Tag: National Insurance hike

What does a “very difficult winter” look like for low-income families?

A lower-income couple with two young children where one adult is working full-time is going to need to find an additional £31-a-week to cover the cost of living and falling benefit rates from October, according to new analysis by the Joseph Rowntree Foundation.

In an interviewyesterday, the Business Secretary warned “it could be a very difficult winter”. This comes amid growing concern across the political spectrum that the rising cost of living is about to put immense strain on low-income families.

If the Government proceeds with cut to Universal Credit as planned, changes to the energy price caps, and inflation means that at the same time this couple family are trying to compensate for the £20-a-week they had before the cut, they will soon need to find an additional:

  • £3 for energy (assuming pre-payment meter)
  • £8 for other living costs

= an additional £11 per week from October.

On top of this, the same family would need to find an extra £2.50 to cover the increase in National Insurance Contributions from April 2022 because of the Health and Social Care levy.

This would mean in total this family may need to find an additional £13.50 per week or £710 per year (around the entire clothing and footwear annual budget for this kind of family) as well as losing £20 a week from Universal Credit. For this family, the extra costs alone equate to around 3.5% of their weekly disposable income.

Peter Matejic, Deputy Director of Evidence & Impact at the Joseph Rowntree Foundation, said: “Millions of low-income families are incredibly anxious about how on earth they are supposed to make ends meet from next month.

“Ministers rightly recognise this is shaping up to be a very difficult winter, yet there is little sign of them taking the decisive steps that are necessary to avoid real hardship for low-income families.

“The growing concern about the cost of living reinforces why cutting Universal Credit makes absolutely no sense. Social security is a key defence in protecting families from precisely these sorts of economic shocks, but the Government is on course to impose the biggest ever overnight cut to the system and leave families with an inadequate lifeline.

“The Prime Minister urgently needs to keep the £20-a-week increase to Universal Credit in place. Rising child poverty, soaring demand for food banks, people worrying about keeping their homes and covering the cost of bills, flies in the face of uniting and levelling up our country.”

“Millions more people now have a better chance to live happy, healthy and dignified lives”

Health and Social Care Secretary Sajid Javid justifies the Health and Care levy

This past year has been the most difficult in living memory for our country – and we have faced those difficulties together. The British people have made unprecedented sacrifices to our freedoms and our way of life to keep each other safe.

Whilst staff in the NHS and across social care have moved mountains to help those who needed care. They have treated over half a million patients with COVID-19, administered over 90 million life-saving vaccines, and cared for the elderly and most vulnerable in our society.

Despite these efforts, it was inevitable that this global pandemic would take its toll on a system that was already in need of reform. We now have a backlog of 5.5 million people waiting for treatment – and if we were to continue with business as usual this could rise in the coming years to as high as 13 million. Before the pandemic, we treated nine in 10 people within 24 weeks. That has now risen to 45 weeks.

The pressures of the pandemic have also been stark in social care, adding to the burdens of an unfair system in crisis. Around one in seven people end up paying over £100,000 for care, and often the heaviest burden falls on those least able to bear it. Meanwhile, staff in social care have worked tirelessly, even when we know they could have benefitted from better support and training.

No responsible government – especially a Conservative one – can bury its head in the sand and pass these problems onto the next one.

The Health and Care Levy announced yesterday will be a direct investment into the NHS and social care. But I appreciate it does not sit easily with everyone. No government would ever wish to go back on a promise it has made to the people – and I’ve always believed in making sure the tax burden is as low as possible.

Yet no government since the Second World War has faced unprecedented challenges of such magnitude. Last week I met health ministers from the world’s biggest economies at the G20: we are all having to deal with the consequences of this global pandemic. I am determined we face up to them.

We want the NHS to be a world-class service, and we need to put social care on the strongest possible foundation for the future. But we have to do that in a responsible way. That means spreading the burden across the broadest shoulders, and not simply borrowing in the short-term to pay for the long-term. That is what our levy does: it shares the burden across employers, employees and pensioners alike. The highest-earning 14 per cent in the country will pay over half the levy.

Together, we are making a critical investment in our country’s future. This will be the biggest catch-up plan in NHS history – delivering nine million more checks, scans, and treatments. We all know someone who has been waiting to long for such procedures.

We are going to ensure the vital work of routine operations, meaning things like hip replacements and cataract surgery do not stop. We are also investing in the next generation of scanners and screening equipment, so we are even quicker at finding and treating diseases like cancer.

The levy is also a vital first step for the reform of our broken care system. No one will have to pay more than £86,000 in care costs over their lifetime. That cap will apply to everyone – it will not matter what condition you have, where you live, how old you are or how much you earn.

We are also casting out the safety net further by expanding means-tested support, so many more people can benefit from having the costs of their care covered. In addition, care staff will now benefit from half a billion pounds of funding to deliver new qualifications, better career routes and much-needed mental health and wellbeing support.

Through these historic investments we are meeting the scale of the challenges we face together, just as we have done throughout this pandemic. In making these difficult decisions we are stepping up as a country to end the cruel care lottery and tackle the backlog. As a result, millions more people now have a better chance to live happy, healthy and dignified lives.

MPs voted through the NHS and Social Care tax rise last night