Working pensioners could now be charged National Insurance for the first time to help fix the social care crisis, and Treasury officials are considering the case for extending the National Insurance system beyond the state pension age of 66 where it currently stops.
Insiders said the move would raise comparatively modest sums but would have symbolic significance as a new system to pay for the care of the elderly that’s not financed solely by higher taxes on people of working age.
Boris Johnson and Rishi Sunak are thought to be close to a deal to cap social care costs. This would deliver the Prime Minister’s manifesto promise to end the scandal that sees thousands of older people compelled to sell their homes to pay the bills.
The ministers are eyeing an increase of at least 1 per cent in the National Insurance rates subsidised by both workers and employers.
The entire cost could reach £10 billion a year, but the plan to increase National Insurance has alarmed some Tory MPs as it breaks a separate manifesto promise not to increase main tax measures.
The amount of pensioners in work has increased sharply in recent years and is now thought to total more than 1.3 million.
The Institute for Fiscal Studies (IFS) estimates the Government could raise about £1 billion for every 1 per cent of National Insurance levied on working pensions.
Treasury modelling is thought to have estimated considerably lower returns, perhaps a little as £120 million a year.
A Treasury insider said that there’s a fairness argument that if older people are going to benefit from a policy they should help finance it where they can afford to.
However, those over the state pension have paid into the National Insurance system all their lives, and you would certainly expect some opposition if they tried to extend it.
Helen Miller, deputy director of the IFS, said there’s a clear case for extending National Insurance past the state pension age, and she said the prevailing system already embeds a pretty significant tax break for people beyond retirement age, adding that if you were to increase National Insurance for social care you wouldn’t be starting from a level playing field.
She said that initially a lot of spending would be on the older generation and that they shouldn’t automatically eliminate them from helping to pay for it.
However, it’s shocking that older people have to work to live because their pensions have been delayed, and this is like a kick in the teeth for them, and the IFS is mad if it seriously thinks a billion pounds can be raised from 1.2 million pensioners.
And why someone has to pay so that migrants can be housed, fed, given medical care and not just for a little while, and I doubt any of them will work for years, but it seems that our politicians want every penny they can squeeze out of anyone foolish enough to work.