Working Brits under 66 face a tax hike of almost 1% to fund social care under bombshell plans being considered by Boris Johnson.
The Prime Minister is reported to have agreed a one percentage point rise to National Insurance Contributions (NICs), currently 12% on certain earnings, to finally solve the care crisis.
The Times said the £10bn-a-year measure would at first fund measures to clear the NHS backlog, before then paying for a lifetime care costs cap – meaning care residents would not have to sell their homes later in life.
But the proposal would smash a hole through the Tories’ 2019 manifesto pledge not to raise National Insurance, Income Tax or VAT until at least 2024.
It would come just four years after Chancellor Philip Hammond U-turned over plans to hike self-employed NICs by 2% amid Tory fury.
It will provoke a major backlash among both ‘low-tax’ Tories – and campaigners who question why younger people should entirely fund a service that is mostly for the elderly.
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Paul Johnson of Institute for Fiscal Studies warned it would be a “very inequitable” solution to the crisis.
He told The Times: “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 hiking National Insurance “is a terrible way” to fix the “national disgrace” of social care.
He added: “It asks younger and lower-paid workers to contribute more than older and wealthier people, compared to a fairer rise in income tax.
“Why we would do that having just lived through a pandemic that has increased wealth but hit young low earners hard, is a question to which no-one has a good answer.”
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Most employed workers pay 12% National Insurance contributions on their earnings between £184 and £967 a week, with a rate of 2% on earnings above that.
But these ‘Class 1’ contributions are only paid by people before they reach state pension age – which is currently 66 and rises to 67 later this decade.
Self-employed people continue paying National Insurance after their retirement age, but for no more than a year.
Boris Johnson refused to deny a tax hike last night, telling a No10 press conference: “All I can say is we’ve waited three decades, you’re just going to have to wait a little bit longer. I’m sorry about that but it won’t be too long now, I assure you.”
And Business Minister Paul Scully refused to rule out a National Insurance hike when questioned on multiple newspaper reports.
“That’s not something I recognise,” said the minister, who has no responsibility for social care or the Treasury.
Asked how viewers would feel about a tax hike he replied: “What I think your viewers will want is a solution for social care.”
Boris Johnson was reportedly hoping to unveil a plan this week – with Saturday marking the second anniversary of his false claim that he had a “clear plan prepared” to tackle the care crisis.
But it may have been thrown into chaos by him, the Chancellor and Health Secretary all having to isolate.
A Downing Street source told The Sun: “It’s going to be controversial and you can’t really do much when the three salesmen pitching this to the country are locked up.”