Boris Johnson is reportedly considering plans to raise National Insurance payments by one percentage point for employers and employees to raise £10 billion a year to help support the ageing population.
The Prime Minister is yet to get a deal over the line but is understood to be close, and has declined to rule out tax rises to pay for his long-awaited social care reforms.
Downing Street on Tuesday also declined to deny suggestions that a controversial National Insurance rise could form a central part of Mr Johnson’s proposals.
“There’s continued speculation but I’m simply not going to be engaged with that speculation,” the Prime Minister’s official spokesman said in the first in-person briefing for Westminster journalists since before the first lockdown.
It’s been around for a long time this issue, and we really do need to get to grips with it
Paul Scully, business minister
“The process for agreeing our proposals is still ongoing.
“We will set that out before the end of the year.”
The plan is not expected before the autumn, with the Commons set to rise for its summer break following Thursday’s business.
There had been widespread expectation that a plan would be put forward before the summer, but the three main players who would be involved in the decision – the Prime Minister, Chancellor and Health Secretary – are all self-isolating.
Earlier, business minister Paul Scully said he did not recognise reports in the newspapers, but he told Sky News: “We’ll see what happens in terms of when we announce our details on social care.”
He said: “What we do want to happen is to make sure that we can come up with a comprehensive programme to tackle social care. It’s been around for a long time this issue, and we really do need to get to grips with it, and that’s what the Prime Minister and the Health Secretary are really determined to do.”
Mr Johnson said he would soon set out how to respond to the challenge of the cost of social care, two years since he used his first speech as Prime Minister to promise to “fix the crisis in social care once and for all with a clear plan we have prepared”.
Reports have suggested the Prime Minister has concluded more tax will be needed.
But shadow economic secretary Pat McFadden said paying for social care must be fair to all income groups and all ages.
The Labour MP told Sky News: “There’s been a social care problem in the country for many, many years. We know we’ve got to fix it, the Covid pandemic has shown us the problems in the system, and we understand that’s got to be paid for.
“And again, with a tax proposal, which has been briefed to one or two newspapers, the best way to judge it is on two criteria.
“One: does it really fix the problem in social care? And secondly, is it fair to people of all ages, and all income groups?”
It would be a continuation of a long-term policy of hitting those of working age while protecting pensioners even for something designed to benefit people well over pension age. It’s a question of fairness
Paul Johnson, head of the Institute for Fiscal Studies
Paul Johnson, the head of the Institute for Fiscal Studies, told The Times: “Funding social care just from National Insurance would be very inequitable. It would be a continuation of a long-term policy of hitting those of working age while protecting pensioners even for something designed to benefit people well over pension age. It’s a question of fairness.”
At a press conference on Monday, Mr Johnson was asked whether the 2019 Tory election manifesto commitment not to raise income tax or national insurance remained in place.
The Prime Minister sidestepped the question but said the problem of social care had “bedevilled governments for at least three decades”.
The chair of representative body the Independent Care Group, Mike Padgham, cautiously welcomed the progress.
He said: “We have long campaigned for better funding for social care and believe that people would be prepared to pay a little more in taxation or National Insurance, or a combination of both, in return for a properly funded, fair social care system.
“This might not be the perfect solution to everyone, but we have to make a start and refine as we go along, rather than keep talking.”
However, the GMB union said raising National Insurance would hit the lowest paid.
Rachel Harrison, GMB national officer, said: “We can debate the merits of how social care should be funded, but GMB does not back raising regressive National Insurance, which would hit the lowest paid workers.
“Any investment in adult social care must come with ringfenced cash to improve the pay, terms and conditions of workers across social care to reflect the skilled and valued job they do.”