A tax rise in national insurance could be used for a post-Covid boost for the NHS and to address long-term social care funding, according to reports.
MPs are due to return to Westminster after their summer recess on Monday amid a cabinet split over how to pay for the government’s long-awaited social care reforms.
Cabinet minister Robert Jenrick said the government would announce details of the social care plan “very soon” – but insisted no decision had yet been made on particular tax rises.
“We will work as quickly as possible to get that certainty that people have been looking at for so long,” the justice secretary told Sky News on Friday. “Any reforms will be resilient for the long term. This isn’t just a change for a parliament – this has got be a generational change.”
Any rise in national insurance is expected to face criticism as it is likely to disproportionately hit millions of working-age younger people, many of whom are unable to buy a home, in order to pay for a scheme designed to ensure that non-working elderly people are not forced to sell their homes.
The move would also be a clear breach of the 2019 Conservative election manifesto pledge on tax.
Health Secretary 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.
Senior figures from No 10, the Treasury and the Department of Health and Social Care (DHSC) are expected to meet in crunch talks on Friday, the Guardian reports, with health service leaders concerned that the final figure could be just half the £10bn they are demanding.
One NHS source told the Guardian: “From what we can see the government is preparing to announce that it’s going to increase the NHS’s budget by about £5bn next year. If they do, that’s £5bn less than we’ve told them the service needs and thus they’ll be leaving the service £5bn short.”
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 and the PM looks prepared to break the pledge.
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.”
