Rishi Sunak and Sajid Javid have come out today to outline their support for this month’s hike in National Insurance, despite the growing cost of living crisis.
Sunak said the £12bn-a-year increase in health and social care spending, which will come from the tax hike, was a “top priority” for the government.
The chancellor said the spending had to be funded in a “responsible and sustainable way”.
“The money raised by the levy will enable us to deliver improved services for patients, cut waiting times and make social care funding more fair – all part of a better system for health and social care,” Sunak said.
The 1.25 percentage point increase in National Insurance for employees and employers will come into place from Wednesday.
It is a part of a swathe of tax rises from the chancellor, due to come in over the next two years, which will increase the UK’s tax burden to its highest level in seven decades.
Taken together with soaring inflation, the Institue for Fiscal Studies estimates that the median British wage earner will be £400 worse off over the next 12 months.
The money in the first year will predominantly be spent on clearing the Covid backlog, before incrementally more is allocated to social care spending.
After three years, the £12bn in extra tax revenues will all be spent on social care.
Health secretary Sajid Javid said it was “vital” to clear the Covid-created backlog and deliver “millions more scans and operations”.
“This critical investment in our nation’s future will be paid for by those with the broadest shoulders, whilst those on low and middle incomes are protected,” he said.
The increase in National Insurance has been unpopular among large numbers of Tory backbenchers who are unhappy with the expansive economic policy being pursued under Boris Johnson.
On Friday, Tory MP Steve Baker said: “I’ve said it before and I’ll say it again – the Conservative party is in the wrong place and heading in the wrong direction.”