Johnson set to raise taxation to pay for social care

Prime Minister Boris Johnson will address lawmakers on Tuesday on his plans to fix Britain's social care system, with many in his own party furious that he wants to pay for it by hiking taxes in a clear breach of his election pledges.

After splurging on the Covid-19 pandemic, Johnson is now trying to address Britain's creaking social care system, whose costs are projected to double as the population ages over the next two decades.

Johnson wants to raise the National Insurance (NI) tax paid by around 25 million working people to subsidise care for pensioners, including wealthy retirees, according to media reorts.

The prime minister will chair a cabinet meeting on Tuesday morning and is afterwards expected to address parliament at around 1130 GMT. Johnson, along with Chancellor Rishi Sunak and Health Secretary Sajid Javid will then hold a news conference.

"We must act now to ensure the health and care system has the long-term funding it needs to continue fighting Covid and start tackling the backlogs, and end the injustice of catastrophic costs for social care," Johnson will tell parliament, according to extracts released by his office.

"My government will not duck the tough decisions needed to get NHS patients the treatment they need and to fix our broken social care system."

Although the next national election is not due until 2024, many Conservatives say that raising taxes will hurt their positioning as the party of low taxation.

"A tax rise suggests ministers are increasingly conscious that the country cannot live on fantasy money. That, at least, is to be welcomed," said William Hague, a former Conservative Party leader.

"The reality of reduced take home pay to deal with a problem out of sight of most people will be unwelcome when it bites," Hague said, adding that fringe parties would benefit from the tax rise.

Johnson's office and the Treasury have repeatedly refused to detail financing plans, but media have reported that the prime minister wants to raise NI, paid by working people and employers.

Johnson had been expected to announce a roughly 1 percentage point increase on the rate of NI, which official estimates show would raise around £10 billion a year.

Many Conservative lawmakers worry this will hurt younger, low-income workers and breach his 2019 election guarantee not to raise the tax.

The alternatives to raising national insurance are increasing income tax or imposing a wealth tax of some kind.

Under the current care system, anyone with assets over £23,350 pays for their care in full. This can lead to spiralling costs and the complete liquidation of someone's assets.

Johnson faces more widespread resistance to plans to remove a 20 pounds-per-week increase to Universal Credit, that was introduced at the height of the pandemic. The move would affect 4.4 million households from mid-October.

"If the (government) goes ahead with this cut, it would be the largest overnight benefit reduction that has ever happened," researchers Torsten Bell, Adam Corlett and Daniel Tomlinson said in a report published by the Resolution Foundation think tank on Monday.

"That should give policy makers reason to pause as to whether this is a good idea – politically, economically or morally."