Boris Johnson has refused to rule out further tax rises after announcing a £12 billion-a-year levy to fund health and social care.
Announcing the measures in the Commons, he insisted they were necessary to deal with the backlog in the NHS built up during Covid and to deliver long-overdue reform of the social care system in England.
But at a press conference later in Downing Street, he refused to give a firm commitment that taxes would not go up again – although he said he did not want that to happen.
“If you want me to give that emotional commitment, of course that’s the case,” he said.
The Government’s plan will see the introduction of a new health and social care levy, based on a 1.25 percentage-point increase in National Insurance (NI) contributions – breaking a Tory commitment not to raise NI.
Under the new levy a typical basic-rate taxpayer earning £24,100 would pay £180 more a year, while a higher-rate taxpayer on £67,100 would pay £715.
As well as providing extra funding for the NHS to deal with the backlog built up during the Covid-19 pandemic, the new package of £36 billion over three years will also reform the way adult social care in England is funded.
A cap of £86,000 on lifetime care costs from October 2023 will protect people from the “catastrophic fear of losing everything”, Mr Johnson said.
The Government will fully cover the cost of care for those with assets under £20,000, and contribute to the cost of care for those with assets between £20,000 and £100,000.
Scotland, Wales, and Northern Ireland will receive an extra £2.2 billion a year as a result, around 15% more than they will contribute through the levy, creating what ministers described as a “Union dividend” of £300 million.
Mr Johnson said the reform of the social care system was long overdue, while without the additional funding NHS waiting lists could have risen from a record 5.5 million to 13 million.
“No Conservative government wants to raise taxes. This new levy will break our manifesto commitment but a global pandemic wasn’t in our manifesto either,” he said.
“Everyone knows in their bones that after everything we have spent to protect people through that crisis we cannot now shirk the challenge of putting the NHS back on its feet.”
Paul Johnson, director of the Institute for Fiscal Studies economic think tank, said the new levy came on top of bumper tax rises already announced this year.
“This is a huge year for tax rises – a permanent increase of 1.5% of national income to highest in peacetime,” he said.
Businesses, which will also be hit by the increase in NI, warned the plan would be a “drag anchor” on jobs growth as the economy was pulling out of the pandemic.
Suren Thiru, the head of economics at the British Chambers of Commerce, said:â¯ “This rise will impact the wider economic recovery by landing significant costs on firms when they are already facing a raft of new cost pressures and dampen the entrepreneurial spirit needed to drive the recovery.”
However, opposition among Tory MPs – some of whom were heavily critical of the idea of an NI increase – was more muted.
A number of backbenchers and party grandees have complained it meant that young, low-income workers would in effect be paying so that elderly residents in the affluent south did not have to sell their homes.
However, former health secretary Jeremy Hunt suggested they had been placated by the decision to extend the new levy to working adults of pension age – who do not pay NI – and to increase the dividend tax by 1.25 percentage points.
With MPs due to vote on the new measures on Wednesday, Mr Hunt told the BBC: “I can’t really imagine any backbenchers wanting to turn round to their own constituents and say they tried to vote down extra money for the NHS and care system.”
Over the first three years of the new levy, around £5.3 billion will be spent on social care and the rest will go to the NHS, with more going to social care after that as the cost of the care cap starts to rise.
The Labour leader, Sir Keir Starmer, opposed the NI increase, saying the Government should be taxing wealth, aiming at “those with the broadest shoulders” to pay for an improved social care system.
He said that what Mr Johnson had announced was “a tax rise on young people, supermarket workers and nurses”, adding: “Read my lips: the Tories can never again claim to be the party of low tax.”