Rishi Sunak would be foolish to use national insurance alone to pay for social care

Whatever happens, writes John Rentoul, the tax system is likely to become even more complicated

Tuesday 20 July 2021 13:42
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<p>Rishi Sunak, left, and Boris Johnson, looking for the answer</p>

Rishi Sunak, left, and Boris Johnson, looking for the answer

Boris Johnson and Rishi Sunak are close to agreeing to raise national insurance contributions to pay for social care, according to credible reports from the heart of government.

This has provoked a storm of protest from anyone who knows anything about tax policy. Torsten Bell, of the Resolution Foundation, said the government is right to say that social care needs more money and that this means higher taxes, but he also said that “raising national insurance is a terrible way to go about this – it asks younger and lower-paid workers to contribute more than older and wealthier people, compared to a fairer rise in income tax”.

Those are the reasons I would be surprised if the chancellor’s plan, when it sees the light of day, takes this precise form. Pensioners are exempt from national insurance contributions, which are also not levied on employees’ earnings above a certain level or on interest and dividend income. What is more, the Conservative manifesto said: “We promise not to raise the rates of income tax, national insurance or VAT.”

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