” he told MPs.
Johnson said the government will also address the fears that people have about how their loved ones will be looked after, by investing in the quality of care, carers themselves and by integrating health and care in England.
The Secretary of State for Health and Social Care, Sajid Javid, will be bringing forward a white paper on integration later this year, the PM confirmed.
Johnson accepted that the levy breaks a manifesto commitment not to raise income tax, VAT or National Insurance, adding: “ This is not something I do lightly, but a global pandemic was in no one’s manifesto and I think the people in this country understand that in their bones.”