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National
Kate Plummer

Boris Johnson to fund social care by abandoning manifesto pledge on tax hikes – here’s what it’s all about

Boris Johnson

(Picture: Parliamentlive.tv)

Boris Johnson‘s controversial social care funding plans have been approved by MPs.

The Commons voted last night by 319 to 248 in favour of the UK-wide 1.25 percentage point increase on National Insurance contributions, despite five Tory backbenchers voting against the measure and another 37 opting not to vote at all.

Speaking in the Commons earlier this week, the Prime Minister announced the move, as well as a 1.25 per cent increase in the dividend tax for those who receive income from owning shares. The latter tax is expected to raise £600m.

He said: “No Conservative government ever wants to raise taxes and I will be honest with the House – yes, 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 and I think the people of this country understands that in their bones and they can see the enormous steps this Government and the Treasury have taken.

“After all the extraordinary actions that have been taken to protect lives and livelihoods over the last 18 months, this is the right, the reasonable and the fair approach.”

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.

The National Insurance tax increase is set to come into effect from April 2022 and will be paid by all working adults, including those over the state pension age – unlike other National Insurance contributions.

Downing Street said that a typical basic rate taxpayer earning £24,100 would contribute £3.46 a week, while a higher rate taxpayer on £67,100 would pay £7.15 a week.

Meanwhile, according to Treasury modelling, in 2022-23, more than a third of the overall tax increases and over half the increase in dividend tax rates will come from the top 10 per cent of households, with the majority coming from the top 20 per cent of households.

The Government said the progressive nature of the levy meant that 6.2 million people earning less than a threshold of £9,568 in 2021-22 will not pay the levy.

Meanwhile, 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..

Responding to the announcement in the commons, Labour leader Keir Starmer said that the Conservatives could no longer claim they were “the party of low tax”.

He added that the tax rise “places another burden on business just as they are trying to get back on their feet” and would impact young people and workers disproportionately.

“We do have to ask those with the broadest shoulders to pay more,” he said.

But ministers turned on Labour for voting against a measure which will deliver extra funding for the NHS.

The leader of the Liberal Democrats, Sir Ed Davey also said the tax was “unfair”, and said the government’s plan missed out solutions for staffing shortages, care for working age adults and unpaid family carers.

Meanwhile, the CBI said the move “amounts to a tax on jobs which could derail the UK’s economic recovery”.

Richard Kramer, Chief Executive at disability charity Sense, said the charity was “disappointed” by the policy. He added:

“We don’t have confidence that this is the long-term, sustainable and sufficient funding plan that was promised. Will the money really find its way back into social care after 2025?  We need a commitment from Government that this money will be ring-fenced, or we will never find our way out of this crisis.

“We must ensure the care needs of older and disabled people are addressed, and the cash doesn’t just end up filling other gaps within the wider health care system.

“This must be the first step in ensuring disabled people and those in vulnerable situations, many of whom have had their services cut over the last 18-months, are no longer forgotten and receive the right care and support.”

Other public figures, including opposition MPs and journalists, slammed the government’s decision, with many pointing out that Brexit was meant to fund the NHS – as per Johnson’s infamous promise on the side of a bus:

As did other people on social media:

The five rebels who voted against the measures included former cabinet ministers Sir John Redwood and Esther McVey along with Sir Christopher Chope, Philip Davies and Neil Hudson.

At least another five – Jake Berry, Steve Baker, Dehenna Davison, Richard Drax and Sir Roger Gale – indicated that they were deliberately abstaining.

Others, however, thought Johnson had no other choice given the pressures of the pandemic - though they seemed to hold a minority view:

Former chancellor George Osborne said:

Chris Skidmore MP added:

And Lucy Allan said:

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