Social care  

Social care reform voted through despite concerns

Social care reform voted through despite concerns
 Boris Johnson speaking in the House of Commons

MPs have voted in prime minister Boris Johnson's social care levy, despite objections over its impact on young and low income earners.

Some 319 MPs voted for the levy, with 248 voting against it in the House of Commons yesterday, making up a majority of 71.

The policy will place a 1.25 per cent increase on National Insurance contributions alongside a 1.25 per cent dividend tax, in order to pay for a social care cost cap.

Ahead of the vote, which took place on Wednesday evening, some MPs had objected to the logic behind the levy.

Leader of the Scottish National Party Ian Blackford went as far as to accuse the prime minister of “fleecing Scottish families”.

He said: “Yesterday, without consultation, the prime minister announced plans to impose a regressive Tory poll tax on millions of Scottish workers.

“Yet again, the Tories are fleecing Scottish families, hitting low and middle income workers, and penalising the young.

“This is a tax hike on the poor, and on the young, prime minister, and you should be ashamed of yourself.”

Blackford cited Joseph Rowntree Foundation data, which suggested around 2m families with low incomes will now pay an extra £100 a year due to the NI tax rise.

Blackford, MP for Ross, Skye and Lochaber, quoted former Conservative leader Sir Iain Duncan Smith, who has labelled the policy “a sham” to The Telegraph earlier this week, as well as former chancellor Lord Hammond, who said on Times Radio that the then-planned NI hike was a case of “the poor subsidising the rich”.

Blackford concluded: “Isn’t this the case that the Tory tax hikers are once again balancing the books on the backs of the poor and the young?”

Johnson objected to Blackford’s accusation of no consultation. “I much enjoyed my conversations with representatives of the Scottish administration,” the PM told the house.

“One thing they said to me was that they wanted more funding for the NHS.”

The NHS will benefit from some of the extra funds, with the Scottish NHS due to receive £1.1bn.

'Disproportionately' impacting low earners

Experts have highlighted an apparent inequality in the government’s planned tax increases, which they argued focused too heavily on the young working population. 

A report published by the Resolution Foundation pointed to “hidden” and “significant inequalities” embedded within the policy.

It calculated the typical 25-year-old will pay an extra £12,600 over their working lives from the employee part of the tax rise alone, whilst the majority of pensioners will pay nothing.

Mike Stimpson, a partner at Saltus, told FTAdviser: “It does also appear to be disproportionately impactful for lower earners as they will be paying proportionately the same but the effect on their standard of living will be much greater.”

Andrew Tully, technical director at Canada Life, agreed. "It doesn't feel an entirely equitable way of raising funds for social care as people with significant assets and low incomes will pay less,” he said.