Johnson to defy Tory MPs and launch £10bn-a-year tax hike to fund social care and NHS

Prime minister Boris Johnson will defy a revolt among Tory MPs and scathing criticism and plough on with a hike to national insurance to generate more than £10bn a year to tackle the swelling backlog of NHS work and fix the UK’s ailing social care system.

Johnson will today announce an at least one percentage point rise to national insurance in a bid to raise money for tackling the growing waiting list of routine operations and treatment and provide resources to shake up the social care regime.

The prime minister and his chancellor, Rishi Sunak, met with Tory MPs yesterday to convince them a national insurance hike is the only viable way to raise funds to clear the NHS backlog and to fix the social care system.

The hike is expected to raise at least £10bn a year, the proceeds of which will be directed to the NHS initially, but will generate income for the social care system in the long term.

The increase is expected to be branded a “social care levy” to make it more digestible among the public. Although the changes will only apply to England, the extra receipts yielded will be distributed across each respective country in the UK.

Johnson is also expected to announce a cap of around £80,000 for individual social care costs. He also announced an additional £5.4bn for the NHS yesterday over the next six months.

The prime minister could also introduce a higher means-tested floor – the value of a person’s assets before the state pays care costs – increasing it to £100,000 from £23.250.

The cap is designed to stop older, typically wealthier, Brits from having to sell their homes to pay for social care. Torsten Bell, director of the Resolution Foundation, said: “The cap stops you losing your house, the floor stops you losing everything.”

National insurance is paid by both employers and employees and is determined by the worker’s salary.

Any percentage point increase would actually count as double, as it would increase both employers’ and employees’ contributions by the same amount.

The plans have faced intense criticism over concerns any national insurance increase will fall disproportionately on younger working Brits, despite this group receiving no short-term benefits from the social care shake up.

However, the Daily Mail reported that working pensioners, unlike ordinary national insurance contributions, would also pay the extra charge.

The Institute of Directors labelled the plans as illogical as they will increase costs on employers and disincentivise employment at a time when the UK economy is still recovering from the damage inflicted on it by the Covid crisis.

Meanwhile, research from AJ Bell shows fewer than one in six Brits support increasing national insurance to fund social care reforms, opting instead to support rises to capital gains and dividend taxes. Over a third of people supported no increase in taxation.

Tom Selby, head of retirement policy at AJ Bell, said: “Prime Minister Boris Johnson and Chancellor Rishi Sunak will be taking a huge gamble if they push ahead with rumoured plans to increase National Insurance rates and scrap the state pension triple-lock to fund social care reforms.”

“Both measures represent a clear breach of the Conservative manifesto and so would undoubtedly prove hugely controversial.”

The Tories promised not to raise national insurance, income tax and VAT in their 2019 election manifesto. They also said they would maintain the state pension triple-lock, which is expected to be scrapped this week.

On budget day in March, Sunak tweeted the Conservatives would not raise the rates of income tax, national insurance or VAT.

After winning the Tory leadership race in 2019, Johnson promised he had a plan to fix social care ready to be implemented.