Boris Johnson imposes special tax to pay for social care overhaul

UK workers, businesses and shareholders will pay more after manifesto U-turn

Britain’s Prime Minister Boris Johnson talks to Kathleen, a resident of Westport Care Home, in Stepney Green, east London. Photo: AP
Beta V.1.0 - Powered by automated translation

UK Prime Minister Boris Johnson has announced a manifesto-busting tax rise to help pay for social care and cut National Health Service backlogs.

He said the additional revenue would pay for the biggest catch-up programme in the history of the NHS in England, with £12 billion ($16.53bn) a year being used to help the struggling heath service.

The UK-wide tax will be focused on funding health and social care in England, but Scotland, Wales and Northern Ireland will also receive an additional £2.2bn each to spend on their services.

On Tuesday, the Prime Minister admitted the proposals would break an election pledge not to raise taxes, but said the pandemic had made social care reform a priority.

Mr Johnson said raised taxes on workers, businesses and shareholders would cut NHS waiting lists, many of which grew when treatment for non-acute conditions was delayed.

He was facing a major rebellion from MPs and senior party leaders over how to pay for the plan but has won Cabinet support for the tax rise.

Mr Johnson announced the system in the House of Commons and outlined a UK-wide 1.25 per cent health and social care levy based on National Insurance contributions.

It means workers, including younger people and the lower paid, will contribute more tax to pay for social care, often a benefit enjoyed by retirees.

National Insurance, a payroll tax, will rise from next year, breaking the Conservative Party’s manifesto pledge not to increase any of the main rates of tax. A levy on dividends will also be raised by 1.25 per cent to ensure high earners pay their share, Mr Johnson said.

“No Conservative government ever wants to raise taxes and I will be honest with the House – yes, I accept that this breaks a manifesto commitment, which is not something I do lightly,” he said.

“But a global pandemic was in no one’s manifesto and I think the people of this country understand that in their bones and they can see the enormous steps this government and the Treasury have taken.

“After all the extraordinary actions that have been taken to protect lives and livelihoods over the last 18 months, this is the right, the reasonable and the fair approach.”

He said it would also cover the reform of the social care system in England, ending what No 10 Downing Street described as “unpredictable and catastrophic” care costs faced by many families.

A backlog of health problems in Britain is the driving force behind the government’s tax rise to provide additional funding to health care. Getty

During a press conference, Mr Johnson said millions would now go to improve the UK's health system which had been pushed to breaking point by Covid-19.

At the start of the outbreak, there were at least 30,000 patients in NHS beds who would have been better treated elsewhere, he said.

He also promised that the levy would be used to recruit thousands of qualified carers and make it a “respected qualification in its own right”.

“We’ll make up the Covid backlogs. We'll fund more nurses and I hope we will remove the anxiety of millions of families up and down the land by taking forward reforms that have been delayed for far too long,” he said.

He refused to rule out future tax rises to help tackle the UK’s budget deficit.

Speaking alongside Mr Johnson, Chancellor Rishi Sunak also said that the tax plans were fair, honest and “not a stealth tax”.

“If we are serious about defending this principle in a post-Covid world we have to be honest about the costs that brings,” Mr Sunak said.

Health Secretary Sajid Javid described the move as an “important” moment for the country and that the pandemic had left everyone “in the same boat”.

In England, thousands of pensioners end up selling their homes – often their most valuable asset – to meet the costs of their social care.

Under the current system, only those with savings and assets worth less than £23,250 do not need to make a contribution.

From October 2023, anyone with assets of less than £20,000 have their care costs fully covered by the state, while those with between £20,000 and £100,000 will be expected to contribute to their costs but will also receive state support.

No one will have to pay more than £86,000 for care costs in their lifetime.

Labour leader Sir Keir Starmer reminded the prime minister that there were two million people on the NHS waiting list before the pandemic and called the tax rise “a sticking plaster over gaping wounds”.

“This is a tax rise that breaks a promise that the prime minister made at the last election ... read my lips, the Tories [Conservatives] can never again claim to be the party of low tax,” he said.

Jacob Rees-Mogg, the Leader of the House of Commons, former chancellor of the exchequer Philip Hammond and former prime minister John Major had all criticised the plan in recent days.

After the announcement, Jake Berry, one of a crop of Conservative politicians representing seats in northern England won from the Labour Party with promises of investment and new jobs, said the proposed plan would help affluent, older voters at the expense of younger, poorer ones.

And William Hague, a former Conservative leader, said breaking an election promise would be a “loss of credibility when making future election commitments, a blurring of the distinction between Tory and Labour philosophies, a recruiting cry for fringe parties on the right, and an impression given to the world that the UK is heading for higher taxes”.

Updated: September 07, 2021, 5:29 PM