National Insurance cut could break down families, says government's own analysis

Boris Johnson rammed through the tax hike in just 24 hours last week – now it’s emerged HMRC analysis said it could hurt ‘family formation, stability or breakdown’ for families just about managing

The Tory hike in National Insurance could raise the risk of breakdown for families already on the breadline, analysis for the government has found.

Boris Johnson broke his manifesto last week by hiking the tax from 12% to 13.25% to help tackle the NHS Covid backlog – and start pumping money into social care.

But now analysis has emerged by Her Majesty’s Revenue and Customs (HMRC), which was only released after Tory ministers rammed through the measure in 24 hours in a Commons vote.

The analysis said the impact would be “significant” on economic factors such as earnings, inflation and company profits.

It added: “There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”

Ministers have insisted the rise is the fairest way to fund the changes needed in the health and social care service.

But the HMRC report said the change would disproportionally affect those whose main income came from working, rather than from property income, pension income or savings.

Earlier, Health Secretary Sajid Javid said it would have been wrong to “doggedly” stick to manifesto commitments over tax rises in the face of a crisis in health and social care as Labour warned Tory plans could force care providers to go bust.

While Labour set out more detail for their alternative proposals to reform the social care system.

Shadow health secretary Jonathan Ashworth told broadcasters on Sunday the party would implement a “reform programme” for social care, making a “national framework” to expand eligibility so that more people access care in their home, which the party said could generate £2.5 billion in savings.

Mr Ashworth also said Labour would invest more in staff salaries and training, give carers “proper” respite support, and improve conditions for those with disabilities.

Speaking on Trevor Phillips On Sunday on Sky News, he said: “If you expand eligibility with a national framework… which is what we want to see, more people will access care in their home, and will not need to go into a care home or be delayed in hospital in a bed not able to get care out in the community.”

He said the IPPR (Institute for Public Policy Research) has suggested such a move would save £2.5 billion, which Mr Ashworth said Labour would “reallocate to the front line of social care”.

He said the way to raise standards is “investing in staff”.

“We will pay the staff a real living wage,” he said, and “get rid of these zero-hours contracts that a quarter of the staff are on and we will invest in their training”.

But Mr Javid said: “I wasn’t prepared to see, as the Health Secretary, where, for example with the NHS, with the growth that we’ve seen in the waiting list, I wasn’t prepared to see that waiting to be any higher than it needs to be.

“I want that waiting list to be tackled, and the way to do that is to make sure that the resources are there and we’re also making sure of the right reforms.”

Work and Pensions Secretary Therese Coffey admitted not being aware of the HMRC report.

She told LBC radio she “absolutely” still backs the 1.25% levy.

Asked then if she is happy to break up families, she said: “I’m not sure where that comes in on your questioning.

“I don’t know where HMRC or any… I have not seen that report.

“I expect it’s an unquoted source and we don’t look into elements like that.”

Told it is from the HMRC, she said: “I’m not aware of it, thank you for bringing it to my attention. I’m not sure I agree with the assertion that is made.”


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