Social care tax rise: MPs approve Boris Johnson’s controversial £12bn national insurance hike

Boris Johnson’s controversial plan to raise national insurance by 1.25 percentage points to raise £12 billion for the NHS and social care was passed by MPs tonight

Despite widespread opposition to the Health and Social Care Levy, the House voted by 319 to 248 in favour of the increase in national insurance contributions (NICs).

Boris Johnson did see his working majority of 80 cut to 71 in the process, with a number of Tory MPs apparently choosing to abstain while others made clear they were only voting with the greatest reluctance.

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At-a-glance: 5 key points

  • The House voted by 319 to 248 in favour of the 1.25 percentage point increase in NICs, which would raise £36 billion over three years.
  • The Prime Minister’s plan to raise NICs breaches his tax-lock manifesto pledge not to raise NICs, income tax or VAT. However, Mr Johnson said that a "pandemic was in nobody’s manifesto".
  • Social care will receive just £5.3 billion in the first three years of the levy. The rest of the £36 billion will go to the NHS to clear the Covid backlog.
  • There was dismay among MPs that a scheme to place a lifetime cap of £86,000 on social care costs in England would primarily benefit elderly households in the more affluent parts of the South, at the expense of working families elsewhere.
  • In a Commons debate on the issue, former minister Steve Baker said his party needed to "rediscover what it stands for" rather than "every time there is a squeeze on the public finances, coming back for higher taxes".

What was said in the debate?

In the Commons debate, Jake Berry, the leader of the Northern Research Group of Tory MPs, warned that by listing the levy on people’s payslips as a health and social care charge, it would “never go down, it can only go up”.

“No party is ever going to stand at an election and say I’ve got a good idea, vote for me, I’ll cut the NHS tax,” he said.

“It is fundamentally un-Conservative and in the long term it will massively damage the prospects of our party because we will never outbid the Labour Party in the arms race of an NHS tax.”

Former minister Steve Baker said the party was facing a “generational crisis” due to its inability to fund promises dating back more than a century.

“Now the Conservative Party, at some stage in our lifetimes, is going to have to rediscover what it stands for because I have to say at the moment we keep doing things we hate, because we feel we must,” he said.

Background

The health and social care levy will also be extended to those over state pension age and on dividends in an attempt by Chancellor Rishi Sunak to make it fairer.

However, the independent Institute for Fiscal Studies said “this remains a tax which will be overwhelmingly borne by workers”.

The levy will fund a cap of £86,000 on lifetime care costs from October 2023, with government support to kick in for anyone with assets under £100,000.

There are no guarantees of how the cash will be allocated beyond 2025, which has raised concerns that the NHS could continue to take up the cash generated by the levy, potentially causing the Government to raise taxes further.

Resolution Foundation chief executive Torsten Bell said Mr Johnson had “turned his back on low taxes in favour of an NHS-dominated state”.

He added: “The tax rises that will pay for a bigger NHS are generationally unfair, excluding rich retirees while prioritising wealthy landlords over their tenants.

“And while the social care cap will prevent people being hit with catastrophic costs, it will benefit southern households far more than those living in Red Wall seats.”

However, Downing Street insisted that it represented a “progressive” approach to the issue of funding adult social care.

“Diseases like dementia affect families up and down the country,” the Prime Minister’s official spokesman said.

“This is an approach that provides certainty for people up and down the country, it is an approach which is progressive, which sees those who have more pay more.”

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