Boris Johnson is looking to raise National Insurance in order to fund long-term reform of social care, but any proposals aren’t expected until the autumn.
According to The Times, National Insurance payments for businesses and employees will rise by 1 percentage point, a penny in the pound, to fund the changes. The move will generate an extra £10bn annually, the report added.
But any tax rise could prove controversial, as under its ‘triple tax lock’ manifesto, the government has pledged not to raise income tax, VAT or National Insurance.
And pensions and investments firm Aegon said that while applying the increase in National Insurance to both employees and employers would spread the costs widely, the different treatment of the self-employed would raise questions around fairness.
More significantly, individuals currently don’t pay National Insurance on earnings after state pension age, and this would look hard to justify on intergenerational fairness grounds.
Steven Cameron, Pensions Director at Aegon said: “The older people are, the sooner they may benefit personally from the new deal, so there is an argument for levying increases initially only on those above a certain age. Governments of nations within the UK have devolved powers to make their own social care arrangements and to set income tax rates and bands, which also need factored in, adding another layer of complexity. The different approach to social care in Scotland, for example, would raise questions around the fairness of a UK wide hike in National Insurance.”
The Independent reported last week that the Prime Minister is expected to make a major announcement on social care reform this week, but proposals are now not expected until the autumn.
Boris Johnson told a news conference on Monday that the issue of what to do with social care had “bedevilled governments for at least three decades”.
“All I can say is we’ve waited three decades, you’re just going to have to wait a little bit longer,” he said. “I’m sorry about that but it won’t be too long now, I assure you.”
Commenting on the delay, UNISON general secretary Christina McAnea said: “The government has raised hopes around reform only to dash them yet again.
“The longer ministers stall, the more desperate the state of social care becomes. A properly funded plan is needed now to address poverty pay and rising job vacancies.
“Ministers have to deliver on a blueprint for a national care service that puts people and high standards of care before profit. Care workers must also be fairly rewarded for their skill and dedication.”
Edel Harris, chief executive of the learning disability charity Mencap, said: “The delay is an enormous blow for the care workers who work tirelessly day in and day out to provide vital support, and who had hoped that Boris Johnson would keep his word and publish the long awaited and much needed reform.
“It has been two years since the Prime Minister promised to fix social care “once and for all”. Every month where reform is delayed is another month of going without for people with a learning disability and their family carers – they simply shouldn’t have to wait a moment longer.”
A Department of Health and Social Care spokesperson said: “We are committed to the sustainable improvement of the adult social care system and, as set out in the Queen’s Speech, we will bring forward proposals later this year to ensure every person receives the care they need, provided with the dignity they deserve.
“We are working closely with local and national partners to ensure our approach to reform is informed by diverse perspectives, including from people with lived experience of the care sector.”