Keir Starmer says the national insurance rise is “the wrong tax at the wrong time”.
The Labour leader said:
People are really, really struggling to pay their bills. And this is just going to impact on them very, very hard.
Starmer told BBC Radio 5 Live the government had chosen to place the burden on people in employment, while protecting those who made income from renting out property and share dividends.
He said:
There are lots of landlords who’ve got many, many properties and they are not going to be paying a penny more in tax. Their tenants, who are going out to work, are going to be paying more in tax.
Instead, Starmer said the “general approach should be that income of all its forms should be taxed fairly” and promised to set out Labour’s plan to follow that before the next general election, due to take place in about two years.
National insurance increase is right and fair, says Sajid Javid
Kevin Rawlinson
The increase in national insurance payments for millions of people already struggling to deal with the cost of living crisis is both right and fair, the health secretary has said.
Sajid Javid said the levy of an extra 1.25 percentage points, due from Wednesday, was needed to pay for health and social care after the pandemic.
The government has pressed ahead with its plans to increase national insurance contributions for both workers and businesses, despite calls from businesses groups, unions and some Conservative MPs to at least delay the introduction.
A planned change to free some of the country’s lowest earners from national insurance contributions altogether is not due to be implemented until the summer.
Read more here:
It would be “morally wrong” to let “our children pay for our healthcare and our adult social care”, Sajid Javid has said.
Speaking on BBC Breakfast, the health secretary said:
The choice for us as a country is we either put that money in ourselves now, and if we don’t do it ourselves, we will have to borrow it. And that is mortgaging the future of our children and our grandchildren.
I think it not only is economically wrong and opens up more risk for the public finances, I think it is morally wrong.
Why should our children pay for our healthcare and our adult social care? They are going to have enough challenges as they grow older. I think that will be the wrong approach.
Graeme Wearden
The financial pressures on many UK households and businesses have intensified today, as national insurance rates are lifted to raise funds for the NHS and social care.
Despite the cost of living crisis, the government has pressed on with its manifesto-busting 1.25 percentage point rise in national insurance, announced last September.
The move means millions of workers will begin paying higher National Insurance contributions from today, the start of the new tax year.
Businesses will also see their contributions rise, at a time when they’re already juggling rising costs. Tax rates for dividend income also rise by 1.25 percentage points.
Businesses groups, unions and some Conservative MPs had all pushed the government to delay the increase, given the financial pressures on workers and companies.
The “health and social care levy” is expected to raise around £12bn per year, to tackle the backlog of cases at the NHS due to the pandemic, and also reform routine services.
Today’s changes mean those earning above £9,880 will now be liable for 13.25% NI contributions, up from 12%. Earnings above £50,270 will be charged a rate of 3.25%, up from 2%.
But from July, national insurance will only start to be charged on earnings over £12,570, because chancellor Rishi Sunak announced a £3,000 rise in the NI threshold in last month’s spring statement. That will take around two million workers out of direct tax altogether (if they earn less than £12,570 per year).
According to Resolution Foundation, everyone earning less than £32,000 a year will be better off from the combination of those two policies from July.
But there are other changes kicking in for the new tax year, including a freeze on income tax thresholds. That will drag more people into paying tax, or more tax, if their pay increases over the next few years.
That will make it harder for households to handle rising costs, such as last week’s surge in energy bills.
April 2022 will see the UK’s cost of living crisis intensify as energy prices jump by more than half overnight, pushing 5 million English households into fuel stress, even accounting for support measures recently announced by the Chancellor: https://t.co/1sL3kMHK30 pic.twitter.com/6O4gOARCCp
— Resolution Foundation (@resfoundation) April 5, 2022
Prime minister Boris Johnson has defended the national insurance increases, saying the health service needs the extra resources:
We must be there for our NHS in the same way that it is there for us. Covid led to the longest waiting lists we’ve ever seen, so we will deliver millions more scans, checks and operations in the biggest catch-up programme in the NHS’s history.
We know this won’t be a quick fix, and we know that we can’t fix waiting lists without fixing social care. Our reforms will end the cruel lottery of spiralling and unpredictable care costs once and for all and bring the NHS and social care closer together. The Levy is the necessary, fair and responsible next step, providing our health and care system with the long term funding it needs as we recover from the pandemic.
The government says the levy means:
- It will begin raising billions to tackle Covid backlogs and reform routine services.
- £39bn over the next three years will put health and care services on a sustainable footing.
- It will deliver biggest catch-up programme in NHS history and end spiralling social care costs.
You can follow the business liveblog which is covering the rise in national insurance in detail today:
One thing no government can control is NHS demand, the health secretary has said.
When asked when the NHS waiting list will start falling, Sajid Javid told BBC Breakfast:
I have been really straightforward about this. What we can do in the NHS is increase activity levels and that is exactly what this extra funding is going to do. The one thing that no government can control is demand for the NHS, especially on the back of a pandemic.
We estimate some 11 million people stayed away from the NHS during the height of the pandemic. I think we can all understand why that happened. I want those people to come back.
I want them to know that the NHS is there, that it’s open for them. I want them to be seen.
What I don’t know, no-one knows, is what proportion of those people will come back. Is it 50%? Is it 70% or 30%? That is why it’s very hard to put a number on where the waiting list goes. It is already at six million and it will go higher before it starts to come down.
The chair of the the environment, food and rural affairs committee, which has published a report about “acute labour shortages” in the food and farming industry, said he was “hopeful” the home office was listening to concerns.
Speaking on BBC Radio 4’s Today programme, Neil Parish said:
I am hopeful that the Home Office is listening but they must listen and do something about it rather than just leave it and it’ll sort itself out, because it won’t.
