Boris Johnson faces growing revolt over tax hikes to fix social care

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Boris Johnson faces growing revolt over tax hikes to fix social care
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Boris Johnson on Monday faced a growing revolt including from Tory MPs in the North of England over hiking National Insurance to tackle the social care crisis.

Jake Berry, chairman of the Northern Research Group of Conservative MPs, stressed that there was an issue of “inter-generational fairness” as people over the pension age, even if employed, do not pay National Insurance contributions but younger workers do.

He argued that it would be better to increase income tax as it is a broader levy and would mean wealthy pensioners would also contribute towards providing better care for people in old age.

Former Northern Powerhouse minister Mr Berry stressed that Conservatives had previously condemned raising NICs as a “jobs tax”.

Speaking on BBC Radio 4’s Today programme, he added: “It affects people who are in work and it does not really seem to me to be reasonable that people who are going to work, in my own constituency in East Lancashire, probably on lower wages than many other areas of the country, will pay tax to support people to keep hold of their houses in other parts of the country where house prices may be much higher.

“If this as important as we know it is, let’s level with the British public, let’s increase income tax...don’t forget many pensioners will have a higher income, particularly former public sector workers, than people who are actually in work.”

He also suggested that Health and Care Secretary Sajid Javid had previously opposed increasing NICs.

Former Cabinet minister David Davis expects to oppose the mooted NI increase unless it is clearly laid out how it would deal with the NHS backlog and is hypothecated to improve social care, as otherwise he believes it would be the “worst possible tax”.

The Haltemprice and Howden MP told The Standard: “The big issue with National Insurance is it’s damaging on employment and on growth.”

Former Work and Pensions Secretary Esther McVey and Bishop Auckland MP Dehenna Davison have also spoken out against using NI contributions to fund the social care reforms.

Three former Tory Chancellors, Lord Hammond, Lord Clarke and Lord Lamont, have raised concerns about the mooted NI hike and many Cabinet ministers and dozens of Tory MPs are believed to be opposed to it.

However, Armed Forces Minister James Heappey argued the Government can still get its reforms through the Commons, with the prospect of a reshuffle having been floated to keep ministers in line.

He told Sky News: “There is still a majority of 80 which gives the Government the ability to deal with these very hard issues and make no mistake, reforming social care will be a very hard issue to deal with.

“There will be no consensus over any one option that might be put forward by the Chancellor in due course.

“But the Government, and Parliament and the nation needs to deal with this.

“This has been something that has been ducked by too many governments.

“Our social contract right now, that deal that during your working life you pay taxes in order to support those who are in retirement at that point and in turn those who are working whilst you are retired will support you - that social contact is broken at the moment.

“This reform is needed.

“This is an extraordinarily difficult challenge. We have to avoid it becoming a conflict between generations.”

He also emphasised the need to “avoid this lazy characterisation” that all pensioners are wealthy.

Mr Johnson, Chancellor Rishi Sunak and Mr Javid have been thrashing out the details of the social care plan which Mr Heappey confirmed is due to be announced within days.

The Government was expected on Monday to unveil £5.5 billion more for the NHS this year, including to help clear the backlog of appointments ands treatments caused by the coronavirus pandemic.

But Downing Street sources said details of the social care plans were still being worked out on Sunday night and that a day for the announcement was yet to be confirmed.

The Sunday Times reported that lifetime contributions on care will be capped at about £80,000 and National Insurance will be increased by 1.25 per cent to raise between £10 billion and £11 billion per year.

But such an increase in taxation would be a breach of the 2019 Tory manifesto, which contained a personal “guarantee” from Mr Johnson not to raise income tax, VAT or National Insurance.

Former Chancellor Lord Hammond told Times Radio: “I think that if the Government were to go ahead with the proposed increase in National Insurance contributions, breaking a manifesto commitment in order to underwrite the care costs of older people with homes, I think that would provoke a very significant backlash.”

The Tory peer, who was Chancellor between 2016 and 2019, also said he would “vote against” the legislation in the House of Lords if the opportunity arises.

“Economically, politically, expanding the state further in order to protect private assets by asking poor people to subsidise rich people has got to be the wrong thing to do,” he said.

Lord Clarke, the Conservative Chancellor between 1993 and 1997, said there are “problems with national insurance” that should be tackled while raising it.

He told LBC radio it is “too heavily weighted on the lower paid” and there is “no reason” why people who continue to work after the state pension age no longer pay it.”

Conservative former prime minister Sir John Major warned against the move targeting workers and employers by arguing it is “regressive”.

Instead he called for Mr Johnson to take the “straightforward and honest” approach of increasing general taxation.

Meanwhile Sir Keir Starmer has said that Labour would also oppose an increase in National Insurance contributions.

“We do need more investment in the NHS and social care but National Insurance, this way of doing it, simply hits low earners, it hits young people and it hits businesses,” he told the Mirror.

“We don’t agree that is the appropriate way to do it. Do we accept that we need more investment? Yes we do. Do we accept that NI is the right way to do it? No we don’t.”

Ministers have also privately acknowledged their opposition to the proposal, while Commons Leader Jacob Rees-Mogg appeared to show his disapproval in his “weekly wisdom” column in the Sunday Express.

He cited George Bush Sr’s promise not to create new taxes in his successful bid to be US president, before he went on to raise taxes and lose the next election to Bill Clinton.

Mr Rees-Mogg added: “Voters remembered these words after President Bush had forgotten them.”

But resistance from ministers may be damped by speculation about a looming Cabinet reshuffle.

And a second electoral promise may be broken in swift succession, with ministers reportedly preparing to announce that the state pension triple lock will be temporarily replaced with a “double lock”.

This is because distortions to wages during the coronavirus crisis could mean pensioners would get a payment rise of as much as eight per cent, while workers face tighter times.

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