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The Bill

The Health and Social Care Levy Bill 2021-22 was introduced on 8 September 2021. The Bill, with its explanatory notes, is published on the Bill’s page on Parliament.uk, which also provides details of its parliamentary progress.

In a statement to the House on 7 September, the Prime Minister announced plans to substantially increase funding for health and social care over the next three years, to be funded by a new tax: the Health and Social Care Levy.

The Levy is to be based on National Insurance contributions (NICs), which is paid by employees, employers and the self-employed. The majority of receipts from NICs are paid into the National Insurance Fund, to pay for contributory benefits (primarily the state pension). A single portion of the income from NICs is not paid into the Fund, but is allocated to the National Health Service.

The Levy will be introduced in two stages:

  • In 2022/23 the rate of primary Class 1 NICs for employees charged on their earnings, the rate of secondary Class 1 NICs for employers charged on their employees’ earnings, and the rate of Class 4 NICs for the self-employed charged on their trading profits, will be increased by 1.25 percentage points.
  • In 2023/24 a separate Levy set at 1.25 will be introduced, replacing this temporary increase in NICs rates. Liability to the Levy will be extended to individuals in employment who are over State Pension age. At present pensioners are not liable to pay NICs on any earnings they receive from employment.

The Health and Social Care Levy Bill would provide for the temporary increase in NICs rates for 2022/23, and their replacement with the Levy from April 2023.

The Bill also makes provision for the Treasury to determine the allocation of the receipts from the Levy between health care and social care, and the amounts to be split between England, Wales, Scotland and Northern Ireland. NICs is not a devolved tax. The Bill extends and applies to the whole of the UK.

Statutory provisions regarding NICs are not included in the annual Finance Bill, so changes to National Insurance in recent years have been made by the introduction of relatively short bills (for example, the National Insurance Contributions Act 2014, and the National Insurance Contributions Act 2015).

Financial impact

The Government’s health and social care plans were set out in detail in a Command Paper published alongside the Prime Minister’s statement. This estimated that the Levy would raise an additional £11.4 billion a year for health care and social care, for the three year period 2022/23 to 2024/25.

The Office for Budget Responsibility (OBR) published a revised estimate in its Economic and Fiscal Outlook which accompanied the Autumn 2021 Budget. It is now anticipated the Levy will raise around £12.4 billion a year for health and social care over the next three years.

Parliamentary procedure

Following the Prime Minister’s statement on 7 September, the Leader of the House announced that the House would consider a motion to approve a Ways and Means Resolution, to enable the Government to bring forward legislation to introduce the Levy.  This was approved on 8 September, after which the Health and Social Care Bill was published (Votes and Proceedings No.43, 8 September 2021). In the Business Statement on 9 September, the Leader of the House said all stages of the Bill would be taken on 14 September.

A Commons Library briefing on public bills receiving their second and third readings on the same day, provides a list of examples of public bills being ‘fast-tracked’ in this way. A recent example of expedited legislation in the field of tax law was the Stamp Duty Land Tax (Temporary Relief) Act 2020. This introduced a temporary relief for residential house sales, as part of a package of measures announced by the Chancellor in June 2020 to boost job creation in the context of the Covid-19 pandemic. Initially the Government’s decision to ‘fast-track’ the Health and Social Care Levy Bill was not addressed in the explanatory notes to the Bill, published alongside the Bill on 8 September 2021. An updated version of the notes, with an additional section relating to fast-track legislation, was published on 13 September 2021.

In turn, on 14 September the House approved a motion for all of the Bill’s stages in the Commons to be taken that day, and the Bill was agreed, unamended (Votes and Proceedings No.47, 14 September 2021HC Deb 14 September 2021 cc837-947).

This briefing provides a short overview of the National Insurance system, before discussing the Government’s plan for health and social care, its proposal for a new tax to fund this plan, and the content of the Bill.

Further reading

Several Commons Library briefings provide background to the Government’s plans for health and social care:


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