Boris Johnson will defy widespread Conservative anger with a social care rescue plan set to hit workers and businesses with higher national insurance bills, insisting it is the only way to end “catastrophic” care bills.
Despite mounting criticism that the move will punish the young and worse off – and amount to “a jobs tax” on struggling firms – the prime minister will finally unveil the plan he promised more than two years ago.
In the Commons on Tuesday, Mr Johnson will hail the expected national insurance increase of around 1.25 per cent, raising £10bn a year, as evidence that he will not “duck the tough decisions needed” to “fix our broken social care system”.
“We must act now to ensure the health and care system has the long term funding it needs to continue fighting Covid and start tackling the backlogs, and end the injustice of catastrophic costs for social care,” he will say.
The Commons statement and afternoon press conference will come despite Tories from all wings of the party attacking the plan as unfair and likely to backfire.
“Red wall” Conservatives joined with One Nation and Thatcherite MPs to demand a rethink – one echoing Labour in saying higher taxes would be “pointless” without a proper plan to overhaul care.
The head of the Northern Research Group, Jake Berry – the guardian of the “levelling up” pledge – protested that increasing national insurance was a mechanism for wealthy southern property owners “to keep hold of their houses”.
Robert Halfon, the respected One Nation backbencher, announced he would not support the plan unless everyone earning under £40,000 was exempt from the tax increase.
And David Davis, the former cabinet minister, called higher national insurance the “worst possible tax”, because it falls on businesses as well as workers, saying: “It’s damaging on employment and on growth.”
The hike will reportedly be referred to as the “Health and Social Care Levy” and will be “legally ringfenced” to ensure it is used only for the purpose of funding the care sector.
The government is also expected to announce plans to break its manifesto commitment to protect the state pension. It is understood the “triple lock” will be suspended for a year and pensioners will receive an increase of 2.5 per cent rather than the expected 8 per cent.
During a private drinks event on Monday evening hosted by the 1922 Committee of backbench Conservatives, the chancellor Rishi Sunak told MPs: “It’s fair to say that we’ve got a tough autumn ahead.”
“That doesn’t mean there won’t be disagreements, there always are, but we should never lose sight of the central fact that we are a team,” Mr Sunak added ahead of the announcement on social care.
The influential Institute for Fiscal Studies highlighted how pensioners would pay just 1.4 per cent of the higher bills – compared with 13.8 per cent if income tax was increased instead.
However, some critics did praise the prime minister for finally grasping the nettle of social care, a controversy ducked by the last two Tory prime ministers.
The move is intended to deliver Mr Johnson’s pledge to prevent people having to sell their homes to meet catastrophic care bills – but at the cost of breaking his manifesto vow not to hike taxes.
Lifetime care payments would be capped at about £80,000, the lower figure of £50,000 – proposed by Andrew Dilnot in a shelved study, a full decade ago – having been rejected, it appears.
In the long term, the idea is for the cap to stimulate an incentive for insurance companies to begin offering to start offering social care insurance.
Increasing national insurance rather than income tax means companies will pay half the cost through employer contributions – rather than workers having to stump up the full £10bn a year.
The government signalled its intent to press ahead when James Heappey, the armed forces minister, told LBC Radio: “This is going to be hard, there will be no consensus, but we have to try.”
No 10 is buoyed by polling suggesting that voters will support the national insurance increase, backed by 64 per cent in a YouGov poll with only 23 per cent opposed.
The current system has been widely condemned for the unfairness of dementia victims paying for their care, while someone cared for by the NHS receives treatment for free.
Anyone with assets over £23,350 pays in full – with around one in seven people facing bills of more than £100,000.
But Mr Berry revealed the anger of his Northern Research Group when he accused Sajid Javid, the health secretary, of opposing higher national insurance when writing the 2019 Conservative manifesto.
“He was a great believer in not racking up the jobs tax and I just wonder why he’s had a sort of Damascene conversion when becoming the health secretary to seeing the jobs tax as the way forward,” he told the BBC.
He also attacked a policy that would “hit the youngest, particularly hit those in work” in order to “pay for people to have protection in care”.
Both Labour and the Liberal Democrats opposed hiking national insurance to pay for social care, Labour arguing the cart is being put before the horse until there is worked-up plan to rescue rundown services.
Alex Stafford, a red wall Tory elected in Rother Valley, Yorkshire, echoed the criticism, telling Times Radio: “We can’t just raise tax without a plan to actually make fundamental changes and make things better.
Crucially, the increases to national insurance are not expected to fund a better care system for three years – with the £30bn raised first used to tackle rapidly rising NHS waiting lists, caused by the Covid pandemic.
To begin that task, the NHS will be given £5.4bn over the next six months, with £1bn to cut waiting lists and £2.8bn for costs such as better infection control to continue to protect against the virus.
Mr Johnson said: “The NHS is the pride of our United Kingdom, but it has been put under enormous strain by the pandemic. We cannot expect it to recover alone.
“My government will not duck the tough decisions needed to get NHS patients the treatment they need and to fix our broken social care system.”
