National Insurance: Laura Kuenssberg issues warning to Boris Johnson
Analysis from the Institute for Government forecasts that “fixing” social care could cost £10billion per year. A one percent rise in National Insurance contributions would raise an estimated £10billion, but extra funding is needed to address waiting lists caused by Covid.
Prime Minister Boris Johnson, Chancellor Rishi Sunak, and Health Secretary Sajid Javid have agreed to raise National Insurance by about 1.25 percent, but reports say their officials are haggling over final details of how the £10billion per year should be spent.
The money raised in the first three years is expected to fund the NHS to continue clearing backlogs and other aftershocks of the pandemic before being switched to pay for social care.
Rishi Sunak wants a firm commitment that the revenue from the tax rise will be switched to pay for social care amid fears that it will continue to be swallowed up by the NHS.
A source told The Times: “The NHS money to deal with the waiting lists will drop off, whereas social care costs will be low at first and then rise.”
Boris Johnson will also be announcing a new cap on how much people will be billed for social care in their lifetime at approximately £60,000 to £80,000.
Currently, only those who do not have assets worth more than £23,250 are given social care free of charge.
An Express reader said they have watched their family’s savings “get swallowed up at £5,000 per month for dementia care”.
But the new reform hopes to change this to take financial burden off families who are paying for their loved ones’ care.
With an ageing and growing population, the UK must figure out how to fund the social care system.
The Prime Minister will be breaking his 2019 manifesto pledge not to raise National Insurance, which has angered members of the public, many of whom leant him their vote based on that promise.
At the launch of the Conservative Party manifesto, he said: “We will invest millions more every week in science, in schools, in apprenticeships, and in infrastructure, and control our debt at the same time, and that we can reach, and we will reach, net zero by 2050 with clean energy solutions.
“We can do all these things without raising our income tax, VAT, or National Insurance contributions.
“That’s our guarantee.”
Conservative MPs have expressed alarm at Mr Johnson’s u-turn, but with a cabinet reshuffle looming and Tory politicians wanting to retain their positions, it is thought the Prime Minister will not receive strong backlash from within the party.
Leader of the House of Commons Jacob Rees-Mogg, however, used his weekly segment in the Sunday Express to publish a famous quote by former President George Bush senior, who pledged “Read my lips: no new taxes” in the 1988 US elections.
Mr Bush later broke this pledge and lost at the next election to Bill Clinton.
Social commentators have theorised that Mr Rees-Mogg was sending a warning to Mr Johnson that asking people on average wages to fund help for the elderly, will cost the Tories at the ballot box.
Shadow Secretary of State Lisa Nandy has said the Labour Party supports the “broad principle” of increasing taxes to pay for NHS and social care recovery, but that Mr Johnson should not place the burden on families who are already under financial strain.
She added: “His plan is that he’s going to break his 2019 promise to not raise national insurance contributions and load the entirety of the cost of social care on to supermarket workers, delivery drivers who are already suffering with high childcare costs, high housing costs and who kept us going through the pandemic.
“I think that’s a really difficult ask of a group of people who haven’t done well under this Conservative government over the last 11 years.”
There has been a wave of criticism urging the government not to increase National Insurance tax as a tax that specifically targets the young, and should instead be looking at wealth taxes like corporation tax or mansion tax, or the need to prevent tax avoidance.
An Express reader commented: “A big problem is the rich and self-employed avoid paying tax as do those living on benefits. The burden will fall on the middle-income earners.”
Another suggested: “Charge all digital trading companies five percent sales tax and use some of it to fund NHS & Adult care.”
Torsten Bell, Chief Executive of the Resolution Foundation, said: “Tax rises will be needed to deliver decent social care, but a National Insurance rise is a terrible way to raise the funds required.
“It’s a tax disproportionately loaded on to younger and lower-paid workers, compared to a fairer rise in income tax.
“Why we would target a tax rise on the groups who have been hardest hit by the economic impact of this pandemic while exempting older and wealthy individuals, is completely beyond me.”
I’m over 66 and so are many of my Parliamentary colleagues. As MPs we earn a very good salary & yet as pensioners we pay no National Insurance contributions.
It is deeply unfair that our generation should benefit from the mooted Tory social care policy & not contribute.
— Margaret Hodge (@margarethodge) September 6, 2021
Currently, individuals do not pay National Insurance after they reach State Pension age unless they are self-employed.
But experts have warned that Mr Johnson may be planning to extend National Insurance contributions to working pensioners too.
Shaun Moore, tax and financial planning expert at Quilter, said that increasing National Insurance for the young while the elderly escape the charge would appear unfair.
He said that removing the National Insurance exemption for pensioners “would at least make it seem that everyone is in the same boat”.
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Many elderly remain in hospital longer than they need to because of a shortage of care home beds
A furious debate has erupted on social media around whether pensioners should start to pay National Insurance because the UK needs everyone to help rebuild after Covid.
But many pensioners argue that they should not have to contribute, considering they have spent a lifetime paying tax already.
Simon Bye tweeted: “Increasing national insurance to pay for social care certainly isn’t levelling up. It means low wage earners get a tax increase while wealthy pensioners are unaffected.”
John Eyres disagreed, writing: “David ‘two brains’ Willets says pensioners should start paying national insurance to fund social care. Has anyone told him that pensions are already taxed? And that most pensioners have paid NI for 45 years already?”
An Express reader said: “I am a pensioner in my 70s and I have a part-time job to make ends meet. We Boomers were taxed more heavily in our prime earning years.
“I no longer have to pay National Insurance contributions. Pensioner poverty is very real, and I, for one, am dreading the infirmity of great old age if I live to my nineties like my parents did.”
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