Triple lock ‘faces axe within days’
Backlash over plan to hike NI – amid fears it wouldn’t help to sort system for two years and
THE state pension triple lock could be ‘suspended’ as soon as next week, it was claimed yesterday.
The measure guarantees the state pension will rise in line with inflation, earnings or 2.5 per cent, whichever is higher.
But distortions to wages caused by the coronavirus crisis could mean that pensioners see their payments rise by as much as 8 per cent from April next year.
The Chancellor has previously hinted that he would not go ahead with an 8 per cent rise, saying his decision would be guided by ‘fairness both to pensioners and for taxpayers’.
The Mail revealed last month Rishi Sunak was set to temporarily axe the triple lock due to the billions it could add to public spending. It is thought it is likely to be suspended for at least a year. Yesterday, Bloomberg reported that Mr Sunak could make an announcement as soon as next week, though Treasury sources dismissed the suggestion.
Another source familiar with the plans said they did not expect Mr Sunak would grant an 8 per cent rise.
Helen Morrissey, a pensions analyst at Hargreaves Lansdown, said: ‘An early decision would be welcomed as bringing clarity for everyone. The current situation, though extreme, shows the importance of reviewing the triple lock. It has improved the incomes of pensioners, but we need to look at whether the triple lock remains the best way to maintain the long-term value of the state pension while striking a balance between taxpayers and pensioners.’
MINISTERS faced a furious backlash over plans for a £10billion ‘jobs tax’ to pay for social care last night as it emerged it may not even help the struggling sector for another two years.
Boris Johnson, Chancellor Rishi Sunak and Health Secretary Sajid Javid will thrash out proposals this weekend aimed at finally ending the scandal that forces thousands to sell their homes to pay for care.
But the reform will come at a high cost with both business and workers facing a tax rise of at least 1 per cent in national insurance contributions.
The move drives a coach and horses through the Prime Minister’s manifesto pledge not to raise the headline rate of income tax, national insurance or VAT during this parliament.
Last night it divided Tory MPs with some Cabinet ministers privately warning against the move by describing it as
‘Not a good moral or economic case for it’
‘a drag anchor on jobs and growth’. And the Mail can also reveal that the money raised will initially be used to clear the huge NHS waiting list built up during the pandemic – meaning that more cash may not flow into the struggling social care sector for another two years.
The NHS waiting list has reached a record 5.45million and Mr Javid has warned it could reach 13million unless more resources are pumped in.
But the plan will eventually deliver on the PM’s election promise to end the care lottery that forces thousands to sell their homes in later life, resolving an issue that has bedevilled successive governments for decades.
The PM’s plan will impose a ‘cap’ on the total amount people will have to pay for their own care. Mr Johnson had initially wanted to set the cap at £50,000 but following pressure from the Treasury it is now likely to be significantly higher – at £60,000 or even £80,000.
Ministers will also bring in an increase in the so-called ‘floor’ when state care funding kicks in.
Currently anyone with assets of more than £23,250 is not eligible for any state help with costs.
The proposal is also expected to equalise the costs paid by private and state-funded care home residents. Currently private residents pay an average 40 per cent premium – leading to claims the middle classes are cross-subsidising the care of those on lower wages.
But it is understood ministers will pump in billions extra to the fees paid by local authorities in order to improve care standards and conditions.
Downing Street is braced for a backlash over the planned tax rise with insiders acknowledging it will be ‘a hard sell’. A 1 per cent rise in national insurance would see someone earning £20,000 pay an extra £104 a year in tax, while someone on £60,000 would pay an extra £504.
One Cabinet minister told the Mail: ‘Breaking a manifesto pledge on tax will come back to haunt us.’ While former cabinet minister Sir John Redwood said: ‘It’s taxing a lot of people including younger and lower-paid people... I don’t think there’s a good moral case for that and there’s certainly not a good economic case for it.’
Suren Thiru at the British Chambers of Commerce said businesses would oppose a rise in national insurance as it would ‘represent a drag anchor on jobs growth at an absolutely crucial time’.
FIXING social care has been kicked into touch so often that it wouldn’t look out of place at Twickenham. So we salute Mr Johnson if he ends the scandal of pensioners being forced to sell their homes.
But hiking National Insurance to boost funding of the creaking sector, brutally exposed by Covid, is not the answer.
Leave aside that it breaks a Tory manifesto pledge. Younger generations would bear the cost of supporting their wealthy elders.
It would be a punishing ‘jobs tax’ on business, strangling the recovery. And the Treasury may pilfer receipts to fix potholes.
A pensions-style automatic enrolment scheme, where individuals build up their own care kitty, might be better. Certainly, no one votes Tory for higher taxes.