Boris Johnson ‘faces a Cabinet revolt’ with more than half of ministers opposing national insurance tax hike to fund social care reforms
Boris Johnson is facing a cabinet revolt over his plans to increase National Insurance to fund his social care reform plans.
The Prime Minister has been considering a 1 percentage point increase in National Insurance to pay for a lifetime cap on the amount people contribute towards their care.
The new levy would be charged on both employers and employees, raising £10billion a year.
The NI plan faced criticism because it would hit lower-paid workers more than an increase in income tax, and because those of pension age do not pay NI even if they still work.
It has now emerged Prime Minister is now also facing a revolt from inside his own cabinet as ministers have said they won’t back the plan.
Prime Minister Boris Johnson is facing a cabinet revolt over his plans to increase National Insurance to fund his social care reform plans which would see a lifetime cap on care bills
According to the Sunday Times, five ministers have said that they oppose the proposed rise which has yet to be finally agreed.
It was reported Rishi Sunak and Sajid Javid were on the verge of agreeing the plans but a source told the Sunday Times Mr Sunak was ‘uncomfortable’ with the idea.
The source added: ‘Raising national insurance and giving pensioners a pay rise at the same time smacks of intergenerational unfairness.’
One cabinet minister told the newspaper: ‘I don’t think it is right, particularly after the pandemic, to be asking 20 and 30-year-olds to pay more, especially when we also want them to get on to the housing ladder.’
Another cabinet minister said: ‘Raising NI in the way proposed would increase intergenerational unfairness and would hit the working young given that people do not pay NI beyond state pension age. I don’t see why we can’t pay for social care out of the existing budget by making savings.’
Sources says Chancellor Rishi Sunak is ‘uncomfortable’ with raising NI to pay for the care plan
A third said: ‘I don’t think the public are going to buy the idea that by raising NI, we are not breaching our manifesto pledge not to breach taxes. That’s simply semantics.’
It comes after Business Secretary Kwasi Kwarteng publicly dismissed the idea of funding social care reforms by hiking national insurance.
In a round of interviews on Thursday Mr Kwarteng pointed to the vow in the Tory manifesto that NI, income tax and VAT will not be increased during this Parliament.
‘That’s what it says in the manifesto, I don’t see how we could increase national insurance,’ he told Sky News.
‘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.’
Last week, business secretary Kwasi Kwarteng publicly dismissed the idea of raising NI
Mr Kwarteng added: ‘I don’t think we’ll put up national insurance in that specific…’
Economists have been scathing about the idea, branding it the least fair way as it hits those on the lowest incomes and pensioners do not pay.
Mr Johnson’s attempts to reach cross-party consensus on social care suffered a further blow as Sir Keir Starmer labelled the NICs funding stream a ‘jobs tax’.
Sir Keir argued at PMQs that charging businesses could deter them from employing extra people.
The Labour leader said: ‘The trouble is that nobody believes a word the Prime Minister says any more.
‘He promised he had a plan for social care, but he has ducked it for two years. He promised not to raise tax, but now he is planning a jobs tax.’
Last week, the architect of the care cap had said wealthy pensioners should contribute towards the costs of reforms.
Sir Andrew Dilnot said England’s social care system is a ‘massive political failure that has gone on for decades’.
And he said any tax rise to pay for the reforms should encompass those past retirement age as well as those below it.
Sir Andrew told BBC Newsnight that a rise in income tax would be more sensible, as that encompassed pensioners.
However, the move would be controversial because Mr Johnson’s 2019 manifesto pledged not to increase income tax, NI or VAT.
Sir Andrew said: ‘I think there’s a strong case to be made for making sure that however the money is raised those over retirement age as well as those under retirement age make a contribution.
‘About half of social care spending is actually on people of working age not on the elderly and three quarters of us will in the end need social care.
‘But I certainly think it’s entirely reasonable and appropriate that people over retirement age as well as under retirement age should pay towards this thing that will benefit many of us.’
Sir Andrew, an economist, came up with the idea of a lifetime cap on the amount spent on care back in 2011.