In the News

Will the government increase national insurance to pay for social care?

Graham Watson

7th September 2021

It seems that the government is considering financing increased expenditure on social care by increasing National Insurance contributions.

This, according to Larry Elliott in this piece in the Guardian is fraught with difficulty: it imposes higher costs on businesses; it worsens inter-generational equity, by effectively taxing the young to subsidise the elderly.

Of course, it could be financed in other ways - out of taxation for example - but that would fall more squarely on individuals, and governments are reluctant to do this, even if it would make sense.

For some, increasing national insurance to pay for social care is the exact opposite of levelling up. It does not take tax from unearned income much of which flows to the richest in society.

The General Secretary of the TUC, Frances O'Grady, speaks out hereagainst the prospect of National Insurance increases to fund social care, arguing that instead the government should be taxing the rich instead.

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