GB News: Stephen Dorrell talks about National Insurance for social care
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In his column for the Sunday Express at the weekend, Leader of the House of Commons Jacob Rees-Mogg reminded readers of George Bush’s famous quote: “Read my lips: no new taxes,” pointing out that “voters remembered those words after president Bush had forgotten them”.
Some cabinet ministers are concerned the party is about to make a similar mistake and those who voted for the Conservatives at the last election are unlikely to forget.
Prime Minister Boris Johnson is expected to announce a long-awaited plan to reform social care this week, with reports suggesting that this could amount to a raise in National Insurance by one percent, or even higher next April to help fund social care and the NHS following the COVID-19 pandemic.
A 1p increase to National Insurance would bring in about £11bn, of which employers would pay £6.5billion and employees £4.3billion.
Meanwhile, other Tory supporters have also raised concerns over the plans with former Conservative deputy chairman Lord Ashcroft tweeting the 2019 manifesto pledge with the comment “a reminder”.
Jacob Rees-Mogg fires ‘no new taxes’ warning (Image: Getty)
Jacob Rees-Mogg warns ‘no new taxes’ (Image: Express)
Despite these concerns, Downing Street has not confirmed details of the announcement but a senior government source said ministers “will not duck the tough but necessary decisions needed to get the NHS back on its feet”.
Who will pay the brunt of NI tax hikes?
Those against the proposal to raise National Insurance say it’s unfair on younger workers who will have to take the brunt of the burden.
Shaun Moore, tax and financial planning expert at Quilter, said: “Boris Johnson will be keen to tick social care off his to-do list well before it becomes a contentious issue at the next general election. “But he clearly hasn’t read the room since the plans were last floated and then shelved in July.”
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How are National Insurance payments worked out?
There are different types of National Insurance contributions which depend on peoples’ employment status.
Class 1 type is paid by employees earning more than £184 a week who are under the state pension age and is automatically deducted by their employer.
This comes to between £184 to £967 a week, or between £797 to £4,189 a month for employees.
Class 1A or 1B National Insurance is paid directly by employers on their workers’ expenses or benefits.
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Meanwhile, there have also been reports that pensioners might be asked to contribute as many are more economically active these days than generations before them.
Currently Brits do not have to pay NI contributions when they reach state pension age, unless they are self-employed and pay Class 4 contributions.
Making those who continue to work past the state pension age pay National Insurance could see workers aged 65 and over pay an extra £1,252 a year.
Trade union boss Frances O’Grady has said that it “wasn’t right” to hit young and low-paid workers with a tax increase while “leaving the wealthy untouched”.
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The TUC general secretary instead called for the government to increase capital gains tax – a levy on profits made when selling assets like property or shares.
Proposals to add up to 2p on National Insurance payments as well as ditching the triple lock protection on the state pension have been described as “madness”.
The triple lock is a commitment by the Government to raise the State Pension annually in line with inflation, average earnings, or 2.5percent – whichever is greater.
However, it looks set to be scrapped in another controversial move this week as Parliament returns after its summer break.