MPs will vote on Boris Johnson’s plan to hike National Insurance to rescue the NHS and social care just 24 hours after the proposals were revealed, in a bid to crush Tory opposition.
As expected, payments will rise by 1.25 per cent from next April, to pump £12bn a year into services – breaking a Tory manifesto pledge and, critics say, punishing the young and lower-paid.
To counter that charge, working pensioners will also pay what will be called a new “health and social care levy” – which will be listed separately on pay slips, from April 2023.
And business owners and investors will also pay a new dividend tax of 1.25 per cent, after criticism that only workers and companies paying them are being hit.
But, although the plan is billed as one to end the social care crisis, only about £2.6bn a year will go into care, with the vast majority to try to prevent NHS waiting lists hitting a feared 13 million patients.
Lifetime care payments will be capped at £86,000 from October 2023, a much higher figure than the £35,000 proposed by Sir Andrew Dilnot in a shelved study, a full decade ago.
No-one with assets below £20,000 will pay any social care costs – but, although a “floor” of £100,000 for escaping bills was expected, people with assets up to that amount will contribute.
In the Commons, Mr Johnson pointed to the unforeseeable impact of the Covid pandemic on waiting lists as the reason for having to break his vow not to hike taxes.
“We must now help the NHS to recover, to be able to provide this much-needed care,” he told MPs.
And, pointing to the dividend tax as proof of the plan’s fairness, the prime minister said: “We will be asking better off business owners and investors to make a fair contribution too.”
Just moments after the statement, Jacob Rees-Mogg, the Commons leader, said MPs would be asked to vote on the proposals on Wednesday – authorising the creation of a health and social care levy.
But Keir Starmer ripped into the broken manifesto pledge, saying: “Read my lips: the Tories can never again claim to be the party of low tax.”
And the Labour leader attacked the use of National Insurance to find the money, branding the new levy “a tax rise on the young, supermarket workers and nurses”.
He challenged Mr Johnson to guarantee that the NHS waiting lists backlog would be wiped out by the next election, expected in 2024 – a guarantee the prime minister refused to give.
The Institute for Fiscal Studies pointed out the £12bn-a-year tax increase was on top of £25bn of tax hikes already in the pipeline – making the overall rise of 1.5 per cent of national income the “highest in peacetime”.
Mr Johnson conceded the broken pledge, telling MPs: “I accept this breaks a manifesto commitment – which is not something I do lightly. But a global pandemic was in no-one’s manifesto.”
Strikingly, the statement focused first on rescuing the NHS – not on social care – with the amount to be delivered quickly for better care services unclear.
The £5.4bn for care, over the two years between 2023 and 2025, is to fund the new cap and enable wealthy homeowners to pass on their properties to their children.
However, the coupling of better funding for the NHS and care makes it much harder for Tory opponents to oppose the package, in a vote set to be held within days to prevent unrest growing.
Before the announcement, Red Wall’ Conservatives had joined with One Nation and Thatcherite MPs to demand a rethink.
