Words By Jasmine Crowhurst
The British Government is planning a tax hike for around 25 million people to help fund adult social care and the NHS in the UK.
Prime Minister Boris Johnson is set to announce more details about the social care manifesto next week.
The Government’s political move will be in the form of a rise in national insurance that will see around 25 million workers and employers pay extra tax.
The reform plans to combine two aspects, firstly new measures to ease the impact of the social care crisis, and more funding for the NHS to tackle spiralling waiting lists, and clear a backlog built up during the pandemic.
In return, Johnson promises to cap the amount an individual will ever pay in social care costs during their lifetime, between £60,000 to £80,000, and better protect people from having to sell their home to meet care bills.
However, Number 10 and the Treasury are conflicted about how much the tax rise should be, negotiations continue on these specifics, despite months of planning. Downing Street favours a one per cent rise in National Insurance – but the Treasury is pushing to go higher, possibly up to 1.25 per cent.
The major challenge for the Government will be winning approval for the National Insurance rise, both from the public and Tory MPs who are ideologically opposed to tax rises. Successive governments have avoided tackling the challenge of how to meet the growing costs of funding adult social care. Social care and the NHS are hugely emotive issues, perhaps even more prevalent now to the British public considering the past 18 months have seen huge stress on the National health and social services. It is hoped that by explicitly linking the tax rise to more funding for health and social care, it will prove more popular with voters than normal tax hikes.
When he became Prime Minister in July 2019, Mr Johnson promised that he had a “clear plan” for solving the social care crisis, an agenda that was eclipsed by the global pandemic. This latest rise is likely to be seen critically as a breach of the Tory manifesto from the December 2019 election, which ruled out raising the national insurance rate, making even a modest increase likely to be met with backlash.
While there is cross-party agreement for urgent reform of social care to address these problems, there is also much disagreement over how to pay for the overhaul. The opposition Labour party said the move would disproportionately hit low earners, young people, and businesses. There are implications that a tax hike might see young people bear the brunt of the reform, as older generations are not required to pay the tax after retiring.