Joanna Partridge
Chronic worker shortages in the food and farming sector as a result of Brexit and the coronavirus pandemic could push food prices even higher and lead to more having to be imported, MPs have warned.
Parliamentarians on the environment, food and rural affairs committee reported that the sector had half a million vacancies in August last year, representing an eighth of all roles.
The huge labour shortages in the food industry have led to unharvested crops being left to rot in fields, the cull of healthy pigs on farms because of a lack of workers at meat processing plants, and disruption to the food supply chain, as well as threatening the UK’s food security.
The committee – which is chaired by the Conservative MP Neil Parish, along with five other Conservatives, four Labour MPs and one Scottish National party colleague – wrote in a report that the workforce shortfall was the “single biggest factor affecting the sector”.
The food industry is the UK’s largest manufacturing sector but MPs issued the stark warning that it could shrink permanently if the government does not address the acute labour shortages, which could lead to wage rises, price increases, reduced competitiveness and, ultimately, food production being exported abroad.
They found that food and farming businesses have been badly hit by a lack of workers, with the pig sector particularly affected, prompting a crisis in domestic production. Industry associations have previously claimed that as many as 40 independent farms have left the sector as a result.
Farmers have been warning for some time about a lack of workers, after many overseas workers went home during the pandemic, and Brexit has limited the number of EU temporary workers who can travel to the UK on the seasonal worker visa scheme.
Read more here:
Ed Davey: Tories increasing national insurance ‘just at the wrong moment’
Increasing national insurance for millions of workers is unfair and comes at the wrong time as the nation faces a cost-of-living crisis, Liberal Democrat leader Sir Ed Davey has said.
He told BBC Breakfast that “the NHS and the care system does need money but it needs to be done in a fair way”.
On the national insurance rise, he said:
It doesn’t tax the unearned income of very wealthy people. It doesn’t tax the income of landlords. It puts all the burden on working people – that is wrong.
Yes, we need more money for the NHS and social care. The Conservatives starved it of money and one reason why the pandemic was so difficult was that the Tories had underfunded the NHS.
He said that income tax could go up a penny in the pound because that “spreads the burden and makes sure that wealthy people do pay their fair share”.
Davey told the programme:
The problem we have at the moment is that the conservatives are not only taking an unfair approach to funding the NHS, but they are putting this tax rise up just at the wrong moment.
Nicola Slawson
The health secretary has defended the decision to hike up national insurance for millions of workers as he argued it is “right that we pay for what we are going to use as a country”.
Sajid Javid told Sky News it was “necessary” because of the impact of the pandemic, which is going to have an impact for years.
It kicks in today, the new health and social care levy. All of the funding raised from it is going to go towards the extra 39 billion we are going to put in over the next three years to health and social care.
It’s going to pay in the NHS for activity levels that are some 130% of pre-pandemic, it’s going to be nine million more scans, tests and procedures, meaning people will get seen a lot earlier.
Why is any of this necessary, whether it is for health or social care? It’s because of the impact of the pandemic. We know it is unprecedented. It has been the biggest challenge in our lifetime. The impact of that is going to continue for many years.
He added:
You asked me about the fairness of it. When we spend money on public services, whether it’s NHS or anything else, for that matter, the money can only come from two sources. You raise it directly for people today, that’s through taxes, or you borrow it, which essentially you are asking the next generation to pay for it.
I think it is right that we pay for what we are going to use as a country but we do it in a fair way. This levy, the way it is being raised is the top 15% of earners will pay almost 50%. I think that is the right way to do this.
Welcome to today’s politics live blog. I’m Nicola Slawson and I’ll be taking the lead today. You can contact me on Twitter (@Nicola_Slawson) or via email (nicola.slawson@theguardian.com) if you have any questions or think I’m missing something.
We also have a dedicated Ukraine blog, which you can follow here:
Two-child policy hasn’t made UK families smaller, only poorer – research
Patrick Butler
It was one of the Conservatives’ most controversial cuts: waging war on the UK’s “benefit culture” by restricting social security payments that supposedly enabled “welfare scroungers” to have large families they could ill-afford.
The two-child policy – which limits benefits payments to the first two children born to the poorest households – would, proponents argued, cut the welfare bill and bring “feckless” parents to heel by – as one minister put it – teaching them “the reality that children cost money.”
New research, however, indicates the behavioural change aspect of the policy has dismally failed. Since its introduction exactly five years ago today, the fertility rate for third and subsequent children born to poorer families has barely fallen. Instead, the main impact of the policy has been to become the biggest single driver of child poverty.
Prof Jonathan Portes, co-author of the study said:
In the absence of a behavioural fertility response to the policy, the main function of the two-child limit is to deprive families living on a low income of approximately £3,000 a year. This will inevitably lead to dramatic increases in child poverty among larger families.
Analysis of birth records and household survey data for the study, commissioned by the Nuffield Foundation, found the policy’s introduction in 2017 led to a decline in births of third children of just 5,600 a year – fewer than 1% of the total annual births in England and Wales.
The study speculates as to why the policy has had so little behavioural impact. Unpublished research suggests over half of families were unaware of the policy before they were affected. Many large families – Orthodox Jewish and Muslim families are disproportionately affected – may ignore it for religious reasons.
The research comes as fresh estimates suggest that 1.4 million children in more than 400,000 families in the UK are affected by the two-child policy. April’s below-inflation benefits rise means affected families with three children face a £983 a month shortfall in benefits, with larger families facing an even bigger hole in their income.
Sara Ogilvie of Child Poverty Action Group (CPAG), which produced the estimates, said:
The two-child limit is a brutal policy that punishes children simply for having brothers and sisters. It forces families to survive on less than they need, and with soaring living costs the hardship and hunger these families face will only intensify.
Read the full story here:
