National Insurance contributions will rise by 1.25% to pay for the social care system in England in a bid to end the “unpredictable and catastrophic costs” faced by many.
A social care package, which the prime minister has called “the biggest catch-up programme” in the NHS’s history, will be funded through a new, UK-wide 1.25% ‘health and social care levy’ from April 2022.
The plan was signed off by ministers at a Cabinet meeting earlier after days of fury from Tory backbenchers.
The levy is expected to raise about £12bn which, in the early years, will mainly be used to fund dealing with the NHS backlog.
This includes £2.2 billion a year for Scotland, Wales and Northern Ireland, as tax changes affect the whole of the UK.
Announcing the plans in the Commons, Prime Minister Boris Johnson said the costs of the programme will be split between individuals and businesses and “those who earn more will pay more”.
He added there will be a cap of £86,000 on what people will be asked to pay over their lifetime for care, and said anyone with assets worth less than £20,000 will not have to make any contribution from their savings or housing wealth.
Mr Johnson said he accepts that the measure breaks a Tory manifesto pledge not to hike national insurance, but that it was a necessary move due to COVID financial pressures.
“This is the right the reasonable and the fair approach,” he said
