Boris Johnson has delayed plans to fix the crumbling social care system until the autumn, after negotiations foundered with the three key players isolating.
Negotiations had been taking place over recent days in the hope of getting agreement between Johnson, the chancellor, Rishi Sunak, and the health secretary, Sajid Javid, about how a cap on lifetime costs could be funded.
The talks were focused on a potential 1p increase in national insurance contributions, potentially branded as a social care levy or premium.
But with the three now in quarantine after Javid tested positive for Covid, it is understood it has been impossible to reach a final agreement, despite two years having elapsed since Johnson first claimed to have a plan to fix the system, “once and for all”.
A government source described the plans as “well progressed,” but said it had not been possible for them to be signed off in the available time before parliament’s summer recess. “Obviously having the three of them off hasn’t helped,” the source said.
Critics had already rounded on the idea of a national insurance rise, warning that it would be unfair to younger workers.
Torsten Bell, director of the Resolution Foundation thinktank, called it “a turkey of a way” to raise the necessary funds. “It’s a tax disproportionately loaded on to younger people and lower-paid workers (compared to a fairer rise in income tax) who have borne the brunt of this recession," Egli ha detto.
As when Gordon Brown used national insurance to fund an increase in NHS funding, it might be viewed as more politically palatable than an income tax rise.
tuttavia, national insurance affects lower-paid workers – kicking in at £9,568 a year, as opposed to £12,570 for income tax. It is not paid by those over state pension age, unlike income tax. And it is not levied on other forms of income, such as dividends.
Ryan Shorthouse, chief executive of the Conservative thinktank Bright Blue, told the Guardian’s Politics Weekly podcast there was a “compelling case” for an injection of extra funding into the creaking system – but questioned the wisdom of a national insurance increase.
He suggested a levy on a family’s estate after death would be a fairer way of meeting the costs. “I think taxing in that way, from the property, the inheritance, which now in the UK … the value of that is huge, would be better and fairer than actually through national insurance, where you’re taxing a lot of younger workers; you’re increasing the tax on labour, which particularly at the moment when we’re trying to have an economic recovery I don’t think is a sensible move.”
Pointing out that the over-65s no longer pay national insurance, – unlike income tax – he said: “a lot of people who need and benefit from this extra social care funding will not be paying for it”.
“The politics of it is that younger taxpayers who have also suffered quite a lot from the pandemic economically, will be paying for social care, which a lot of people who are actually benefiting from that injection of funding won’t be paying for.”
Former Conservative chief secretary to the Treasury David Gauke, also speaking on Politics Weekly, described national insurance as a “complete con”, because it is not really hypothecated to pay for the NHS, as was originally conceived – though it is likely to be seen as easier to sell politically.
“In many ways it’s just like income tax, except it’s got a different base, it’s collected in a different way, and people don’t think it’s like income tax – so governments of all colours tend to find it a politically easier way to raise revenue," Egli ha detto.
Gauke added that the government had not yet prepared the ground for a tax increase.
“The problem all politicians have got with this is that until you have been confronted with the realities of social care and how it’s funded, the general public don’t know the situation we’re in, and how challenging it is, and actually how much they’re going to pay themselves – and so it comes as a big surprise to people. And I’m really not sure the government has done enough pitch-rolling on this.”