The prime minister has defended the decision to hike up national insurance for millions of workers, arguing that the manifesto-breaking rise is “necessary, fair and responsible”.
On Wednesday, national insurance contributions will increase by 1.25 percentage points.
From April 2023 onwards, the NI rate will decrease back to the 2021-22 level, with a new 1.25% health and social care levy legally introduced.
The UK Government predicts that the tax rise will raise £39 billion over the next three years to help reduce the Covid-induced NHS backlog and later reform adult social care for the long-term.
Manifesto pledge
The Conservative Party 2019 election manifesto, which helped Mr Johnson deliver a landslide majority, pledged “not to raise the rates of income tax, national insurance or VAT”.
But senior ministers have argued that the impact of the coronavirus crisis meant that tax promise to the electorate could no longer be kept.
The Tory administration has since increased the tax burden to its highest point in 70 years.
Cost-of-living crisis
The hike comes as Brits are hit by a quadruple whammy of increased costs, with free Covid tests ending and council tax going up.
At the same time, the biggest jump in domestic energy bills in living memory came into effect on 1st April as charities warn that 2.5 million more households are set to fall into “fuel stress” and supplier websites remained unresponsive to customers.
As a 54 per cent increase to Ofgem’s price cap hit bills, the Resolution Foundation think tank said the number of English households in fuel stress – those spending at least 10 per cent of their total budgets on energy bills – was set to double overnight from 2.5 to five million.
Resolution Foundation senior economist Jonathan Marshall said: “Today’s energy price cap rise will see the number of households experiencing fuel stress double to five million.
“Another increase in energy bills this autumn hastens the need for more immediate support, as well as a clear, long-term strategy for improving home insulation, ramping up renewable and nuclear electricity generation, and reforming energy markets so that families’ energy bills are less dependent on global gas prices.”
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