Boris Johnson faces a cabinet uprising over his plans to increase National Insurance to fund his social care reform plans.
The prime minister is considering a 1 percentage point increase in national insurance to pay for a lifetime limit on the amount people contribute to their care.
The new levy would be levied on both employers and employees, generating £10 billion a year.
The NI plan has been criticized because it would affect lower-paid workers more than an income tax hike, and because people of retirement age won’t pay NI even if they’re still working.
It has now become clear that the prime minister is now also facing an uprising from his own cabinet, as ministers have said they will not support the plan.
Prime Minister Boris Johnson faces a cabinet uprising over his plans to increase national insurance to fund his social care reform plans, which would put a lifetime cap on health care bills.
According to the Sunday Times, five ministers have said they oppose the proposed increase, on which no final agreement has yet to be reached.
It was reported that Rishi Sunak and Sajid Javid were about to agree to the plans, but a source told the Sunday Times that Mr Sunak was “uncomfortable” with the idea.
The source added: “Increasing national insurance and giving retirees a raise at the same time smacks of intergenerational unfairness.”
A cabinet minister told the newspaper: ‘I don’t think it’s right, especially after the pandemic, to ask 20- and 30-year-olds to pay more, especially if we also want them to progress up the housing ladder. ‘
Another minister said: ‘Increasing NI in the proposed way would increase intergenerational unfairness and would affect young people in work as people do not pay NI above state pension age. I don’t see why we can’t pay for social care from the existing budget by saving.’
Sources say Chancellor Rishi Sunak is ‘uncomfortable’ with raising NI to pay for health plan
A third said: ‘I don’t think the public will believe the idea that by raising NI, we’re not violating our manifest pledge not to violate taxes. That’s just semantics.’
It comes after Affairs Minister Kwasi Kwarteng publicly rejected the idea of financing social care reforms by increasing national insurance.
In a round of interviews on Thursday, Mr Kwarteng pointed to the pledge in the Tory manifesto that NI, income tax and VAT will not be increased during this Parliament.
“That’s in the manifesto, I don’t see how we could increase national insurance,” he told Sky News.
“But you know, over the last 18 months things have been very flexible, we’ve been through an unprecedented time, we’ve spent massive amounts that we never thought was possible and it’s up to the Chancellor and the Treasury, and the wider government , to establish a budget.’
Last week, company secretary Kwasi Kwarteng publicly rejected the idea of increasing NI raising
Mr. Kwarteng added: “I don’t think that in that particular…
Economists have criticized the idea, calling it the least fair way because it affects the lowest-income earners and doesn’t pay retirees.
Mr Johnson’s efforts to build consensus between parties on social care took a further blow when Sir Keir Starmer called the flow of funding from NICs a “job tax”.
Sir Keir argued during PMQs that charging companies could deter them from hiring additional people.
The Labor leader said: ‘The problem is that no one believes a word the Prime Minister says anymore.
“He promised he had a plan for social care, but he dug into it for two years. He promised not to raise the tax, but now he is planning a job tax.’
Last week, the healthcare ceiling architect had said wealthy retirees should contribute to the cost of reforms.
Sir Andrew Dilnot said England’s social care system is a “mass political failure that has been going on for decades”.
And he said any tax hike to pay for the reforms should include both retirement and under-retirement age.
Sir Andrew told BBC Newsnight that an increase in income tax would be more sensible, as the same applies to pensioners.
However, the move would be controversial because Johnson’s 2019 manifesto promised not to raise income tax, NI or VAT.
Sir Andrew said: ‘I think there is a strong case for ensuring that no matter how the money is raised, both those who have reached retirement age and those who have reached retirement age contribute.
‘About half of social care spending goes to people of working age, not the elderly, and three quarters of us will eventually need social care.
“But I certainly think it’s perfectly reasonable and appropriate that people above retirement age and below retirement age pay for this thing that will benefit many of us.”
Sir Andrew, an economist, came up with the idea in 2011 of a lifetime limit on the amount spent on healthcare.