A tax rise in the form of a hike in national insurance is on the cards amid a cabinet split over how to pay for the government’s long-awaited social care reforms, according to reports.
Sajid Javid has pushed for a two percent increase, saying the £10 billion raised from a mooted one percent rise is not enough, according to The Times.
Meanwhile, the Treasury is seeking a 1.25 percent increase that would affect 25 million people according to the Daily Telegraph, which said an announcement could come as soon as next week.
Any rise in national insurance is expected to face criticism as it is likely to disproportionately hit millions of younger people — and would be a clear breach of the 2019 Conservative election manifesto pledge on tax.
Boris Johnson has faced increasing pressure to offer details on his plan for social care reform, which he said was ready when speaking on the steps of Downing Street in 2019.
At the 2019 election, the Conservatives pledged in their manifesto not to raise the rate of income tax, VAT or national insurance.
But the idea of increasing national insurance was floated earlier this year.
When asked if there could be no national insurance hike, Business Secretary Kwasi Kwarteng told Sky News in July: “That’s what it says in the manifesto, I don’t see how we could increase national insurance.
“But you know things have been very flexible over the last 18 months, we’ve lived through an unprecedented time, we’ve been spending huge amounts of money that we never thought was possible and it’s up to the Chancellor and the Treasury, and the wider Government, to decide a budget.”
Mr Johnson, Chancellor Rishi Sunak and Health Secretary Sajid Javid are the three main players involved in the decision, it is reported.
