Boris Johnson outlines new 1.25% health and social care tax to pay for reforms

Boris Johnson: Social care must be paid for by taxes, not borrowing.

BBC News is reporting that a new health and social care tax will be introduced across the UK to pay for reforms to the care sector and NHS funding in England.

Boris Johnson said it would raise £12bn a year, designed to tackle the health backlog caused by the Covid pandemic and to bolster social care.

He accepted the tax broke a manifesto pledge, but said the “global pandemic was in no one’s manifesto”.

However, Labour leader Sir Keir Starmer said the plan was a “sticking plaster”.

Leaders in social care also warned the money was “nowhere near enough” and would not address current issues in the sector.

The tax will begin as a 1.25 percentage point rise in National Insurance (NI) from April 2022, paid by both employers and workers, and will then become a separate tax on earned income from 2023 – calculated in the same way as NI and appearing on an employee’s payslip.

This will be paid by all working adults, including older workers, and the government says it will be “legally ring-fenced” to only go towards health and social care costs.

Income from share dividends – earned by those who own shares in companies – will also see a 1.25% tax rate increase.

The UK-wide tax will be focused on funding health and social care in England, but Scotland, Wales and Northern Ireland will also receive an additional £2.2bn to spend on their services.

The SNP said the tax would “unfairly penalise Scottish families – and leave the poorest in society subsidising the wealthy”.

MPs will vote on the new proposals in the Commons on Wednesday.

Mr Johnson said the proceeds from the tax would lead to £12bn a year being raised, with the majority going into catching up on the backlog in the NHS created by Covid – increasing hospital capacity and creating space for nine million more appointments, scans and operations.

A portion of the money – £5.4bn over the next three years – will also go towards changes to the social care system, with more promised after that.

A cap will be introduced on care costs from October 2023 of £86,000 over a person’s lifetime.

All people with assets worth less than £20,000 will then have their care fully covered by the state, and those who have between £20,000 and £100,000 in assets will see their care costs subsidised.

National Insurance

Mr Johnson insisted that with the new tax, “everyone will contribute according to their means”, adding: “You can’t fix the Covid backlogs without giving the NHS the money it needs.

“You can’t fix the NHS without fixing social care. You can’t fix social care without removing the fear of losing everything to pay for social care and you can’t fix health and social care without long-term reform.”

But Labour’s Sir Keir said the new tax broke the Conservatives’ pledge at the last election not to raise National Insurance, income tax or VAT.

He also said the rise would target young people, supermarket workers and nurses, rather than those with the “broadest shoulders” who should pay more.

The Labour leader added: “Read my lips – the Tories can never again claim to be the party of low tax.”

Keir Starmer says the Conservatives can “never again claim to be the party of low tax”

The leader of the Liberal Democrats, Sir Ed Davey – who is a carer himself – also said the tax was “unfair”, and that the government’s plan missed out solutions for staffing shortages, care for working age adults and unpaid family carers.

Mr Johnson said no Conservative government wanted to raise taxes – but he defended the move as “the right, reasonable and fair approach” in light of the pandemic, which saw the government spend upwards of £407bn on support.

Later, during a press conference, the prime minister said he didn’t want to raise taxes further but did not promise there would be no further rises before the next election – despite being asked repeatedly to rule it out.

The IFS said that the announced tax increases – combined with those announced in the Budget earlier this year – totalled the highest tax rises in over 40 years.

Meanwhile, the government has also announced it will suspend the so-called “triple lock” on pensions for one year following concerns that a big post-pandemic rise in average earnings would have led to pensions increasing by 8%.

One comment

  1. And pensions they’re to be frozen below wage inflation as the guaranteed Triple Lock becomes the Double Lock. Double Cross more like!

    Poor old pensioners. An easy kicking really. You really do have to tee he at the the mass of pensioners who voted Tory. Poor suckers really.


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