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UK leader Johnson gambles on tax hike to pay for elder care
Britain's Prime Minister Boris Johnson takes part in an activity,during a visit to Westport Care Home in Stepney Green, eastLondon, yesterday, ahead of unveiling his long-awaited plan to fixthe broken social care system. (Photo: AP)
News
September 8, 2021

UK leader Johnson gambles on tax hike to pay for elder care

LONDON, England (AP) — UK Prime Minister Boris Johnson announced yesterday 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. However, 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 (US$50 billion) over three years for social care and the overstretched National Health Service (NHS). The NHS faces a backlog of millions of delayed appointments and procedures after 18 months of novel coronavirus 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 end up paying more than £100,000 (US$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 per cent 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 to not hike personal taxes. The increase, which takes effect in April, will cost someone paid £21,000 (US$27,500) a year about £180 (US$248) more on their annual tax bill. High earners who are paid £67,000 pounds a year (US$92,000) will pay more than triple that.

Taxes on income from stock dividends will also rise 1.25 per cent 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.

William Hague, a former Conservative leader, said breaking an election promise would mean 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 UK 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 (US$118,500) starting in 2023, and everyone with assets of less than £100,000 (US$138,000) will get some State support.

Care organisations largely welcomed the announcement, but an employers’ organisation, 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 centre-left think tank, said the Government’s announcement was “a first step on a long reform journey”.

“Delivering quality and personalised 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 have 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 programmes, did not go far enough.

“He’s putting a sticking plaster on gaping wounds that his party inflicted,” Starmer said.

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