Business groups decry NI hike ahead of social care plan announcement
Boris Johnson will today outline his government’s plan for social care reform, with the widespread expectation he will announce an increase in National Insurance.
It will come alongside plans to fix the Covid-related NHS backlog, which is thought to be at around five million people.
It is expected that it will be paid for by increasing National Insurance Contributions for employees and employers by between 1 and 1.25 per cent – a move that has been widely criticised by UK business groups and the Labour party.
The increase would also mean Johnson has broken his promise from the 2019 election to not hike income tax, VAT or National Insurance.
The Institute of Directors has said the increase is “illogical” as the economy begins a fragile recovery.
Downing Street said in a statement tonight that “health service needs help to recover and build back better to improve patient care”, adding that “challenges faced by our NHS and care sector are closely linked”.
Johnson said in his first speech as Prime Minister two years ago that he had a plan to “fix social care once and for all”.
He has since been criticised for not coming to the electorate with a clear plan.
In a statement released tonight, he said: “We must act now to ensure the health and care system has the long term funding it needs to continue fighting Covid and start tackling the backlogs, and end the injustice of catastrophic costs for social care.
“My government will not duck the tough decisions needed to get NHS patients the treatment they need and to fix our broken social care system.”
Multiple outlets over the weekend said the NHS would get a £35bn funding boost over the next three years thanks to the tax rise.
The extra taxation, a projected £10bn a year, would then be used after this point to fix the country’s social care crisis by capping individual care costs at £80,000.
The Institute of Directors today said any increase in National Insurance, which will disproportionately hit the lowest wage earners, was “illogical”.
IoD chief economist Kitty Ussher said: “National Insurance should not be used in place of general taxation. It was established to protect people financially from the risks of being unable to work, based on a contributory system, and it is on that basis that employers also make contributions.
“There is no logic to employer national insurance contributions being used to fund anything else.”
Federation of Small Businesses chair Mike Cherry has called an increase in National Insurance a “a jobs tax” as it will make it harder for “small firms to provide opportunities and invest to improve productivity”.
“If this hike happens, fewer jobs will be created by the UK’s small business community over the crucial months ahead,” he said.
Shadow health secretary Jon Ashworth said: “The Prime Minister must set out how he will bring down waiting lists quickly, support the NHS workforce, fix crumbling hospitals and deliver modern equipment to speed up diagnosis of deadly diseases and crucially, ensure more people can access the social care they need.
“The NHS is in desperate need, but the Prime Minister – along with every Conservative MP – was elected on a manifesto that promised to fix social care on a plan that had been developed and promised no rise in National Insurance. His broken promises on tax rises cannot be followed by more broken promises for the NHS.”