Boris Johnson defends UK tax rise as national insurance increase comes into force

From April 6, national insurance contributions will rise by 1.25 per cent

The UK Conservative Party’s 2019 election manifesto had pledged ‘not to raise the rates of income tax, national insurance or VAT’. PA

British Prime Minister Boris Johnson has defended the decision to increase national insurance for millions of workers, saying the rise is “necessary, fair and responsible”, despite it breaking an election promise.

On Wednesday, national insurance contributions will increase by 1.25 percentage points.

From April 2023 onwards, the rate will return to the 2021-2022 level, with a new 1.25 per cent health and social care levy introduced.

The UK government predicts that the tax rise will raise £39 billion ($51bn) over the next three years to help reduce the Covid-induced National Health Service backlog and later reform adult social care for the long-term.

“We must be there for our NHS in the same way that it is there for us," Mr Johnson said.

“Covid led to the longest waiting lists we’ve ever seen, so we will deliver millions more scans, checks and operations in the biggest catch-up programme in the NHS’s history.

“We know this won’t be a quick fix and we know that we can’t fix waiting lists without fixing social care.

“Our reforms will end the cruel lottery of spiralling and unpredictable care costs once and for all, and bring the NHS and social care closer together.

“The levy is the necessary, fair and responsible next step, providing our health and care system with the long-term funding it needs as we recover from the pandemic.”

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The Conservative Party 2019 election manifesto, which helped Mr Johnson to deliver a landslide majority, pledged “not to raise the rates of income tax, national insurance or VAT”.

But senior ministers have said the effect of the coronavirus crisis meant that promise to the electorate could no longer be kept.

The Conservative administration has since increased the tax burden to its highest point in 70 years.

Health Secretary Sajid Javid said the pandemic had placed “unprecedented pressure on the NHS” and increased waiting times.

“This investment will go into tackling those backlogs and will help make sure everyone can get the care and treatment they need,” Mr Javid said.

The Department for Health and Social Care says the number of people waiting for elective care in England has risen from 4.4 million before the pandemic to six million.

The eventual number could reach the 10-million mark, with people who did not come forward for treatment during the lockdowns predicted to look for care in the coming months and years, the department said.

The department said the extra cash from the insurance rise will reduce waiting times, while reforming the way routine services are delivered so the NHS is fit for the future.

“We can’t have business as usual, which is why we are rolling out surgical hubs and community diagnostic centres up and down the country to deliver millions more scans, checks and operations," Mr Javid said.

“This vital funding will ensure the NHS is equipped to not only reduce waiting times but also tackle the big challenges we face, from cancer to heart-disease and dementia.”

Chancellor Rishi Sunak said the government would “not shy away from the difficult decisions” ministers needed to make to “fix our social care system and slash NHS waiting times”.

Mr Sunak said the levy would also be used to cap the cost of care so “people no longer live in fear of losing everything”.

Under the current system, those with assets of more than £23,250 ($30,397) pay their care costs in full.

But under a reformed system from October 2023, anyone with assets under £20,000 will have their care costs fully covered by the state, the department said.

The cost of care will then be capped at £86,000, with the point at which people meet the full cost of their care rising from £23,350 to £100,000, about four times higher than the current system, health officials said.

The government says the levy is progressive, with the highest 15 per cent of earners paying more than half of the revenue.