Boris Johnson breaks tax pledge to fund new care for elderly

The Tory government said late on Tuesday the tax hike brings Britain into line with France, Germany and Japan.

Boris Johnson visits a London care home on Tuesday. Picture: Getty Images

Breaking an election pledge not to raise taxes, British Prime Minister Boris Johnson has announced hefty new funding to fix a social care crisis and a pandemic surge in hospital waiting lists.

The Tory government said late on Tuesday the tax hike brings Britain into line with France, Germany and Japan, which have all raised social insurance levies to help care for ageing populations.

Mr Johnson conceded that the 1.25 per cent levy on UK national insurance contributions – paid by workers and their employers – ­violated Conservative party manifesto promises ahead of the ­December 2019 election.

“No Conservative government wants to raise taxes,” he told a news conference after an uproar among many of his backbenchers and reports of a cabinet rift over the plan. At the weekend, senior minister Jacob Rees-Mogg recalled George H.W. Bush’s declaration in 1988: “Read my lips: no new taxes.” Mr Bush broke his pledge and lost the US presidential election four years later.

Arguing that “Covid wasn’t in our manifesto either”, Mr Johnson said “nor could we in good conscience meet the cost of this plan simply by borrowing the money and imposing the burden on future generations”. The corona­virus pandemic has fuelled a record backlog of 5.5 million routine procedures on the National Health Service, rising to 13 million by the end of the year if left unchecked, the government said.

It announced an initial package of £5.4bn ($10.1bn) in extra funding for the NHS to help clear the backlog.

The new national insurance levy will then raise £36bn over the next three years for the NHS, before it is targeted directly to funding elderly care. While national insurance is paid by all UK workers except the low-paid, the government said a 1.25 per cent levy would also be slapped on share dividends to capture the better-off who rely on investments for income. At present, anyone with assets over £23,250 has to pay in full should they need to go into a care home. That has led to many elderly Britons being forced to sell their homes and liquidate their life savings. Under the new plan, from October 2023 anyone with assets of £20,000 to £100,000 will contribute to their care but will also get means-tested support. No one will have to pay more than £86,000 over their lifetime.

Mr Johnson, who entered Downing Street in July 2019 claiming to have a plan ready on social care, said successive governments had ducked the electorally tricky challenge for too long.

“There cannot be any more dither or delay,” he told the Commons. “You can’t fix the NHS without fixing social care.”

The government also announced another manifesto breach in scrapping a guarantee that would have seen retirees get an annual raise to their state pension by 8 per cent next year. With wages frozen for many state employees but labour shortages driving up private-sector salaries, Mr Johnson said the “statistical freak” for pensioners was unjustified.

Opposition parties seized on the latest U-turns by the Johnson government, which has also broken with its electoral pledges by slashing the foreign aid budget.

Employers’ organisation the CBI accepted social care reforms and greater investment were “long overdue” but said businesses already faced a corporation tax hike in 2023.

AFP