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MPs back health and social care levy

MPs back health and social care levy
By Jess Hacker
9 September 2021

MPs have voted in favour of an increase to National Insurance (NI) to fund the NHS and social care, despite criticism from the opposition and within the Tory party.

The vote, which was held last night (8 September), came just over 24 hours after prime minister Boris Johnson first proposed the tax increase.

Despite an internal backlash, MPs backed the Government’s decision 319 votes to 248.

The social care plan, which Mr Johnson called ‘the biggest catch-up programme’ in UK history, will now mean no one in England will have to pay more than £86k for care over their lifetime, however this will not include care home food and accommodation costs.

From April 2022, the health and social care levy will be collected through an increase in NI rates by 1.25%.

However, by 2023, it will become ‘legislatively separate’ as a formal legal surcharge, replacing the NI increase which will return to their previous level. This surcharge will also apply to individuals working above the state pensions age who are not currently liable to pay NI on their earnings. Overall, this is expected to raise around £11.4bn a year.

Rates of dividend tax will also increase by 1.25%, which the Government has estimated will raise around £0.6bn a year. This will total around £12bn per year extra for the NHS.

Mr Johnson promised this money would ‘fix’ social care and the NHS.

Speaking in the House of Commons on Tuesday (7 September), Mr Johnson said: ‘You can’t fix the Covid backlogs without giving the NHS the money it needs.

‘You can’t fix the NHS without fixing social care, you can’t fix social care without removing the fear of losing everything to pay for it, and you can’t fix health and social care without long-term reform. The plan I am setting out today will fix all of these problems together.’

However, the proposition was met with hostility, with many arguing that it will target  young people and those on low incomes: including care workers.

Ahead of the vote, spokesperson for the leader of the Labour party, Sir Keir Starmer, confirmed that Labour would be voting against the changes, on the grounds that ‘they don’t fix social care, they won’t clear the backlog and it’s an unfair tax rise’.

Rachel Reeves, the shadow chancellor, had earlier told the Commons that there was a two-point test for assessing the funding package: ‘First, does it fix social care? Second, is it funded fairly? And the answer to both those questions is no.

‘It is a broken promise, it is unfair, and it is a tax on jobs.’

Meanwhile, Tory MP Jake Berry shared concerns that the proposals are not ‘really a health and social care tax’ but actually ‘a Trojan horse for an NHS tax’.

He added: ‘If it’s an NHS tax which will be hypothecated and listed on your payslip then call it that, don’t call it a health and social care tax because it’s to fund the NHS and when the time comes to move the money from the NHS over to health and social care, what government of any political hue is going to cut 12 billion from the NHS budget?

‘So if you create an NHS tax, you have an NHS tax forever, it will never go down, it can only go up. No party is ever going to stand at an election and say I’ve got a good idea, vote for me, I’ll cut the NHS tax.’

Earlier this week, the Health Foundation called for an extra £17bn to help clear the backlog in the NHS, but said additional investment would be needed to support recovery in primary care.

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