15 questions for the government on national insurance

This week may see the announcement of a rise in national insurance, as part of the PM’s plan to fix social care. 


It’s fair to say the idea has gone down like a cup of cold sick. Many have pointed out this tax hike on working people would fly in the face of all the PM’s promises, and kills the suggestion that the Tories are the ‘party of low tax’ stone dead. 


Boris and his top team will be out and about explaining the details of the plan. Here’s 15 questions they should be asked about their planned Tory tax rises:



1. What is the money for, the NHS or social care?


Social care costs are not just covered from the NHS England budget, but councils too. Who will this cash be handed over to? Will it mean taxpayers can expect to see a cut in the social care precept, which many already pay on their council tax bills?


2. Will the revenue be legally ring-fenced or do we just have to trust you?



The 0.7 per cent aid budget legally has to be spent on defined causes, set by the OECD. Though it can be legally reduced, it can’t be permanently spent elsewhere. Will a new law protect this money in the same way, or will you be free to spend it however you want? 



3. How can you guarantee taxpayers will see an improvement in the quality of care? 


Money is not delivered to the frontline by government, but by councils and quangos. Blair and Brown pulled the same stunt, and looked on as the cash was gobbled up on things like payroll and cost inflation. Will you be rejecting any NHS pay rises to guarantee this can’t happen again? 



4. What happens when the initial cash comes to an end?


If it is introduced for 2022-23 and hypothecated initially for the NHS and then for care after two years, that means the NHS budget will be reduced for 2024-25. Unless borrowing or taxes are increased. Can you confirm which of these options you favour?



5. If the tax raises more or less than expected, will there be more or less money for social care?  


In a recession unemployment goes up. This means national insurance revenues go down. If this is really a hypothecated tax, that means the government will cut care and NHS budgets in a recession. Can you confirm this is the case?



6. What will you do about the fact the UK has an ageing population? 


Because national insurance is only paid by people of working age, the base for the social care levy will shrink faster than for many other taxes. As the country ages, the proportion of the population liable for the social care levy will therefore reduce as the proportion of the population in care increases. What assessments have been made as to when the social care levy will need to be increased to reflect this demographic change?



7. Why do the employed have to pay more for old age?


Raising employer and employee national insurance, as reported, would fall on PAYE workers and businesses. They are also required to auto-enroll into a pension. Neither of these apply to the self-employed. Why are you targeting employed workers in this way? 



8. How do you justify taxing renters to allow older people to keep their homes?


This tax will hit the young hardest and many may never get to own a home. Those of state pension age won’t have to suffer the burden of increased national insurance and likely avoid having to sell their house to pay for care. How is this fair?



9. What will you do if your plan doesn’t work?


Throwing money at a problem is no guarantee of success. If social care has not shown any measurable improvement, taxpayers will once again feel short changed. What metrics will you use to judge if this rise has paid off?  



10. What alternatives to the cost-capping model have been considered?


Germany and Japan both use systems that put more responsibility on the individual to provide for their social care. Similarly, like pensions, have you considered people auto-enrolling into a social care savings scheme, which people would be free to “top-up” as they see fit. Other systems work well in other countries. 



11. What spending reductions were considered before you concluded that taxes need to be increased instead?


TaxPayers’ Alliance research, launched by the then health secretary, identified that the social care sector could similarly save £5.9 billion annually by improved productivity from accelerated use of technology. Was this even considered? 



12. What do you say to people on low incomes who can’t afford another tax rise?


Someone earning £20,000 a year will pay an extra £130 in national insurance under the plans being reported. That’s enough to buy a week’s worth of shopping for the family or school clothes for the children. It’s also the same as some older, wealthier people get in winter fuel payments. Why is the cost being loaded onto working families? 



13. How do you justify a system which punishes people that have done the right thing? 


Under reported plans, those who have diligently saved and paid taxes all their lives will have to fork out £80,000 for their care. But those who haven’t saved and not worked may not have to pay a single penny. What message does this send?



14. How high will you let taxes go to pay for social care?


Raising national insurance will take the tax burden to a 70 year high, the highest since Clement Attlee. Any further rises, such as raising fuel duty, would take this even higher. How high is too high?   



15. Are the Conservatives still the party of lower taxes? 


When Blair and Brown did this in 2002, Conservative leader Iain Duncan- Smith said: “One thing that we learned from the Chancellor today is that he has already broken one major election promise by putting up national insurance, which is a tax on income...This Government said that they would not raise income taxes at all—they do not like being reminded of that, but it is the truth—but everyone knows that this is a tax on income. The Chancellor has added a penny in the pound to income tax, and he has broken his promise to the British people… Frankly, after this no one will ever believe another word that he says.” Does this still stand? 

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