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1.25% National Insurance increase announced

British Prime Minister Boris Johnson has announced a 1.25% increase in National Insurance from April 2022

British Prime Minister Boris Johnson has announced a 1.25% increase in National Insurance from April 2022 to address the funding crisis in the health and social care system.

Boris Johnson has told MPs that the government must help the NHS "recover" from Covid.

The prime minister told the Commons: "We must now help the NHS to recover to be able to provide this much-needed care to our constituents and the people we love. We must provide the funding to do so now.

"We not only have to pay for the operations and treatments that people decided not to have during the pandemic, we need to pay good wages for the 50,000 nurses who have enabled that treatment and who can help us tackle waiting lists that could otherwise expand to 13 million over the next few years."

The prime minister has announced the government will begin the "biggest catch up programme" in the health service's history.

He told MPs: "Today we are beginning the biggest catch up programme in NHS history, capping the Covid backlogs by increasing hospital capacity to 110% and enabling 9 million more appointments, scans and operations.

"As a result, while waiting lists will get worse before they get better, the NHS will aim to be treating around 30% more elective patients by 2024-2025 than before Covid. And we will also fix the long-term problems of health and social care that the party opposite certainly failed to tackle."

Mr Johnson said: "Having spent £407 billion or more to support lives and livelihoods throughout the pandemic from furlough to vaccines, it would be wrong for me to say that we can pay for this recovery without taking the difficult but responsible decisions about how we finance it.

"As a permanent additional investment in health and social care it would be irresponsible to meet the costs from higher borrowing and higher debt. From next April, we will create a new UK-wide 1.25% health and social care levy on earned income hypothecated in law to health and social care with dividend rates increasing by the same amount.

"This will raise almost £36 billion over the next three years, with money from the levy going directly to health and social care across the whole of our UK."

Mr Johnson said: "We will do all this in a way that is right and reasonable and fair."

Boris Johnson said the state should target its help at protecting people against the "catastrophic fear of losing everything to pay for the cost of their care", adding: "That is what this Government will do.

"We are setting a limit on what people can be asked to pay and we will be working with the financial services industry to innovate and help people to insure themselves against expenditure up to that limit.

"Wherever you live, whatever your age, your income or your condition, from October 2023 no-one starting care will pay more than £86,000 over their lifetime and no-one with assets less than £20,000 will have to make any contribution from their savings or housing wealth.

"That's up from £14,000 today.

"Meanwhile, anyone with assets between £20,000 and £100,000 will be eligible for some means-tested support and this new upper capital limit of £100,000 is more than four times the current limit, helping many more people with modest assets."

Boris Johnson accepted his plans broke his 2019 election manifesto pledges but he blamed the Covid-19 pandemic for the change of approach.

The Prime Minister told MPs: "No Conservative government ever wants to raise taxes and I'll be honest with the House, I accept that this breaks a manifesto commitment - which is not something I do lightly.

"But a global pandemic was in no-one's manifesto, Mr Speaker.

"I think the people of this country understand that in their bones and they can see the enormous steps that this Government and the Treasury have taken."

He went on: "This is the right, the reasonable and the fair approach - enabling our amazing NHS to come back strongly from the crisis, tackling the Covid backlogs, funding our nurses, making sure people get the care and treatment they need in the right place at the right time, and ending a chronic and unfair anxiety for millions of people and their families up and down this country."

Labour deputy leader Angela Rayner tweeted: "This is not a plan to fix social care.

"Describing it as such is an insult to everyone who works in social care and everyone who relies on social care."

Keir Starmer has demanded to know if the prime minister's new plan for social care will still lead to people selling their homes to fund care.

In the Commons, the Labour leader said: "Under these proposals, people will still pay substantial costs and I heard what the Prime Minster said, so another direct question for him. Can the prime minister guarantee that under his plan no-one will have to sell their home to fund their care - yes or no?"

Sir Keir added: "Social care is about so much more than this. The blunt and uncomfortable truth is that under the prime minister's plans the quality of care received will not improve - there is no plan for that; People will still go without the care that they need - there is no plan for that; Unpaid family carers will still be pushed to breaking point - there is no plan for that; Working-age adults with disabilities will have no more control under their lives - there is no plan for that; Pay and conditions will not improve for care workers - there is no plan for that."

"Let me spell that out - a poorly-paid care worker will pay more tax for the care that they are providing without a penny more in their pay packet and without a secure contract. The prime minister shakes his head, my sister is a poorly-paid care worker, prime minister, so I know this first-hand."

Keir Starmer has said the prime minister's "pretence" that he is taking the action he is on NHS and social care funding because of the pandemic "is not going to wash".

The Labour leader told the House of Commons that the NHS and social care is facing a "crisis".

He said: "The pandemic has undoubtedly placed the NHS under huge strain, but that is only part of the story. A decade of Conservative neglect weakened the NHS.

"Waiting lists had spiralled up two million before the pandemic, targets were missed on cancer, on A&E, on mental health before the pandemic. The same is true on social care - £8 billion cut despite growing demand before the pandemic, carers on poverty wages without secure contracts before the pandemic."

He added: "An indictment of failure is an accurate description of the situation in our health service and social care before the pandemic. So, the pretence that the prime minister is only here because of the pandemic is not going to wash. He is putting a sticking plaster over gaping wounds which his party inflicted. He made that commitment on social care before the pandemic and he said he would pay for it without raising taxes before the pandemic."

Prime Minister Boris Johnson has said the government's new health and social care levy will share the cost between individuals and businesses.

Explaining the reasoning behind the breach of the election promise, which will see a raise in National Insurance (NI) by about 1.25 percentage points, Mr Johnson told MPs: "Someone will ask why we don't increase income tax or capital gains, instead.

"But income tax is not paid by businesses, so the whole burden would fall on individuals, roughly doubling the amount that the basic taxpayer could expect to pay and the total revenue from capital gains tax amounts to less than £9 billion this year.

"Instead, our new levy will share the cost between individuals and businesses, and everyone will contribute according to their means, including those above their pension age.

"So those who earn more will pay more and because we are also increasing dividends tax-free, we will be asking better of business owners and investors to make a fair contribution

 

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