Tax: TaxPayers' Alliance criticises Government on spending in 2020
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Speaking exclusively to the Daily Express, the Health Secretary insisted the massive tax raid will tackle the hospital waiting lists that have soared following the Covid pandemic and end the crisis in social care at last and not be lavished on bureaucracy. Britons will be able to “live their lives knowing that they will be looked after with the dignity and respect they deserve” thanks to the colossal investment he promised. Mr Javid joined Boris Johnson and Chancellor Rishi Sunak yesterday in a Downing Street show of unity over the £12billion-a year blueprint for hiking taxes to fund “beginning the biggest catch-up programme in the history of the NHS” and the social care overhaul.
And last night, the Health Secretary sought to reassure Daily Express readers about the Tory lurch towards soaring tax and spending.
“We are funding this in a responsible way and I will make every penny of this additional funding count,” Mr Javid said.
He added: “As the Daily Express has rightly said for many years, fixing the broken social care system is one of the biggest and most important challenges this country faces – and it is long overdue.
“Successive governments have ducked this problem for decades, but that is finally changing – we are bringing forward fair, sustainable changes to end the cruel care lottery faced by so many.
“We’re putting an end to unpredictable care costs and investing half a billion pounds to deliver new qualifications, better career routes and much-needed mental health and wellbeing support for staff.
“We’re giving people the confidence to live their lives knowing that they will be looked after with the dignity and respect they deserve and still be able to pass on assets they have worked hard for to the people they love.”
Under the plan, a new dedicated tax – the Health and Social Care Levy – equivalent to an extra 1.25% on National Insurance plus a 1.25% raid on share dividends – will fund a colossal spending splurge.
Most of the cash will be used on raising hospital capacity to 110% to offer an extra nine million operations, scans and other appointments to curb soaring waiting times.
Around £5.4billion will be invested in improving social care under NHS leadership to protect families from having to use all their life savings on fees. An £86,000 cap on adult care fees in England will come into force from October 2023 under the plan.
But the mov will send the tax burden soaring to the highest level for more than 50 years.
An employee earning £30,000 will pay an extra £255 a year under the proposals. Unlike with National Insurance, earners above the state pension age will pay the new levy.
Mr Johnson insisted the massive hike in tax for employees and firms was “right, reasonable and fair” to tackle the huge hospital treatment backlog left by the Covid pandemic and fix the social care system neglected by past Tory and Labour governments for decades.
MPs will vote on the package – costing £12billion a year over the next three years – in the Commons today amid anger among Tory backbenchers at the Prime Minister breaking his general election manifesto pledge not to raise National Insurance, income tax or VAT.
A snap poll last night showed voters split over the broken tax promise. The ComRes survey found 46% of those quizzed felt it was “acceptable to break the manifesto tax pledge while 42% thought the move “unacceptable.”
At a Downing Street news conference last night, the Prime Minister expressed regret over the broken promise but insisted the Government had no choice given the crisis in the NHS left by Covid.
“No Conservative Government wants to raise taxes, but nor could we in good conscience meet the cost of this plan simply by borrowing the money and imposing the burden on future generations.
“So I will be absolutely frank with you: this new levy will break our manifesto commitment, but a global pandemic wasn’t in our manifesto either.
“And everyone knows in their bones that after everything we’ve spent to protect people through that crisis, we cannot now shirk the challenge of putting the NHS back on its feet which requires fixing the problem of social care, and investing the money needed,” he said.
He added: “We’re beginning the biggest catch-up programme in the history of the NHS, increasing hospital capacity by 110 per cent, and enabling nine million more appointments, scans and operations.”
Mr Johnson admitted he had to “level with people” that hospital waiting lists will get worse before they get better with millions coming forward for treatment after staying away from the NHS over the last 18 months.
Around 5.5million are currently waiting for treatment.
But his plan will mean that by 2024/25 the service will treat 30% more patients who need non-emergency treatment such as knee replacements or cancer screening.
“A recovery on this scale cannot be delivered by cheese-paring budgets elsewhere and it would be irresponsible to cover a permanent increase in health and social care spending with higher day-to-day borrowing,” the Prime Minister said.
Turning to his social care overhaul, he added: “We are doing something that, frankly, should have been done a long time ago, and share the risk of these catastrophic care costs, so everyone is relieved of that fear of financial ruin.”
Under the social care plan, nobody in England starting care will pay more than £86,000 over their lifetime from October 2023.
Nobody with assets of less than £20,000 will have to contribute to the cost of their care while those with assets between £20,000 and £100,000 will be eligible for means-tested support.
At the news conference, Chancellor Mr Sunak said: “None of us standing here wants to be in a situation where we are raising taxes.”
He added: “There is no perfect way to raise money. I am not going to pretend that there is.
“We have set out why our approach, this new Health and Social Care Levy, is the best way to do it.”
Mr Johnson faced down a threatened Cabinet rebellion over the tax hikes yesterday.
Just two ministers, Commons Leader Jacob Rees-Mogg and International Trade Secretary Liz Truss, raised misgivings about the tax rises at the first Cabinet meeting of the autumn parliamentary term yesterday.
In the meeting, Chancellor Rishi Sunak argued that the only alternative to tax rises was to allow borrowing to soar to irresponsible levels.
Cabinet ministers unanimously agreed the proposals yesterday.
And reaction from Tory MPs was muted yesterday with no open criticism after the Prime Minister set out the plan in a Commons statement.
Tory MPs are expected to back the package today although some rebels may side with the opposition.
Backbencher Stephen McPartland said on Twitter: “The new Health and Social Care Levy provides no new funding for social care for at least three years. No money for living costs, only personal care costs. Selling your home is just deferred. It is a tax on jobs.
“I need much more detail to even consider supporting it.”
Low tax campaigners raised concerns about the measures yesterday.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Hardworking taxpayers will foot a punishing bill for the prime minister’s social care ploy.
“Despite claiming to share the burden, this hike will hit low-paid workers and struggling employers hardest, laying the groundwork for more demands for cash after the next election.
“The government should’ve settled on a fairer and more sustainable solution for fixing social care than forever ramping up national insurance rates.”
Len Shackleton, of the Institute of Economic Affairs, said: “The Prime Minister’s confirmation that National Insurance is to rise will enable some extra resource to go into social care, though much is likely to be swallowed up by the NHS’s insatiable demand for funds – particularly as Boris Johnson hints at pay increases for nurses.”
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