National Insurance rise: Boris Johnson abandons tax hike pledge to fund health and social care overhaul

The Prime Minister announced a 1.25 percentage point increase in National Insurance from April 2022

Boris Johnson has abandoned his pledge not to raise the main rates of tax as he set out plans to pay for reforms to the health and social care system.

In a Commons statement, the Prime Minister announced a 1.25 percentage point increase in National Insurance from April 2022.

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At a glance: 5 key points

  • He said the additional revenue would pay for the biggest catch-up programme in the history of the NHS in England, with £12 billion a year to help deal with the backlog of cases built up during the pandemic.
  • It will also cover the reform of the social care system in England, ending what Downing Street described as “unpredictable and catastrophic” care costs faced by many families.
  • From October 2023, anyone with assets under £20,000 have their care costs fully covered by the state, while those with between £20,000 and £100,000 will be expected to contribute to their costs but will also receive state support.
  • No-one will have to pay more than £86,000 for care costs in their lifetime.
  • Scotland, Wales and Northern Ireland will receive an additional £2.2 billion in additional health and social care spending from the levy.

What’s been 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.”

Boris Johnson

Background

The Cabinet backed Boris Johnson’s plans to reform health and social care funding this morning, even though they include a manifesto commitment-busting tax rise.

The Prime Minister, Chancellor Rishi Sunak and Health Secretary Sajid Javid will hold a press conference this afternoon on their plans to increase National Insurance.

Sir Keir Starmer said the Labour party would oppose the planned rise during the Prime Minister’s statement in the Commons.

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