Plan to hike national insurance payments to fund social care attacked as ‘tax on the young’

A plan to hike national insurance payments to finally tackle the social care crisis has been attacked as unfair on younger workers – while older people would escape paying more.

Ministers appear to be backing away from a new tax on all over-40s, including pensioners, in favour of increasing NI, a move which has enjoyed greater public support in the past.

The issue has sparked an intense battle between Boris Johnson and Rishi Sunak, his Chancellor, but the pair are said to be close to an agreement.

But the Resolution Foundation condemned “a terrible way to raise the funds required” and both senior Tory and Labour politicians echoed the criticism.

“Whilst I welcome the government’s focus on fixing social care, this is an unfair way of doing it,” tweeted Andy Burnham, the Greater Manchester mayor and a former Labour health secretary.

“NI is a regressive tax paid by working-age adults. How can it be right to ask a generation already saddled with university fees & high housing costs to pick up the whole tab?”

Gavin Barwell, Theresa May’s former chief of staff, said the government was right to push up taxes to fix social care but “wrong to pick national insurance”.

The tax, which is not paid by anyone receiving the state pension is “regressive”, he said, adding: “Why should older people with good incomes not contribute?”

And Torsten Bell, the Resolution Foundation’s chief executive, said: “It’s a tax disproportionately loaded on to younger and lower-paid workers, compared to a fairer rise in income tax.

“Why we would target a tax rise on the groups who have been hardest hit by the economic impact of this pandemic, while exempting older and wealthy individuals, is completely beyond me.”

Increasing NI by 1 percentage point – for both employers and employees – would raise £10bn a year and would probably be dubbed a new “health and social care levy”.

Initially, it would be used to cut alarming NHS waiting lists for treatment, which are feared could rise from 5.3 million to 13 million patients.

It would then be spent to cap care costs, along the lines of a decade-old proposal to limit costs to £50,000 so families do not end up selling their homes, and plug growing gaps in care treatment.

The plan was due to be announced this week, as Mr Johnson faced the embarrassment of two years since he arrived in No 10 claiming to have a worked-up solution to the care crisis.

But the prime minister’s isolation – and that of Mr Sunak, after the pair were in close contact with the Covid-infected health secretary Sajid Javid – means a likely delay until the autumn.

Paul Johnson, head of the Institute for Fiscal Studies, said: “Funding social care just from national insurance would be very inequitable.

“It would be a continuation of a long-term policy of hitting those of working age while protecting pensioners even for something designed to benefit people well over pension age. It’s a question of fairness.”