Boris Johnson could rethink plans for a national insurance rise to fund an overhaul of social care, after a significant backlash from cabinet ministers and Conservative MPs.
At least five cabinet ministers are said to oppose plans for a 1% increase in national insurance, likely to be branded a health and social care levy, to tackle the NHS Covid backlog and long-term funding for a more generous social care package based on a cost cap.
One cabinet minister said the prime minister was pushing back against what they saw as an attempt to bounce him into the tax rise, against the Tories’ manifesto pledge. Treasury sources denied they had briefed the plans.
“The Treasury was trying to push the PM in a particular direction, and he’s put his foot down,” the cabinet minister said, suggesting there were more options still on the table.
Johnson has delayed plans for a tax rise to fix the crumbling social care system after details of the funding mechanism could not be agreed in time.
The Guardian revealed on Monday that talks were focused on a potential 1p increase in national insurance contributions, which critics said would be unfair to younger workers.
No 10 and the Treasury are also understood to have examined plans for an income tax rise on over-40s, but one government source said there were concerns the rise would need to be substantial in order to meet the costs.
Increasing national insurance by 1p for employees and employers could raise about £10bn a year, once the extra costs to the government through its wage bill are taken into account.
But some ministers fear the increase would be politically risky, because it would be seen as a tax on jobs, and would fall on younger taxpayers priced out of the housing market.
The business secretary, Kwasi Kwarteng, has publicly played down the idea of increasing national insurance, telling Sky News on Thursday it would be incompatible with the Tory manifesto for NI, income tax and VAT to be increased during this parliament.
“That’s what it says in the manifesto, I don’t see how we could increase national insurance,” he told Sky News.
“But you know things have been very flexible over the last 18 months: we’ve lived through an unprecedented time, we’ve been spending huge amounts of money that we never thought was possible and it’s up to the chancellor and the Treasury, and the wider government, to decide a budget.”
The Sunday Times reported a number of other cabinet ministers had pushed back against the plans.
No 10 refused to commit on Monday to any change in policy. “This is an incredibly complex issue, it’s one the previous governments haven’t addressed and the prime minister will bring forward these proposals later this year,” Johnson’s spokesman said.
Whitehall sources said the prime minister would have to take the decision himself over the summer – but the Treasury appears to be pushing for a national insurance increase as the sole workable solution.
Any deal between Johnson, Rishi Sunak and Sajid Javid is expected to be modelled on the decade-old Dilnot report, which proposed a lifetime cap on care costs of £25,000-£50,000, with the balance met by the state, though the cap may be set significantly higher.
The plan would be expected to cost £7bn-£10bn a year, or more if the “floor” – the level of household savings at which the state steps in to meet an individual’s care costs – was raised from the current level of £23,000.