National Insurance hike will make workers pay for Tory health and care crisis

09 October 2021

By Reginald Banks

The Tories have fired an initial salvo at the working class in the battle over who is to pay for the pandemic.

The new ‘health and social care levy’, which cleared all of its Commons stages in a single day, will raise national insurance rates by 1.25% to their highest level ever in April 2022. This tax increase – billed as a measure intended to rescue the UKs woefully inadequate social care system – is a deeply regressive one, as it hits those who work, and in particular those on the lowest incomes disproportionately, while leaving the profits of corporations and investors untouched. Even worse, it will also fail to fix a health and social care system on the brink of collapse after almost a decade of cuts.

What will it pay for?

The tax measure is a blanket increase on national insurance contributions, NICs, which are paid by all workers. Since the tax is uniform – rather than progressive, like income tax – the increase will hit the lowest paid hardest. Taken together with rising inflation, the cut to Universal Credit and rising unemployment, these measures are likely to push many already struggling over a financial cliff edge.

As the text of the bill shows, this is only a first attack. Further tax rises should be expected – maybe as early as Rishi Sunak’s October budget.

Although the plan is billed as a measure aimed at ending the social care crisis, only £5.4bn of the £36bn to be raised over three years is for care, with the NHS to receive around £25bn and £6bn going to the devolved governments. Initially, the £12bn raised in the first year will go entirely to rescue a collapsing NHS, with the social care system to receive additional funding only in years 2 and 3, 2023-25. As a result, the government will essentially have to cut the NHS budget in 2023 in order to carve out the social care funding.

Despite the spin, this is not really a social care levy in any real sense, but urgently needed additional funding for the NHS after the devastation wrought by the pandemic following 10 years of savage cuts. So much for Johnson’s infamous bus slogan, promising £350 million per week for the NHS following Brexit. If true this would have meant an additional £18.2bn per year for the NHS, with no need for a tax rise at all!

Social care for the rich

In terms of social care, the principle measure is to cap lifetime care payments at £86,000. designed to do is protect those with assets worth over, as will be capped at this figure from October 2023.

Most people in the UK do not have assets worth over £86,000, so will not benefit from this cap, as they will be forced to spend their meagre savings and, if they have one, sell their house just as they do now. Instead it is designed to protect the wealth and inheritances of their middle class and super-rich supporters.

For those that end up relying on state benefits, there is no additional funding provided for local authorities, who are currently the main providers of social care. As pressure on the social care system mounts, due to the country’s aging population, further council tax rises and cuts to local services are inevitable.

Andy Burnham and Jeremy Corbyn have long advocated the integration of the social care system into a properly funded NHS – though Keir Starmer barely mentions this Labour policy. Funding should be raised to recover the cuts made over the past decade and NHS and care workers’ wages raised by at least 15 per cent. To do this will cost money, and therefore require tax rises. We need a steep tax on wealth, capital gains and share dividends, with strict controls introduced to stop tax evasion. The private social care sector should be taken over and placed under the democratic control of its staff and users. All privatisation and outsourcing of the NHS should be reversed, without a penny of compensation paid to the profiteers.

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