UK leader Johnson gambles on tax hike to pay for elder care
LONDON (AP) — U.K. Prime Minister Boris Johnson announced Tuesday how he plans to keep a key election promise to grapple with the rocketing cost of long-term care for Britain’s growing older population. To do it, he broke another election vow: not to raise taxes.
Johnson told lawmakers in the House of Commons that his Conservative government had made the “difficult but responsible” decision to hike taxes in order to raise 36 billion pounds ($50 billion) over three years for social care and the overstretched National Health Service. The NHS faces a backlog of millions of delayed appointments and procedures after 18 months of pandemic pressures.
Johnson said there would be no more “dither and delay” about reforming social care.
“Governments have ducked this problem for decades,” he said.
That burden of funding care for older, sick and disabled adults in Britain currently falls largely on individuals, who often have to deplete their savings or sell their homes to pay for it. One in seven people ends up paying more than 100,000 pounds ($138,000), according to the government, which calls the cost of elder care “catastrophic and often unpredictable.”
Meanwhile, funding care for the poor who can’t afford it is placing a growing burden on overstretched local authorities.
Johnson announced a 1.25% increase in the National Insurance health payments made by working-age people and their employers, saying the move was “responsible, necessary and fair.”
But it breaks Johnson’s promise in the 2019 election campaign not to hike personal taxes. The increase, which takes effect in April, will cost someone paid 21,000 pounds ($27,500) a year about 180 pounds ($248) more on their annual tax bill. High-earners paid 67,000 pounds a year ($92,000) will pay more than triple that.
Taxes on income from stock dividends will also rise 1.25% to defuse claims that the burden is falling only on working people.
Breaking promises is hardly novel for politicians, but those enshrined in British parties’ election manifestos have long been considered binding on governments. Johnson’s plan has alarmed many Conservative lawmakers — both because it involves breaking a firm election commitment and because the burden would fall primarily on workers.
Jake Berry, one of a crop of Conservative lawmakers representing northern England who won seats from the Labour Party with promises of investment and new jobs, said the proposed plan would help affluent, older voters at the expense of younger, poorer ones.
And William Hague, a former Conservative leader, said breaking an election promise would be a “loss of credibility when making future election commitments, a blurring of the distinction between Tory and Labour philosophies, a recruiting cry for fringe parties on the right, and an impression given to the world that the U.K. is heading for higher taxes.”
Johnson said breaking an election promise was “not something I do lightly. But a global pandemic was in no-one’s manifesto.”
Under the government’s plan, which must be approved by Parliament, the amount people have to pay in their lifetime for social care will be capped at 86,000 pounds ($118,500) starting in 2023, and everyone with assets of less than 100,000 pounds ($138,000) will get some state support.
Care organizations largely welcomed the announcement, but an employers’ organization, the Institute of Directors, said it would add “additional burden to business and the cost of employing staff, just as it looks to recover from the pandemic.”
Some analysts said the new tax would raise money but do little to the expensive, inefficient way care is delivered through a patchwork of largely private companies. The Institute for Public Policy Research, a center-left think tank, said the government announcement was “a first step on a long reform journey.”
“Delivering quality and personalized care remain huge challenges for our care system, as does a fair deal for social care workers,” said senior research fellow Chris Thomas.
Attempts to reform the care system have stymied British governments. Johnson’s predecessor, Theresa May, another Conservative, campaigned in a 2017 election on a plan to cut benefits to retirees and change the way they pay for long-term care. The idea was quickly dubbed a “dementia tax” by opponents and May ended up losing her majority in Parliament.
The changes Johnson has proposed apply only in England. Scotland, Wales and Northern Ireland have separate arrangements for elderly and disabled care.
Keir Starmer, leader of the opposition Labour Party, said the government’s reforms, coming after a decade of Conservative government austerity programs, did not go far enough.
“He’s putting a sticking plaster on gaping wounds that his party inflicted,” Starmer said.