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National insurance rise could prompt family breakdown, report warns

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The Government’s increase in national insurance could increase the likelihood of family breakdown for those already on the breadline, a report into the policy’s impact has warned.

Ministers announced on Tuesday that national insurance would rise by 1.25 percentage points to help tackle the NHS backlog caused by coronavirus and fund social care reform.

Analysis prepared for the Government by Her Majesty’s Revenue and Customs (HMRC) and released after MPs had already approved the rise on Wednesday said the impact would be “significant” on economic factors such as earnings, inflation and company profits.

But HMRC also warned: “There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”

Ministers have insisted the rise is the fairest way to fund the changes needed in the health and social care service.

But the HMRC report said the change would disproportionally affect those whose main income came from working, rather than from property income, pension income or savings.

Earlier, Health Secretary Sajid Javid said it would have been wrong to “doggedly” stick to manifesto commitments over tax rises in the face of a crisis in health and social care as Labour warned Tory plans could force care providers to go bust.

While Labour set out more detail for their alternative proposals to reform the social care system.

Health Secretary Sajid Javid on The Andrew Marr Show (Jeff Overs/BBC)
Health Secretary Sajid Javid on The Andrew Marr Show (Jeff Overs/BBC)

Shadow health secretary Jonathan Ashworth told broadcasters on Sunday the party would implement a “reform programme” for social care, making a “national framework” to expand eligibility so that more people access care in their home, which the party said could generate £2.5 billion in savings.

Mr Ashworth also said Labour would invest more in staff salaries and training, give carers “proper” respite support, and improve conditions for those with disabilities.

Speaking on Trevor Phillips On Sunday on Sky News, he said: “If you expand eligibility with a national framework… which is what we want to see, more people will access care in their home, and will not need to go into a care home or be delayed in hospital in a bed not able to get care out in the community.”

He said the IPPR (Institute for Public Policy Research) has suggested such a move would save £2.5 billion, which Mr Ashworth said Labour would “reallocate to the front line of social care”.

He said the way to raise standards is “investing in staff”.

Shadow health secretary Jonathan Ashworth (Yui Mok/PA)
Shadow health secretary Jonathan Ashworth (Yui Mok/PA)

“We will pay the staff a real living wage,” he said, and “get rid of these zero-hours contracts that a quarter of the staff are on and we will invest in their training”.

But Mr Javid said: “I wasn’t prepared to see, as the Health Secretary, where, for example with the NHS, with the growth that we’ve seen in the waiting list, I wasn’t prepared to see that waiting to be any higher than it needs to be.

“I want that waiting list to be tackled, and the way to do that is to make sure that the resources are there and we’re also making sure of the right reforms.”

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