National insurance rise plan under scrutiny by Scottish Government

Any deal by Westminster is expected to propose a lifetime cap on residential care costs of £50,000, with the balance met by the state.

The Scottish Government is to launch a consultation on proposals for a new National Care Service, part of which will include examining the costs of implementing major changes in adult social care.

They include an almost doubling of free personal care and nursing contributions, which the government has said will see an end to non-residential charges.

READ MORE: Brexit and the pandemic blamed as self-funding care home residents face soaring fees 

Raising National Insurance contributions may be controversial because it affects those of working age rather than pensioners.

Professor Cam Donaldson, who is an expert in health economics at Glasgow Caledonian University, says the strategy could be a “political ploy” by the UK government to avoid the use of the word “taxation”.

The Conservative manifesto committed to no rises of income tax, National Insurance or VAT.

“My view would be to go for a fairer (more progressive) taxation system whereby the richer pay more on additional income earned,” said Prof Donaldson.. 

“Time has long since passed by the ability of National Insurance to pay for much of anything.  

“Talking about it in this manner, to me, seems to me to be more of a political ploy to avoid use of the word ‘taxation’. 

“It will have to come from the public purse, better funded by the fairest form of taxation possible.

"By ‘fair’, what I mean is that idea of more progressive taxation - National Insurance would be regressive relative to increasing tax."

Donald Macaskill, Chief Executive of Scottish Care, says any funding plan needs to be “rooted in fiscal reality.

READ MORE: Self-funding Scots care home residents to benefit from higher support 

He said: “We have not, as a whole society, not just our politicians, answered some fundamental questions about how will we pay for rising social care costs because of our demographic challenges and our desire to reform our social care system. 

“Whether the answer is raised income tax or a national insurance scheme, we need to start making those decisions, and I would hope with a degree of political consensus.  

“Whatever the outcome is, we cannot continue to pay for care on the cheap, fail to properly reward and recognise our frontline workers, and perpetuate the discrimination and inequity that exists on the basis of diagnosis, age and location of care support.”

A report commissioned by Age UK comparing social care funding in the UK with countries including Italy, Spain, Germany and Japan found that none had “completely overcome” the challenges of creating a sustainable social care system.

However, most of the countries had implemented significant reforms over the past 25 years, while the UK’s system of means tested care funding had remained broadly unchanged.

READ MORE: Agenda: What next for improving adult social care in Scotland 

In Germany, mandatory social care insurance covers the cost of basic care with out-of-pocket expenditure only expected to pay for anything additional.

Personal insurance experts say avoiding tax rises would leave the Chancellor’s options very limited.

Steven Cameron, Pensions Director at Aegon said: “Delivering a fair and sustainable social care funding deal remains one of our greatest societal challenges.  

“Both employees and employers pay National Insurance and applying the increase to both would spread the costs widely. 

“However, the different treatment of the self-employed would raise questions around fairness.”

Minister for Social Care Kevin Stewart said:“This transformation in social care can only be delivered with increased investment and we are already committed to increase investment in social care from Scottish Government resources by over £840 million by the end of this parliament.

“We await more information from the UK Treasury to better understand the proposals the UK Government are developing.”