The Tories on Tuesday unveiled a scheme that they said would deal with the social care crisis. It is another piece of class warfare, favouring the rich and making workers pay.
A new tax on all workers’ pay, the “health and social care levy” will come in from April 2022. It will be based on national insurance contributions.
Anyone with assets between £20,000 and £100,000 will have to pay towards care costs.
Introducing the plan, Boris Johnson said, "You can’t fix social care without removing the fear of losing everything to pay for social care". But the answer to that is a publicly-owned care service integrated into the NHS and funded by taxing businesses and the rich.
Under the new scheme no one will ever have to pay more than £86,000 for care in their lifetime. This protects the wealth of the super-rich who otherwise would have to keep paying for care out of their wealth.
There is nothing to tackle the blight of poverty pay for care workers or the low standards in much of the privately-owned care sector.
And although Labour leader Keir Starmer made noises about the unfairness of the plan, one of his main lines of attack was. "The Tories can never again claim to be the party of low tax." That's criticising them on right wing terms.
The present system often provides substandard care and takes tens of thousands of pounds from people on the average wage. It is riddled with profit-hungry corporations and based on workers doing long hours for poverty pay.
HC-One, Four Seasons, Terra Firma and Care UK have been big private equity and hedge fund owners of care homes. Private equity finance owns one in eight care home beds in England.
Social care provided by local councils in England is means-tested and is only available free to people with the highest needs and virtually no money.
Most users of care are older people. But others are also involved.
Last month a study showed some adults with learning disabilities are paying thousands of pounds extra a year for care. Six councils doubled the amount of money collected in charges.
There are two central issues that any reform should have confronted.
Firstly, there is the injustice that cancer patients receive free NHS care until death, but Parkinson's and dementia patients have to pay to go into social care. This division was created when the NHS was founded—and has never been properly addressed.
Secondly, capitalism relies on “unpaid care” to look after people who aren’t deemed useful for making profits. This usually means family members, mostly women, working for nothing.
The Tories package deals with none of this.
It is an unjust and inadequate scheme—funded in a wholly unfair way.
A central feature is a cap on the amount an individual will pay in care costs of £86,000.
That will mean nothing to most people. A third of people in Britain have less than £600 in savings. Even the over 55’s, who have the most savings, have an average of around £20,000.
So a cap will protect the wealth of the very rich, but any money that ordinary people have been able to put away will be wiped out.
The scheme is funded through an increase in national insurance contributions (NICs), a tax on people’s pay. This would break a manifesto pledge not to raise them.
Workers presently pay 12 percent NICs on annual incomes between £6,515 and £50,270. That will now rise by 1.25 percentage points.
But the NICs rate on incomes above £50,270 is just 2 percent. In an extraordinary handout to the rich, people on over £1,000 a week pay a lower proportion of their income in NICs compared to the less well-paid.
In addition, NICs apply only to earned income. The vast sums enjoyed by the rich from share dividends, capital gains, rent paid by tenants and investment interest are untouched.
People earning as little as £120 a week pay NIC and so will pay more if the rate rises. Someone grabbing £120,000—or £1,2 million—a year in dividends and other handouts pays not a penny more.
Even some Tories are worried about a backlash. A cabinet minister told The Telegraph newspaper, “They can’t seriously be thinking about a tax raid on supermarket workers and nurses so children of Surrey homeowners can receive bigger inheritances.
“It makes a total mockery of the levelling-up agenda and Red Wallers will be up in arms.”
And the Tories were also expected to announce another attack this week. They were set to set aside the pensions “triple lock” that sees them rise based on the highest of the average increase in earnings, inflation or 2.5 percent.
This means denying pensioners the rise they were promised, just as fuel bills soar.
Tax the rich to pay for social care system
A publicly-owned social care system—integrated with NHS and funded on the same basis—would cost money.
It would need, for example, to greatly improve the conditions for people in care and transform the pay and conditions of care workers.
But taxing the rich, even in quite minor ways, could raise the cash—and far more.
For example, capital gains tax (CGT) is paid on profits from buying and selling assets such as second homes, some shares and some businesses.
Reforming the present regime, so it is taxed like income, would raise an additional £14 billion a year.
A tax on the wealth of very rich people would raise vastly more. The Wealth Tax Commission last year looked at setting the threshold for the tax at £1 million per household—assuming two individuals with £500,000 each.
The very low rate for the tax would be 1 percent per year on wealth above the threshold. But still “a one-off wealth tax would raise £260 billion over five years”.
It adds that the tax, “could not be avoided by emigrating or moving money offshore. In fact, if well designed, it would be very difficult to avoid the tax legally”.