Response to rise in National Insurance to fund NHS and social care

The government has announced today that health and social care reform will be funded through a 1.25% increase in National Insurance, as well as an increase in taxes on share dividends.

In response, Neil Carberry, Chief Executive of the REC, said:

“It’s vital that the social care system is properly funded – this has been a long time coming. But the 1.25% rise in National Insurance, the UK’s biggest business tax, is the wrong choice. As a tax on jobs, and a tax on activity rather than profits, rising National Insurance will fall more heavily on the labour intensive sectors most affected by the pandemic. It also disproportionately affects lower earners. The accompanying rise in taxes on dividends will also hit small limited company directors, who were denied any support during the pandemic. We all agree that social care needs more funding, but increasing labour taxes as we try to recover from the pandemic is not the fairest way to do it.”

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