PM's controversial social care tax hike given green light by Cabinet

6 September 2021, 22:31 | Updated: 7 September 2021, 11:31

Boris Johnson's social care reform plans have been backed by the Cabinet.
Boris Johnson's social care reform plans have been backed by the Cabinet. Picture: Alamy

By Emma Soteriou

Boris Johnson's controversial plans to increase national insurance to cover its reform to the social care system have been given the green light by the Cabinet.

The Cabinet backed the Prime Minister's plans to reform health and social care funding, even though they are expected to involve a manifesto commitment-busting tax rise.

The Prime Minister's official spokesman said Boris Johnson, Chancellor Rishi Sunak and Health Secretary Sajid Javid updated Cabinet ministers on the social care package.

They set out the plan to tackle Covid backlogs in the health system, reform adult social care and "bring the health and social care systems closer together on a long-term sustainable footing".

The spokesman said: "Cabinet agreed the challenges faced by our NHS and care sector are closely linked, and a lack of integration means people are often stuck in the wrong care setting.

"The Prime Minister highlighted that under the current care system, anyone with assets over £23,350 pays for their care in full, which can lead to spiralling costs with around one in seven people now paying over £100,000.

"The Prime Minister said that the changes he will announce today will fix this problem, which is causing chronic and unfair anxiety for millions of people up and down the country."

There could be a rise of 1.25 per cent to raise between £10 billion and £11 billion per year, according to The Sunday Times.

If there is an increase, it will breach a 2019 general election manifesto pledge for the Conservatives, which was to not to raise the rate of income tax, VAT or national insurance.

Vaccines minister Nadhim Zahawi said that for many people it is “back breaking” to pay for their social care, and the current system is “unfair”.

He told Nick Ferrari on LBC we “have to deal with it”.

The £5.4 billion announced for the NHS will deal with the Covid issues and the backlog of those waiting, the minister explained.

He said £2.8 billion of this will cover Covid-19 costs including infection control measures in hospitals, £600 million on day-to-day NHS costs, £478 million will be used for the advanced hospital discharge and the Covid booster programme that will be delivered this autumn, and £1.5 billion will be spent on the elective recovery.

However, he said he suspects the backlog of those waiting for NHS treatment “will get worse before it gets better”.

As well as outlining measures to support the NHS in its recovery from Covid, Mr Johnson is expected to tell MPs that the challenges faced by the health service and the social care system are closely linked.

Read more: PM faces 'significant Tory backlash' over plan to boost social care from tax increase

He said: "We must act now to ensure the health and care system has the long term funding it needs to continue fighting Covid and start tackling the backlogs, and end the injustice of catastrophic costs for social care.

"My government will not duck the tough decisions needed to get NHS patients the treatment they need and to fix our broken social care system."

Read more: National Insurance social care increase: How will it impact you?

On Monday, the Prime Minister's official spokesman said: "We are committed to setting out long-term sustainable reform of the sector and that is what we will do, but beyond that, I am not going to be getting into any more speculation.

"The challenges that face the social care sector are long-standing and have successively not been addressed, and that is something the Prime Minister is committed to doing."

Armed Forces minister James Heappey told LBC: "This is going to be hard, there will be no consensus, but we have to try, because if you can't do it with a majority of 80, when can you?"

Read more: Pensioners should pay National Insurance if still in work, former Tory minister claims

Labour's shadow health secretary Jonathan Ashworth said: "A long-term plan on social care and a rescue plan to address the crisis the NHS has been in for years are both long overdue.

"The Prime Minister must set out how he will bring down waiting lists quickly, support the NHS workforce, fix crumbling hospitals and deliver modern equipment to speed up diagnosis of deadly diseases, and crucially, ensure more people can access the social care they need."

Labour leader Sir Keir Starmer has also signalled his party's opposition to the proposal.

Following a statement in Parliament, the PM - along with Chancellor Rishi Sunak and Health Secretary Sajid Javid - will give a press conference on Tuesday afternoon.

Downing Street said one in seven people now pays more than £100,000 for their care, and said the system can lead to "spiralling costs and the complete liquidation of someone's assets".

Under current arrangements, anyone with assets over £23,350 pays for their care in full, but No 10 said the costs were "catastrophic and often unpredictable".

Ahead of the announcement, No 10 remained tight-lipped on the details.