Boris Johnson has announced a £12 billion tax increase to clear the National Health Service (NHS) waiting list and introduce a new system for funding social care. In a breach of the Conservatives' 2019 manifesto pledge not to raise taxes on income, everyone who works in Britain will see their national insurance contributions rise by 1.25 per cent, with employers also paying an extra 1.25 per cent.
Announcing the plan in the House of Commons, the prime minister blamed the coronavirus pandemic, telling MPs that no Conservative government wanted to increase taxes.
“I accept this breaks a manifesto commitment, which is not something I do lightly. But a global pandemic was in no one’s manifesto,” he said.
“I think the people in this country understand that in their bones and they can see the enormous debts this government, the treasury, has taken on. After all the extraordinary actions that have been taken to protect lives and livelihoods over the last 18 months, this is the right, the reasonable and fair approach.”
The tax increase, which will go to a vote at Westminster on Wednesday, will come into effect next April and the money raised will be "legally ring-fenced" so it can only be used for health and social care. Most of the estimated £12 billion raised each year will go towards increasing hospital capacity and clinical resources to clear the backlog in the NHS caused by the coronavirus lockdowns.
Over the next three years, a smaller portion will go towards changing how social care is funded, with more due to be diverted for that purpose after that. From October 2023, nobody will have to pay more than £86,000 over their lifetime for the cost of their care, although the figure does not cover residential costs. Those with assets below £20,000 will pay nothing towards their care and people with less than £100,000 will have their costs subsidised.
“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 it, and you can’t fix health and social care without long-term reform,” Mr Johnson said.
Burden on youth
Labour leader Keir Starmer said the plan was unfair because it laid the burden on young people and the poorly paid rather than targeting the wealth of the better-off. He accused the prime minister of "putting a sticking plaster over a gaping wound" and told him that many of the problems in the NHS and the social care system were already obvious before the pandemic.
In a separate announcement, work and pensions secretary Therese Coffey said the government would break a second Conservative manifesto pledge by suspending the "triple lock" formula for increasing the state pension. The triple lock means that pensions increase every year by inflation, the average wage increase or 2.5 per cent, whichever is the greater.
But Ms Coffey said that a big rise in wages after the pandemic had “skewed and distorted” the figures, so next year’s pension increase would be the consumer inflation rate or 2.5 per cent.