After a weekend of torrid speculation, the PM has confirmed government plans to raise National Insurance for working people and businesses to pay for increased ring-fenced funding for the NHS and social care, breaking his party’s promise of no tax rises made at the last election
This is wrong on so many levels. Not only is the amount be raised pathetically inadequate – with NHS bosses telling the Guardian they are braced for an increase of just £5 billion next year, having argued in detail why a minimum £10bn is required to meet the increased costs of Covid and the need to bring down waiting times and reduce waiting lists – but national insurance is the most regressive way to raise tax income.
Rather than raise a combination of capital gains tax, corporation tax, or tax private wealth, financial speculation or tax-dodging corporations, this tax hike hits the poorest.
Tax expert Richard Murphy has pointed out that the government’s own table of rates, allowances and reliefs shows how this tax targets those on lower pay, starting on levels of income below the income tax threshold – but proportionally people with incomes above £50,000 a year pay drastically less
Indeed many of the wealthiest people are exempt from it. NIC is not paid at all on unearned income, whether from interest, dividends, rents, trusts or other sources. Retired people, however well off, and even if they work, do not pay it. And many self-employed people with their own companies can avoid significant NIC liability.
So, this is a tax on those in paid employment, and those least likely to be able to afford a tax increase, including people on very low incomes who are already suffering cuts in Universal Credit and facing increased fuel poverty. Worsening their plight is likely to undermine their health and increase pressure on the NHS.
The new tax has been called a health and social care levy possibly to help make it sound less like a tax, but Johnson will also have been spurred on by public polling. 55% of people backed a rise in national insurance and 51 per cent a rise in income tax.
However, we can now see that the long-promised Johnson plan to “fix the crisis” in social care, involves only “capping” the total costs payable rather than any proposal to deliver the service free at point of use, along the line of the tax-funded NHS. Those with assets less than £20,000 pay nothing towards their costs but those with assets between £20,000-£100-000 will still pay something towards care fees – depending on contributions from their local authority, who will receive a share of the proceeds of the new levy.
Responding to the PM statement in Parliament Sir Keir Starmer said: “Under the Prime Minister’s plans the quality of care received will not improve.
“There is no plan for that, people will still go without the care they need, there is no plan for that.
“Unpaid family carers will still be pushed to breaking point, there is no plan for that.
Sir Ian Duncan Smith was among Tories critics labelling the changes a sham for not reforming the social care system.
Above and beyond the issue of funding the problems of the increasingly dysfunctional, largely privatised social care system have been significantly worsened since Covid and Brexit, with an exodus of staff and increased problems in recruiting to low-paid stressful jobs often at unsocial hours.
A survey for ITV News report on September 2 found 78% of providers who responded said recruiting carers is the hardest it has ever been. Because of the staffing crisis, 95% of providers said they are unable to take on all the new clients in need of their help, while 30% of the 843 providers surveyed said they are handing back some, or all, of their care to local authorities because they can no longer fulfil their contracts. ITV News reported having seen lists of people who are waiting more than three months to have a provider assigned to them.
So while NHS Providers step up the pressure for increased NHS funding to allow hospitals and mental health service to get back on track, and the Health and Care Bill seeks to remove the legal requirement to assess vulnerable patients’ needs prior to discharge, the lack of functional social care is likely to block any more rapid discharge of patients.
Tackling part of the problem, and denying the scale and complexity of the issues that have arisen from a decade of under-funding and rounds of ill-conceived legislation limiting international recruitment, still leaves a health and care system deep in crisis.
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