Ministers and MPs slam proposed health and care levy as Boris Johnson set to insist it is vital to save the NHS Boris Johnson could go as far as to hail the levy as a pro-Union move on the basis that it would be a UK-wide measure aimed at supporting the NHS and social care Senior Conservatives were threatening open warfare over Boris Johnson and Rishi Sunak’s planned tax increase on Saturday night, as the Prime Minister prepared to insist it was vital to save the NHS.
Ministers, government aides and backbenchers lined up to denounce a planned National Insurance rise which was privately described by senior figures as “idiotic”, with one Cabinet member declaring the proposal “morally, economically and politically wrong”. MPs warned that the hike would break a personal guarantee issued by the Prime Minister at the 2019 election, and result in younger workers subsidising care for older people. The Telegraph understands that Mr Johnson will seek to justify the increase as necessary to clear the backlog of patients on hospital waiting lists, after official projections suggested the number could reach 13 million.
Mr Johnson, Mr Sunak, the Chancellor, and Sajid Javid, the Health Secretary, are preparing to announce a new three-year funding settlement for the NHS from next April, together with a “top up” worth billions of pounds to finance the health service’s efforts to tackle Covid and the backlog of elective treatment until the deal kicks in.
The new NHS and Social Care Levy, which would amount to an increase of at least 1p on employee and employer National Insurance Contributions (NICs), is expected to be imposed from as soon as April, to coincide with the rise in health service funding. Sources suggested Mr Johnson could go as far as to hail the levy as a pro-Union move on the basis that it would be a UK-wide measure aimed at supporting the NHS and social care. The Westminster Government would be unable to impose an income tax rise on Scotland.
This weekend, Conservative backbenchers were venting their fury about the rise in Tory WhatsApp groups, with a series of MPs preparing to meet to discuss plans to oppose the move when the Commons returns from summer recess. One Government source predicted “either a very big row or a f—ing almighty row” when MPs return to Westminster. On Monday, Mr Sunak will address MPs at a reception hosted by the 1922 Committee of backbenchers, which will now become a rallying point for critics of the move.
On Saturday night, in a particularly extraordinary intervention, a Cabinet minister said: “Putting up National Insurance would be morally, economically and politically wrong. It kicks in at a low level and there are all kinds of exemptions which benefit the rich. If you get all your income from investments and property you don’t pay a penny but if you work your guts out for minimum wage you get clobbered.
“After all that’s happened in the last 18 months they can’t seriously be thinking about a tax raid on supermarket workers and nurses so the children of Surrey homeowners can receive bigger inheritances. It makes a total mockery of the levelling-up agenda and Red Wallers will be up in arms. “That’s before you even get to the fact that a couple of years ago we promised not to do it.”
Steve Baker, the former Brexit minister, said: “Of all the ways to break manifesto tax pledges to fund the NHS and social care, raising NIC must be the worst. In this time of crisis, we need a zero-based review of what the state does and how it is funded.” Writing in The Telegraph, Marcus Fysh, the chairman of the Economic Growth Group of Conservative MPs, stated that he is “alarmed” by the direction of the Government, which appears on course to “take a socialist approach” to the issue.
He stated: “I do not believe it is Conservative to penalise individuals of working age and their employers with higher taxes on their employment when our manifesto promised not to.” Bridget Phillipson, Labour’s shadow chief secretary to the Treasury, said Mr Johnson was on course for a “hat trick” of broken manifesto promises this week, as he prepared to hike NICs, ditch the pensions triple lock, and drop a pledge to reach a consensus with the Opposition over a social care plan.
Separately, Sir John Major, the former prime minister, said: “I don’t think they should use National Insurance Contributions, I think that’s a regressive way of doing it. I would rather do it in a straightforward and honest fashion and put it on taxation.”
Sir Iain Duncan Smith, the former Tory leader, feared that if Mr Johnson pushed ahead with the move the Conservatives would end up presiding over “the biggest tax rises since Clement Attlee”. One senior loyalist said the plan was “idiotic”. Another Tory MP suggested the Chancellor was concerned about Britain becoming a continental-style economy with unsustainable public spending and state intervention. A senior source claimed that negotiations over the proposed NHS funding settlement were still ongoing and “will run very close to the wire”.
Senior figures hope that by placing a ringfenced NHS and Social Care Levy on workers’ payslips, taxpayers will see a direct link between future calls for an increase in health spending, and the impact on their personal finances. But one government figure opposed to the move claimed: “It’s all just going to the same pot… Saying X tax pays for Y spending is just spin.”
Mr Johnson’s decision to link the tax increase directly to a new multi-year NHS funding settlement will be seen as an attempt to avoid a toxic clash with backbenchers over claims that he is breaking a manifesto pledge to fund an as-yet unspecified system of social care. Sir Iain Duncan Smith, the former Tory leader, said: “If we start raising substantial sums of money without a proper solution we end up, if we’re not careful, as a high-tax, high-spend party and the problem not solved.”
A little over a week ago a senior government source said that decisions on NHS spending would “form part of the Spending Review” planned for the autumn. But now this newspaper understands that Mr Johnson is preparing to announce a three-year settlement along with the new levy on Tuesday. Sources claimed negotiations over the size of the deal were “as much with the NHS as it is within Government”, as ministers sought assurances over how the NHS would use the additional billions of pounds to reduce the backlog of operations and treatment.
A government source said: “The NHS needs more money. By the time of the next election there could be 13 million people on waiting lists if we don’t act. “No one should have to face lengthy waits for healthcare. We must do everything we can to properly equip the NHS to make sure everyone gets the treatment they need. This Government will not duck the necessary decisions needed to get the NHS back on its feet.”