Ministers ‘agree to fund social care plan with 1% hike to national insurance’
The governments long-awaited social care plan faces being delayed until the Autumn amid a backlash at claims Boris Johnson will fund the costs by hiking national insurance.
The PM and Rishi Sunak are finally believed to have thrashed out a deal on the provision that would see costs capped, meaning fewer people will have to sell their homes.
However, the package could mean NI being increased by a penny in the pound for employers and employees to raise around £10billion a year.
Economists complained that such a levy would be the least fair option for funding the long-awaited move, as it hits people on low incomes, and is paid by those of working age but not pensioners.
Bringing it in before 2024 could also breach the Tories’ manifesto commitment not to raise income tax or national insurance in this parliament.
Asked at a press briefing last night if the tax lock remained in place, the Prime Minister sidestepped the question, saying the problem of social care had ‘bedevilled governments for at least three decades’.
Boris Johnson and Rishi Sunak are finally believed to have thrashed out a deal on the provision that would see costs capped, meaning fewer people will have to sell their homes
‘All I can say is we’ve waited three decades, you’re just going to have to wait a little bit longer,’ he added. ‘I’m sorry about that, but it won’t be too long now, I assure you.’
It had been hoped that Mr Johnson would be in a position to outline his long-awaited social care reforms for England this week, before the second anniversary of him making his promise to address the issue on the steps of Downing Street in 2019.
But he and the Chancellor have had to self-isolate after Health Secretary Sajid Javid tested positive for Covid, with the plan now expected to be delayed until the Autumn.
Mr Johnson is in favour of a lifetime cap on the amount individuals have to contribute towards their care costs, set at around £50,000.
The Treasury said it is ‘committed to bringing forward a long-term plan to reform the social care system and we will set out proposals in due course’.
Paul Johnson, head of the Institute for Fiscal Studies, told The Times: ‘Funding social care just from national insurance would be very inequitable.
‘It would be a continuation of a long-term policy of hitting those of working age while protecting pensioners even for something designed to benefit people well over pension age. It’s a question of fairness.’
Torsten Bell, chief executive of the Resolution Foundation think tank, 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.’
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘Funding social care requires a more sustainable solution than simply whacking up taxes on working people and businesses.
‘What’s more, when politicians earmark tax proceeds for specific items of spending, it is usually smoke and mirrors. National insurance itself is little more than just another income tax, with receipts used for day-to-day spending and quite often wasted.’
Former Cabinet minister Jeremy Hunt has proposed a ‘health and social care levy’ of one per cent of incomes to help fix the care system in England.
The proposal from the former health secretary came as Boris Johnson failed to rule out the prospect of tax rises to pay for his long-awaited social care plan.
Mr Hunt said his idea – which would raise £6billion a year – could also help tackle the backlog of NHS treatments caused by the coronavirus pandemic.
He said the new premium would assist in fixing the care system without breaking Tory manifesto pledges not to raise income tax or national insurance.
‘The attraction of a health and social care levy is it would fund the NHS backlog in the short term and desperately needed improvements in the social care system in the medium and longer term,’ he wrote on Twitter.
Damian Green, Theresa May’s former deputy, has warned a £50,000 cap on costs would benefit families with expensive homes in the South because they would not have to spend as great a proportion of their wealth.
Mr Green suggested a cap set at 30 per cent of a person’s assets – ensuring those with larger homes pay more before the state steps in.
Mr Johnson and the Chancellor have had to self-isolate after Health Secretary Sajid Javid (pictured) tested positive for Covid, with fears the plan could be delayed until the autumn