National insurance hike: Why will poorer taxpayers pay to protect inheritance of the rich?

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The Prime Minister reached an agreement with senior ministers that the funding should come from a rise in National Insurance, and was originally meant to be announced this week. But the planned announcement has been shelved as the Prime Minister, the Chancellor and the Health Secretary are currently in self-isolation.

Mr Johnson is expected to announce an increase to payments of one percent, a penny for each pound.

The hike is a clear break from his 2019 election manifesto, in which the Tories were adamant National Insurance would not rise under a Johnson Government.

It is expected the change will raise £10 billion a year for the Treasury.

The new health and social care tax will initially be used to address the NHS backlog once the coronavirus pandemic has come to a close.

Health Secretary Sajid Javid has raised concerns that the waiting list for treatment could rise from 5.3 million to 13 million.

The fund will also be used to cap care costs for the elderly.

Mr Johnson is understood to favour plans formulated by Sir Andrew Dilnot, a former government health adviser, to limit costs to £50,000 per person so families do not have to sell their homes to pay for care later in life.

What do the changes mean?

There have been a number of critics of the raise, saying it could disproportionately affect low income and flexible workers.

Blick Rothenberg, a tax advisory firm, found that workers earning £70,000 a year would pay an extra £604 in national insurance.

Those who earn £20,000 a year would pay an extra £104.

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Paul Haywood-Schiefer, a manager at Blick Rothenberg, said: “This can be particularly harsh for those doing short-term jobs.

“For instance, university students taking summer or festive period jobs in between university terms can end up paying national insurance on their wages even when they earn less than the threshold £9,568 per annum.”

Tory MP Damian Green said: “Any solution needs to be fair to people in different parts of the country and to people of different generations.

“We should not put the whole burden of paying for social care on the existing working-age population.

“The burden needs to be shared between the generations. Only using national insurance does not allow for that.”

Why should poorer taxpayers stump up to protect inheritances left by richer older people?

There are two elements supporters of the hike will cite when defending a National Insurance rise.

They argue the same issue could be raised about NHS treatment or any other non-means-tested benefit – and many argue care for the elderly should be no different.

Second, as no one can predict what their care needs will be later in life, planning is almost impossible, as well as private insurance being unwilling to offer cover, schemes backed by the state have proven over time to be the only way of mitigating costs.

Are the changes expected?

No. Boris Johnson has also previously been critical of hikes to National Insurance, with the last raise taking place under Gordon Brown’s tenure as Prime Minister.

Conservative billboards and leaflets from the time slammed Gordon Brown’s National Insurance increase, claiming that it would “kill the economic recovery” following the 2008 financial crash.

Boris Johnson also pledged there would be no raises to income tax, National Insurance and VAT in his 2019 election manifesto.

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