Sunak and Johnson to propose 1% National Insurance hike to fund social care reforms

The policy risks being an ‘intergenerational raid’

National Insurance (NI) contributions look set to rise by 1% to fund long-term care reforms, according to reports.

Boris Johnson is expected to make the plans public soon, in a move that could raise £10bn annually from both employers and employees.

It implies that the employee NI rate on earnings below £967 a week could jump from 12% to 13%.

As things stand, NI contributions are only paid by those below the UK state pension age of 66.

The policy has come under pressure as it is seen as an unfair tax on young people, who feel as though they are already disadvantaged by soaring university fees and house prices.

The tax would initially be allocated to addressing the NHS backlog in the aftermath of the pandemic. The health secretary Said Javid warned that the waiting list could jump from 5.3m to 13m people.

Jeremy Hunt, chair of the health select committee, said there was “a growing realisation that with the Covid backlog we’ll never get the NHS back on its feet without social care reform”.

Hunt added that while there were other options to raise funds, none of them were practicable.

“The attraction of a health and social care levy is it would fund the NHS backlog in the short term and desperately needed improvements in the social care system in the medium-longer term,” Hunt said in a tweet.

Tom Selby, senior analyst at AJ Bell, said the pandemic may be the crisis that finally forces politicians to take meaningful steps to address the UK’s long-term care crisis “after decades of prevarication by successive Governments”.

“However, it would also break a central Conservative manifesto commitment and leave the Government open to accusations of an intergenerational raid, with younger people paying for reforms which immediately benefit older people, most of whom won’t be subject to National Insurance,” Selby added.

“The Government may try to badge this as a ‘social care levy’ separate to National Insurance contributions. This would, on the face of it at least, keep its pledge not to raise NI rates intact – although whether or not voters would see it that way remains to be seen.”