has been accused of ‘turning his back on low taxes in favour of an NHS-dominated state’ after he launched a £12billion raid to fund a social care overhaul and boost the health service.
The Resolution Foundation think tank said the Prime Minister’s tax bombshell ‘fits well with the reality of a rapidly-ageing’ nation.
But it said the 1.25 percentage point hike on National Insurance is ‘generationally unfair’ as younger workers are disproportionately hit while wealthy landlords are ‘prioritised’ over tenants.
Meanwhile, the Institute for Fiscal Studies warned the NHS could end up ‘permanently swallowing’ the extra cash, leaving social care with nothing.
Boris Johnson has been accused of ‘turning his back on low taxes in favour of an NHS-dominated state’ after he launched a £12billion raid to fund a social care overhaul and boost the health service
The Resolution Foundation think tank said the Prime Minister’s tax bombshell ‘fits well with the reality of a rapidly-ageing’ nation. But it said the 1.25 percentage point hike on National Insurance is ‘generationally unfair’.
Mr Johnson yesterday defended his new Health and Social Care levy as he said the extra funding is needed to help the deal with a treatment backlog caused by the crisis and to put the social care system on a more sustainable footing.
But the National Insurance increase was slammed by critics amid warnings from Tory MPs that breaking their 2019 manifesto pledge not to raise taxes risks a hammering at the ballot box at the next election.
The Resolution Foundation said the changes announced by Mr Johnson yesterday amounted to a ‘mini-Budget’ in which the PM ‘fundamentally redirected the Conservative Party away from low taxes and towards an NHS-dominated state’.
The think tank pointed out that over the last six months the Government has announced £36billion of tax rises – on National Insurance, corporation tax and income tax thresholds.
The extra cash for the NHS means the share of overall day-to-day public service spending on the health service will rise to 40 per cent by 2025, a massive increase from 28 per cent in 2004/05.
The think tank argued the PM’s latest plans ‘risk failing some major tests of fairness’.
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It said the National Insurance increase is ‘generationally unfair’ because while working pensioners will have to pay more, only one in six pensioner households have earnings but two thirds have private pension income which is exempt from the levy.
The think tank said that ‘landlords win’ because rental income is also not targeted by the levy.
The Resolution Foundation also said a new £86,000 cap on care costs ‘will be of most benefit to those in the South of England’.
‘Not only will they see a greater share of their total assets protected by the cap, higher care costs mean they are also more likely to reach the cap and then receive state support,’ it said.
Torsten Bell, chief executive of the Resolution Foundation, said: ‘Yesterday Boris Johnson was able welcome to bloxburg roblox announce what the past three prime ministers have failed to – a plan to better protect people’s assets from the costs that come from England’s broken social care system that is likely to actually happen.
The Institute for Fiscal Studies warned the NHS could end up ‘permanently swallowing’ the extra cash, leaving social care with nothing, because health spending growth is almost always higher than planned
‘But in reality social care played a mere supporting role in what amounted to the setting out of wider shift in the Conservative Party’s approach to policy and politics.
The Prime Minister has turned his back on low taxes in favour of an NHS-dominated state.
‘But while this new strategy fits well with the reality of a rapidly-ageing, and austerity fatigued, 21st century Britain, the PM’s new plan raises some major questions of fairness.
‘The tax rises that will pay for a bigger NHS are generationally unfair, excluding rich retirees while prioritising wealthy landlords over their tenants.
And while the social care cap will prevent people being hit with catastrophic costs, it will benefit Southern households far more than those living in Red Wall seats.’
The £12billion a year extra funding is due to be spent by the NHS for the next three years before being channelled into social care.
But the IFS said health spending growth is almost always higher than planned which could make it difficult to take the money away from the NHS.
It said that ‘the experience of the past 40 years shows that NHS spending plans are almost always topped up’.
‘If history repeats itself, the ‘temporary’ increases in NHS funding announced this week could end up permanently swallowing up the money raised by the tax rise,’ the think tank said.