Thursday, May 19

Boris Johnson Delays Welfare Reform Plans Until Fall | Social care

Boris Johnson is delaying plans to fix the crumbling social care system until the fall, after negotiations fell through isolating the three key players.

Negotiations have been held in recent days in hopes of reaching an agreement between Johnson, Chancellor Rishi Sunak, and Health Secretary Sajid Javid on how a cap on lifetime costs could be funded.

The talks had focused on a possible 1 penny increase in national insurance contributions, potentially branded as a social assistance tax or premium.

But with all three now in quarantine after Javid tested positive for Covid, it is understood that it has been impossible to reach a final agreement, even though it has been two years since Johnson first claimed to have a plan to fix the system. , “once and for all”.

A government source described the plans as “well advanced” but said it had not been possible for them to be signed in the time available before parliament’s summer recess. “Obviously having all three out hasn’t helped,” the source said.

Critics had already come close to the idea of ​​an increase in national insurance, warning that it would be unfair to younger workers.

Torsten Bell, director of the Resolution Foundation think tank, called it “a form of turkey” to raise the necessary funds. “It is a tax that is disproportionately burdened on the youth and lower-wage workers (compared to a fairer increase in income tax) who have endured the brunt of this recession,” he said.

Like when Gordon Brown used national insurance to fund an increase in NHS funding, it can be seen as more politically acceptable than an income tax increase.

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However, national insurance affects the lowest paid workers, priced at £ 9,568 per year, as opposed to £ 12,570 for income tax. It is not paid by those of state age, unlike income tax. And it doesn’t apply to other forms of income, like dividends.

Ryan Shorthouse, executive director of the conservative think tank Bright Blue, told The Guardian’s Politics Weekly podcast that there was a “compelling case,” for an injection of additional funding into the creaky system, but questioned the wisdom of an increase in national insurance. .

He suggested that a lien on a family’s estate after death would be a fairer way to cover costs. “I think that taxing that way, property, inheritance, that now in the UK the value of that is enormous, would be better and fairer, than actually through national insurance, where many more workers are taxed. youths; it is increasing the tax on labor, which I do not think is a sensible measure, particularly at a time when we are trying to achieve an economic recovery.

Noting that those over 65 no longer pay for national insurance, unlike income tax, he said that “many people who need and benefit from this additional funding for social care will not pay for it.”

“The policy is that younger taxpayers who have also suffered a lot from the pandemic economically, will pay for social care, which many people who are really benefiting from that injection of funds will not pay.”

Former Conservative Treasury Secretary-in-Chief David Gauke, also speaking on Politics Weekly, described national insurance as a “total scam”, because it is not actually mortgaged to pay for the NHS, as originally conceived, although it will likely look like easier to sell politically.

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“In many ways it is like income tax, except that it has a different base, it is collected in a different way and people do not think it is like an income tax, so governments of all colors tend to find it as a politically easier way to raise revenue, “he said.

Gauke added that the government had not yet prepared the ground for a tax increase.

“The problem that all politicians have with this is that until they have faced the realities of welfare and how it is financed, the general public does not know where we are, or how challenging it is, and really how much are they going to pay themselves, so it’s a huge surprise to people. And I’m really not sure the government has done enough about this. “

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