City councillor: ‘National Insurance hike will disproportionately affect low paid workers’

A Birmingham health boss has said she is concerned that lower paid workers and young people are going to be ‘disproportionately affected’ after Boris Johnson confirmed national insurance contributions will rise.

The prime minister has set out plans to increase the tax on millions of workers to help social care reform and clear the NHS backlog brought on by the Covid pandemic.

Mr Johnson, speaking to the House of Commons, acknowledged the new health and social care levy breached a Conservative Party commitment in its 2019 general election manifesto - but said that “a global pandemic was in no-one’s manifesto.”

Cllr Paullette Hamilton, Birmingham City Council cabinet member for health and wellbeing, has objected to these plans and said increasing general taxation should have been the better route to raise the funds the government is looking for.

How much will national insurance increase?

Mr Johnson’s plan to raise national insurance by 1.25 percentage points to raise £12 billion for the NHS and social care was passed by MPs on Wednesday night.

The new health and social care levy will be paid by all working adults, including those over the state pension age - unlike other NI contributions.

Will lower paid workers be adversely affected?

Cllr Paulette Hamilton, city cabinet member for health and wellbeing in Birmingham, said: “I’m really concerned that predominantly low paid workers and young people are going to be the ones that are disproportionately affected by this.”

Downing Street said that a typical basic rate taxpayer earning £24,100 would contribute £3.46 a week, while a higher rate taxpayer on £67,100 would pay £7.15 a week.

In addition to the health and social care levy, there will also be a 1.25 percentage point increase in the dividend tax - to ensure those who receive their income from shares also contribute.

No-one will have to pay more than £86,000 for care costs in their lifetime.

Ms Hamilton added: “For someone that’s earning £300,000 a year they will only have pay around a maximum of about £700 which really will not affect them a much as someone who is earning around £21,000.”

“And £86,000 for someone who has a property which costs half a million pounds as well as money in the bank wouldn’t impact them as much.

“I think if this was going to work long term it needed to be done through general taxation where it would affect the right groups of people who can afford to be affected by it.”

Ms Hamilton also expressed concerns that the money won’t be put back into social care equally.

“In my opinion there hasn’t been a key focus on social care. If the Government are truly serious about their Levelling Up agenda - what they’ve offered to social care will not level us up, so how are you going to reform a service that you are not even going to put equally into?”

Is there an easy answer to fixing the care system?

Sutton Coldfield MP Andrew Mitchell has said the rise in National Insurance from April next year will help protect the National Health Service and social care systems after a ‘turbulent time during the pandemic’.

“The rise comes with a commitment that people will no longer pay any more than £86,000 in their personal care costs over their lifetime,” said Mr Mitchell.

“Those with less than £20,000 in assets will have their care fully paid for and there will be help for people owning between £20,000 and £100,000 in assets. There are no easy or straightforward answers to fixing our care system, particularly with a growing elderly population and this decision will help ensure that our health and care systems are put on a more sustainable footing.”