'There are fairer ways to fix social care crisis than NI rise'

Prime Minister Boris Johnson leaves 10 Downing Street, London, as Parliament is recalled to discuss

The government has announced an increase to National Insurance to pay for social care. - Credit: PA

Britain’s social care system is in crisis. On that, most people can agree.

In 2019, Boris Johnson said he had a plan to “fix social care once and for all” and that it didn’t involve raising National Insurance. We now know that neither of those statements were true.

Quite apart from his broken promises, Boris Johnson’s plan to raise National Insurance is deeply unfair to people on lower incomes.

Many people think NI is the same as income tax but there are key differences.

The income at which people start paying NI is £3,000 lower than for income tax so it takes a much bigger chunk out of the wages of low earners.

NI is not payable on certain types of income that, generally, only relatively wealthy people receive such as share dividends, interest, property income and capital gains.

In Boris Johnson’s plans, a care worker on the minimum wage will now see their take home pay cut to fund the person they are caring for, who may own a large home and have a generous pension but won’t pay a penny extra.

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A landlord who gets all their income from renting out properties won’t pay any more either, but the young people renting those properties will see their take home pay go down making it less likely that they will ever be able to save to buy their own house in future.

How can anyone in the Conservative Party possibly consider that this is fair?

It is not in dispute that taxes need to go up to sort out social care but there are much fairer ways to do it.

Raising income tax wouldn’t hurt people on low incomes as much and would tax other income such as from rents. Capital gains and share dividends could be taxed at the same level as earned income.

Instead of putting a tax on jobs provided by firms who are struggling after Covid, wouldn’t it be better to tax the profits of businesses who aren’t?

Next week I’ll talk about an even worse problem with Boris Johnson’s plans: despite raking in billions of pounds of extra tax, they aren’t going “fix social care once and for all” and may actually make things worse…
 

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