Anger as Cable says tax elderly to pay for the Health Service

PENSIONERS who work should pay more tax to fund a better NHS, the Liberal Democrats have said.

A report commissioned by the party recommends that the current ban on paying National Insurance after the state pension age should end.

The authors said it was ‘increasingly difficult to justify’ over-65s paying less tax when more than a million of them now work beyond retirement.

They said those who work beyond retirement age should contribute an extra £2billion a year in tax to ensure ‘ intergenerational fairness’. They could pay National Insurance at the same rate as the rest of the workforce, or at a lower rate.

But last night former pensions minister Baroness Altmann said there was a danger that making older people pay National Insurance could reduce the incentive for them to keep working.

Unveiling the report, Lib Dem leader Sir Vince Cable called for a new ‘ring-fenced’ tax specifically to pay for the NHS and social care. The new levy would in time replace National Insurance, he said.

Sir Vince added that there was growing recognition that healthcare needs a pro- tected funding stream. ‘ This report provides some convincing answers on arguably the greatest domestic crisis facing the country – how to deal with the severe pressures on health and social care services,’ he said.

‘We must never again be in a position whereby funding is so short that more than 50,000 operations have had to be postponed over the course of a single month.

‘The health and care budget should be financed by an earmarked tax, which could replace National Insurance.’

The ten-member panel which drew up the study included former NHS England chief executive Sir David Nicholson, and Professor Clare Gerada, former chairman of the Royal College of GPs.

The report concluded that the NHS in England needs a real-terms increase of £4billion in 2018/19, with a further £2.5billion in each of the two following years.

In the short term, the shortfall could be met by raising income tax, but the authors said that in the longer term health and care funding should be brought together in a single tax to replace National Insurance.

The report said: ‘ Currently people who continue working after they reach the state pension age no longer pay National Insurance, regardless of how much they earn. We

‘Increasingly difficult to justify’

believe that in light of concerns about intergenerational fairness, this is increasingly difficult to justify. Some 1.4million people now work beyond the state pension age and this number is rapidly increasing.

‘It nearly doubled between 1993 and 2011, meaning that the revenue lost by the Treasury due to this exemption is also increasingly more significant.’

The report also said that pensioner households are now far less likely to be in poverty than households of working age, particularly those with children. ‘For this reason, we suggest policy makers consider ending the exemption from paying National Insurance for people who continue working past the state pension age,’ it said.

‘There may be concerns about placing this additional tax burden on people coming towards the end of their careers. However, this is the age group who are the biggest users of health and care services.’

Baroness Altmann said: ‘We need a proper analysis of how to fund social care and the problem with levying NI on working people over pension age is that we want more of them to work if they can rather than retire. But I do believe a contribution to social care from all taxpayers is essential.’

Tory MP Andrew Bridgen said: ‘The elderly have already paid a lifetime of tax. What will they suggest next? People who have children should pay more tax?’