Today, the Guardian reported that Prime Minister Boris Johnson is facing resistance from at least five Cabinet Ministers and a number of Conservative politicians to his plans to raise National Insurance to fund social care. In recent days, suggestions have emerged that the Prime Minister plans to increase National Insurance by 1p in order to raise around £6bn in revenue a year to be invested in health and care.
Social care in the UK has been in crisis under successive Governments of all political stripes, with a funding model inadequate to support the current and future needs of an ageing population. The pandemic has thrown this into sharp relief, with brutal headlines and media exposés highlighting how coronavirus was allowed into adult social care settings with devastating consequences for residents and care workers. Following the recent Dominic Cummings BBC interview, the revelations that the Prime Minister used language which could be read as dismissing the deaths of over-eighties from COVID-19, his government is under even more pressure to demonstrate that it is getting to grips with the social care crisis.
It’s clear that social care requires far more funding than currently available, so why are Conservative politicians rebelling on this? The answer may be in the electoral implications of raising National Insurance for the Tories. National Insurance contributions are intended to be just that – providing insurance for retirement and for loss of income, through qualifying those who pay it for State Pension, Jobseekers’ Allowance and other income support mechanisms. By definition, therefore, National Insurance is paid by the working-age population, and rises to it to pay for the social care of the current older generation can be interpreted as a tax on jobs.
Think-tank the Resolution Foundation has argued this week that a rise in National Insurance to pay for social care would “unjustifiably place the burden on the young and low earners”. Lower earners would pay more under a National Insurance rise than they would from a corresponding rise in Income Tax, making the policy less progressive than planned, while National Insurance is not levied on unearned income, meaning that the generally wealthier group of people who receive an income as landlords, business owners or investors would not contribute under these proposals.
The Conservatives are highly aware of how this policy will look to younger voters. In the 2019 General Election, the average age at which a voter became more likely to vote Conservative than Labour was 39, a fall of over eight years from previous elections. Voters in their twenties are still most likely to vote Labour in England, but turnout among this cohort remains low. To maintain its majority, the Conservative Party needs to attract more voters in their thirties and forties to replace older stalwart Conservative voters as they pass on. A tax on this group of people, whose working lives have already seen at least two recessions, could well be distinctly unpopular.
So what’s the alternative? Rumours this week suggest that HM Treasury has examined proposals to raise income tax for over-40s, but that this would need to be a significant increase in order to levy the necessary funds. Back in 2010, with social care on the agenda for that election, the Tories slammed Labour’s proposals for a £20,000 tax on estates to pay for social care as a ‘death tax’, utilising this to great effect on the campaign trail. Eleven years on, and facing a series of unpopular choices, the Conservatives may have to think again about their options.