Families could be hit with higher council tax bills because of the national insurance rise to fund the NHS and social care, a Whitehall chief admitted yesterday.
Around £2billion of the £14billion to be raised by the 1.25 percentage point tax rise, aiming to relieve pressure on NHS waiting lists caused by Covid, will be swallowed up by higher public sector wage bills.
The Treasury said it would hand government bodies extra money for costs of higher employer national insurance contributions for directly employed staff.
But councils that outsource services could be left with the bill and may pass it on to households by raising council tax.
Families could be hit with higher council tax bills because of the national insurance rise to fund the NHS and social care, a Whitehall chief admitted yesterday (stock image)
Boris Johnson today will try to ram legislation for the rise through the Commons.
Asked if councils would be reimbursed for contractors’ extra costs, Cat Little, director general for public spending at the Treasury, told the Commons public accounts committee that ‘all direct employees of the public sector will be compensated for’.
When asked if councils that might otherwise put up their tax bills would be reimbursed, she said: ‘I cannot confirm the position at this stage.’
Tory rebels last night urged the Prime Minister to rethink the hike to fund the NHS and social care reform.
Sir John Redwood said: ‘I see the National Insurance rise has united the TUC [Trades Union Congress] and CBI [Confederation of British Industry] against it. The government should reconsider.’
The TUC has called on ministers to increase Capital Gains Tax instead, while the CBI has warned higher taxes on business will suffocate economic growth.
Around £2billion of the £14billion to be raised by the 1.25 percentage point tax rise, aiming to relieve pressure on NHS waiting lists caused by Covid, will be swallowed up by higher public sector wage bills (stock image)
Revolts on the votes today could surpass last week when five Tories opposed and almost 40 abstained in an initial vote.
Amendments tabled today will include an attempt by Tory MP Marcus Fysh to get ministers to consider how they can encourage people to take out insurance for care costs.
National insurance, which workers and employers pay, will rise by 1.25 percentage points from next April.
From April 2023, this extra payment will become a separate tax called the Health and Social Care Levy.
Unlike national insurance, it will also be paid by people who continue to work beyond retirement age.
The Government says the changes will cost £255 a year for someone earning £30,000, and £505 a year for someone on £50,000.
Shareholders will also have to pay 1.25 per cent more in tax on the profits they make.
Source: Daily Mail UK