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Boris Johnson’s tax rise could see low income Scots pay for care in England

Boris Johnson is facing a major Tory rebellion and accusations that he is again trampling on Scotland’s devolution settlement with a hike in national insurance payments to pay for elderly social care in England.

The Prime Minister and chancellor Rishi Sunak have agreed a manifesto-busting hike of 1.25 per cent likely to be announced this week to raise around £10 billion-a-year for social care and the backlogged NHS.

But Johnson is facing an open revolt from many Tories and opposition from Labour over tax increases that will affect younger and low income workers while leaving pensioners paying nothing extra.

The SNP Government is also alarmed at the lack of consultation over raising national insurance, which is a tax reserved to Westminster, and how the contributions from Scottish workers and businesses will be returned for spending in Scotland.

It all adds up to a massive list of problems for the Prime Minister at the beginning of the Westminster term.

Scotland

Free social care is provided in Scotland but National Insurance is a Westminster tax. There has been little clarity from the UK government on how the tax raised would be recirculated to Scotland.

Alison Thewliss, the SNP Treasury spokeswoman, said there has to be “a guarantee Scotland will receive every penny we are due in Barnett consequentials”.

A £10 billion increase in spending in England should become about £1 billion of extra funding to Scotland though experts warn the transfer is not as simple as that.

One senior Scottish government source said: “You could theoretically end up in a situation where low income earners in Scotland end up paying for social care in England. Even by their standards, I would be staggered if they did that.”

Broken manifesto promise

Some ministers are also nervous about breaking another Tory manifesto pledge by pushing ahead with the proposal, even if the PM focuses on tackling the NHS backlog

Johnson put his signature to the 2019 Tory manifesto: “I guarantee we will not raise the rate of income tax, VAT or National Insurance.”

Tory mutiny

Three former Tory chancellors — Philip Hammond, Ken Clarke and Norman Lamont — have all come out against the tax rise. Five cabinet Ministers are said to be opposed and backbenchers are raising their voices too.

Unfairness for low earners

Labour’s Keir Starmer isn’t helping. Labour has dug in with Starmer confirming the opposition will oppose the NI rise.

In an interview with the Mirror, the Labour leader didn’t rule out Labour backing a capital gains tax hike instead. He will come under pressure from his own MPs and trade unions to explain how he would raise the funds to pay for social care and fund the NHS.

How does he escape?

Boris Johnson is expected to announce on Monday that he will commit £5.5 billion of cash to the NHS this winter, which would mean a proportional increase in the Scottish block grant.

The polling looks good too with two-thirds voters backing the idea of a national insurance rise and still approving of a Tory government.

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