NHS could ‘permanently swallow’ £12bn raised for social care, top economists warn

Tax rises will leave ‘little’ for social care, says Institute for Fiscal Studies

The £12bn a year extra for health and social care as a result of Boris Johnson’s tax hike risks being swallowed up by the NHS, an economic think tank warned.

The Institute for Fiscal Studies (IFS) has warned that very little might be left available for social care, even once funding from the new levy is expected to shift away from the NHS.

Under the plans announced by the prime minister the NHS will get the bulk of the £36bn raised over the first three years, with £5.4bn earmarked for social care in England.

But that balance is expected to tip towards social care in subsequent years as the £86,000 cap on costs introduced from October 2023 starts to require funding.

The IFS suggested that the experiences of the past 40 years showed that NHS spending plans are almost always topped up – meaning that health would continue to require the bulk of the revenue raised by the new tax.

Ben Zaranko, research economist at the IFS, said the extra funding provided for the NHS in the announcement would result in spending growing at 3.9 per cent a year between 2018/19 and 2024/25 – exactly the same rate of growth planned between 2018/19 and 2023/24.

“History suggests these plans will be topped up further – they have been in almost every year for the last 40 years,” he said. “That could leave little if any of the tax rises announced yesterday available for social care.”

Health secretary Sajid Javid has insisted that “more and more” of the money raised by the levy would go towards social care in future years.

But the IFS stated: “If history repeats itself, the ‘temporary’ increases in NHS funding announced this week could end up permanently swallowing up the money raised by the tax rise, leaving little available for social care.”

Social care leaders attacked Mr Johnson’s plan, saying the feared local councils would not receive the funding boost they desperately need to rescue the cash-strapped sector.

Mike Padgham, chairman of the Independent Care Group, warned: “It’s not clear how the money is going to be ringfenced for adult social care so it gets to local authorities on the frontline.”

The Treasury acknowledged the £5.4bn to be spent on social care by 2025 is largely for “implementing” the new caps and floors - which sees care costs covered for those with assets under £20,000, and help available to those with up to £100,000.

Conservative MP Stephen McPartland said he could not back a plan that provided “no new funding for social care for at least 3 years”, but there were few other dissenting Tory voices.

Ahead of a vote on the plans on Wednesday evening, Mr Johnson is expected to address the influential 1922 Committee of Tory MPs in a final effort to sell the package.

The health secretary was challenged on Wednesday to give a clear guarantee that money would shift towards social care.

Mr Javid said: “It’s clear that more and more after three years will shift towards social care because, not least, by that time the money over the next three years that will go to the NHS will be able to deal with so much of the challenge they are facing around the waiting list.”