Is NIC about to rise to pay for social care?by
A purported leak to The Guardian suggests an NIC hike to pay for social care could be on the cards. Philip Fisher explores the Chancellor’s plans.
One has to wonder whether readers are enjoying their newfound “freedom” or cowering away in self-isolation.
For a couple of hours on Sunday, it looked as if the Prime Minister was going to have his cake and eat it by creating a ruling elite escape route from isolation, possibly not the wisest move given his recent health record.
Instead, entirely predictably, he enjoyed the umpteenth U-turn of his dizzying career.
If authoritative reports in the Guardian are to be believed, then with the assistance of Rishi Sunak, surely Brutus to his Caesar with the knives sharpening up nicely under the guidance of Cassius Cummings, one of many more reversals in the pipeline is very much in our sphere of interest.
Oven-ready social care plans
Readers will recall that at the time of the last election the Prime Minister claimed to have an oven-ready (or should that be half baked?) plan to sort out social care.
Being a Boris Johnson plan, it wasn’t even formulated far enough to be written down on the back of an envelope. Two years later, it appears that he may be embarrassed into actually doing something and dear Brutus will need to raise some funds to pay for it.
One could suggest that this is a little bit of a farce, given that the pandemic is likely to cost around £1 trillion against which a few billion for healthcare or social care is a relative drop in the ocean.
Even so, that is not the way that today’s PR-obsessed politicians think.
Breach of a manifesto promises
The leak suggests that they have spent some time trying to come up with a cunning way to raise some taxes, blame it on social care and, in doing so, breach one of the firmest and most memorable of manifesto promises.
That was an absolute assurance that they would not raise income tax, national insurance contributions or VAT during the tenure of this Parliament.
However, as we know, promises are made to be broken and the Guardian article suggests that the latest plan being tested on the public via the back door is a 1% increase in national insurance contributions.
On the plus side, this would raise significant amounts of funds via what has generally been regarded by past Chancellors of the Exchequer as a really helpful stealth tax.
According to the Guardian, the plan would only be to increase contributions from employees and the self-employed. Quite why this is not extending to employers as well might be open to question, although that could be the result of a loss in translation or transmission of the scheme.
There is also a reasonable possibility that this is a relatively subtle attempt to implement some other proposal that the government believes might seem unpalatable to the general public, but could be seen as a lesser evil.
Already the Resolution Foundation has responded angrily pointing out that NICs generally hit the young very hard, while it goes without saying that pensions are only paid to the old - a classic example of divide and rule or another cock-up waiting to happen?
The supreme irony is that the super-wealthy who live off savings and investments would still happily receive pension payments, gains and investment income without paying a single penny into the Exchequer as a result of the projected change.
Such a plan could happen but at the moment, this writer’s guess is that there will be enough of an uproar to leave it dead in the water.
There is also a question of timing, since in a leak to a different national newspaper, Brutus has floated the idea of postponing his Budget announcement until next year.
As has been noted in this column on numerous occasions, there has not been a full-scale Budget at any point in the past five years.
Surely given the parlous state of the country’s finances, particularly if inflation is here to stay and interest rates begin to rise, Mr Sunak will have to take the bull by the horns at some point in the next few years with a carefully thought-through route out of long-term debt.
Alternatively, Mr Sunak might prefer to wait until he moves into number 10 and allow his successor at the house next door to take the flak.