October 10, 2024

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The issues with plan to fund social care reform with National Insurance rise

Evening briefing: Today’s essential headlines

Child vaccines ruled out | Covid-19 vaccines for healthy children aged 12 to 15 are not being recommended by the Government’s group of advisers. The Joint Committee on Vaccination and Immunisation has announced it is not recommending mass vaccination of the age group although it is widening the so-far limited rollout to those in this age bracket who have underlying health conditions. Our liveblog has more.

The big story: Problems with plan to fund social care

Another week, another proposal on how to fix the care crisis. This has been going on so long, the crisis is no longer looming – it is already affecting thousands of families who have been forced to sell their homes to fund end-of-life care. The Government’s latest solution? To increase National Insurance contributions by at least one percentage point, potentially even 1.25 points. Before we go any further, this helpful guide to how National Insurance works and how much you should pay will help put all this into context. Boris Johnson is expected to set out his long-awaited proposals for dealing with the social care issue as early as next week, having promised he had a “clear plan” back in July 2019. The Telegraph this morning revealed the current thinking within Downing Street is that the bill will be paid for with a manifesto-breaking rise in National Insurance that will see around 25 million people pay extra tax. Taha Lokhandwala points out three significant issues with the plan.

How can the Government justify breaking an election promise then? Well, a senior Cabinet minister has warned that the British public must acknowledge that reforming social care will come with a cost. Robert Buckland, the Justice Secretary, would not comment on the specifics, but said the Government’s plan would be set out “very soon”. Challenged about the likely breach of an election pledge, he said: “In our manifesto we also talked about nobody having the monopoly of wisdom and any reforms will be resilient for the long term – not just for this parliament, this has got to be generational.” Read more of his reasoning.

Recovery ‘at serious risk’

Any decision to increase National Insurance would not just hit everyone in the pocket. Business leaders have warned ministers it would amount to a £3.5bn “jobs tax”. Craig Beaumont of the Federation of Small Businesses said the proposal, which could raise up to £20bn for the Treasury, “puts the economic recovery at serious risk” as businesses face higher hiring costs. Then there is the social issue that the potential increases would fall disproportionately on younger and poorer workers. Len Shackleton sets out why the plan is intergenerational robbery.

How to beat the tax raid

What can you do about all this, then? As it turns out, savvy taxpayers could soften the blow and still shave thousands from their tax bill. Read on for three simple ways to reduce the amount of National Insurance you pay and beat the impending raid. Of course, National Insurance is charged at different rates on different bands of earnings. Self-employed workers are also treated differently. This table shows how workers with various incomes would be affected by the plan to increase the tax.

Comment and analysis

Around the world: Japan’s Prime Minister to resign

Japan’s Prime Minister Yoshihide Suga has said he will not run for re-election as party leader this month, effectively ending his tenure after just one year. Mr Suga told reporters today that he will not run in the September 29 leadership race for his governing Liberal Democratic Party (LPD), leaving his post after serving only one year. He says he wants to focus on pandemic measures after facing criticism for slow Covid measures. Read who could become Japan’s next Prime Minister.

Friday interview

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