A NATIONAL Insurance increase announced by the UK Government will lead to additional funding for health and social care in Wales. 

Prime minister Boris Johnson today announced 1.25 percentage point increase in National Insurance contributions, from next April, which is intended to address the long term funding of social care and address a shortfall in health funding. 

The increase breaks a Tory manifesto promise not to raise income taxes - but the government says the pandemic has forced it to act and has tried to sell it a a levy for health and social care.

The increase will essentially be a specific charge on workers’ pay to raise £36 billion over three years for health and social care – but with the Welsh Government, and the other devolved nations responsible for those spending areas it appeared unclear how cash raised in Wales would be spent. 

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Mr Johnson told the House of Commons: “Although Scotland, Wales and Northern Ireland have their own systems, we will direct money raised through the levy to their health and social care services.” 

He said that will deliver an extra £2.2 billion a year to the three devolved nations, and it will be worth around 15 per cent, or some £300 million a year, more than will be generated from residents in Wales, Scotland and Northern Ireland. 

Plaid Cymru said the prime minister shouldn’t be directing how the Welsh Government spends its budget. 

But the additional funds are being raised through National Insurance it means the money is passed to the Welsh Government under a system that has always insured those contributions are allocated to health and social care spending. 

The increase, which is expected to be around £700 million a year by 2025, means that funding stream will see an increase due to today’s decision.  

At present the funding stream is worth around £1.2 billion a year to the Welsh Government which overall spends around £9 billion on health and social services. 

The Welsh Government has said it has welcomed the UK Government’s decision to generate more funding for social care but has said its proposals lack details. 

While the UK Government has outlined from October 2023, nobody will pay more than £86,000 for their social care – regardless of their assets, that is a policy related to England only. 

The Welsh Government is responsible for how care is funded in Wales, and what that will mean for individuals, but from before this May’s election first minister Mark Drakeford has said he wanted to see the UK Government’s proposals before deciding on the best course for Wales. 

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At the election Welsh Labour promised it will not raise the £100 a week cap on non residential social care and it says most citizens pay less than this, or nothing at all if they are on what it calls “low incomes”. 

It also said it would maintain its £50,000 threshold on savings or properties at which point people have to pay the full cost of residential care, which it says is the most generous in the UK. 

At the election it said it wanted care free for all the point of need but said it would need to see the UK Government’s plans. It now knows how much additional funding it will receive and the pressure will be on it to say how that money will be spent. 

Mario Kreft, who speaks for care home owners in Wales, said there is a “once-in-a-generation” opportunity to fix the “broken” social care system in Wales. 

He said: “What we have now is an opportunity to sort out social care which is incredibly important for so many reasons, including the fact that it underpins the NHS. 

“Obviously, there will be additional money coming to Wales but there is no reason for us to do the things that we have always done.” 

He said during the pandemic the Welsh Government has adopted a centralised approach, cutting out what had been regional differences in care provision, and said that should continue. 

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A spokeswoman for the Welsh Government said: “While we support action at UK level to provide much-needed additional and long-term funding for social care, today’s announcement by the Prime Minister is severely lacking in detail.” 

The Welsh Government also said: “We have set out ambitious plans for social care in this term, including paying social care staff a real living wage and offered to work with the UK Government on this very important agenda, including sharing the insights and results of the considerable work we have already undertaken in Wales through our Inter-Ministerial Group on Paying for Social Care. 

The breakdown on today’s announcement: 

Between 2022 and 2023 National Insurance rates will rise by 1.25 percentage points. From April 2023, the levy will appear as a separate entry on individuals’ pay slips. It is at this point that working adults above pension age will chip in. 

The Government is also increasing the rate of dividend tax by 1.25 percentage points to ensure people who receive income from dividends make the same contribution. 

How much will I have to pay? 

The tax will be progressive, meaning those who earn more will pay more. 

For example, a basic rate taxpayer earning £24,100 will contribute £180 a year and a higher rate taxpayer earning £67,100 will contribute £715 a year. 

What will the extra money mean? 

In England Social care will receive £5.3 billion between 2022-23 and 2024-25. 

Less than half of this will fund the minimum floor and cap, which is the government promise to fully cover the cost of care for those with assets under £20,000, and contribute to the cost of care for those with assets of between £20,000 and £100,000. 

Around £500 million will go towards workforce training and skills, while money will also go towards increasing local authority payment rates, integration and quality. 

In Wales all these details will be for the Welsh Government to decide. 

Boris Johnson has written to Mark Drakeford and the other first ministers suggesting they all meet, in person, next month to further discuss the issue. 

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