'Wrong tax, wrong time': Starmer says National Insurance hike will fill blackhole as tax rise hits

The cost-of-living crisis just got worse for millions of Britons with the government's National Insurance increase taking hold today.

Boris Johnson has defended the decision to hike up contributions, arguing the manifesto-breaking rise is “necessary, fair and responsible” - but Labour says it is the "wrong tax, at the wrong time".

The National Insurance increase of 1.25 percentage points comes just days after energy bills rose by around £700 a year when the price cap lifted last Friday - and inflation is forecast to reach a 40-year high by the end of the year.

"There's a real cost-of-living crisis," Labour leader Sir Keir Starmer said, "everyone knows prices are going through the roof, wages are going through the floor".

"Only last week we had the energy bill hike of hundreds of pounds that people can't afford and then today the government chooses to impose new tax on people - and it's only on working people."

Sir Keir told ITV's Good Morning Britain that wealthy landlords and people who make money through stocks and shares won't "pay a penny more as a result of the changes today".

"So it's the wrong tax at the wrong time," he said, adding: "Now we've got the highest tax burden for 70 years."

Despite the tax rise being dedicated to funding health and social care reform, Sir Keir says the government is seeking to "claw back" some of the £11 billion he says was "wasted or lost to fraud" during the pandemic.

"The sad reality is that a lot of the money that's gathered through this tax increase today in the end is going to be filling a blackhole left by the incompetence of the government on finance."

The government plans that from April 2023 onwards, the NI rate will decrease back to the 2021-22 level, with a new 1.25% health and social care levy legally introduced.

It predicts the tax rise will raise £39 billion over the next three years to help reduce the Covid-induced NHS backlog and later reform adult social care for the long-term.

Prime Minister Johnson acknowledged households were facing "unquestionably tough times" but said he had "absolutely no problem" with hiking national insurance to help fund the NHS.

"What we are doing today is unquestionably the right thing for our country, it's the right thing for the NHS," he said, citing the health care waiting list of 6 million people.

The PM said the government would help families "in any way that we can" as he admitted people are going through what are "unquestionably tough times caused by the end of the pandemic, the global inflation problem, the energy price spike".

He accepted the cost-of-living crisis will see people "face choices", after being asked whether families should eat cheaper food, not replace clothes, turn down the thermostat or turn heating off entirely.

The Conservative Party 2019 election manifesto, which helped Mr Johnson deliver a landslide majority, pledged “not to raise the rates of income tax, national insurance or VAT”.

But senior ministers have argued that the impact of the coronavirus crisis meant that tax promise to the electorate could no longer be kept.

The Tory administration has since increased the tax burden to its highest point in 70 years.

Health Secretary Sajid Javid said the pandemic had placed “unprecedented pressure on the NHS” and pushed up waiting times.

“This investment will go into tackling those backlogs and will help make sure everyone can get the care and treatment they need,” he said.

According to the Department for Health and Social Care (DHSC), the number of people waiting for elective care in England has risen from 4.4 million before the pandemic to six million.

The final number could reach the 10 million mark, with people who did not come forward for treatment during the lockdowns predicted to look for care in the coming months and years, the department said.

DHSC said the extra cash from the NI hike will reduce waiting times and deliver millions more scans, tests and operations, while reforming the way routine services are delivered so the NHS is fit for the future.

Listen to the ITV News podcast What You Need To Know:

Mr Javid added: “We can’t have business as usual, which is why we are rolling out surgical hubs and community diagnostic centres up and down the country to deliver millions more scans, checks and operations.

“This vital funding will ensure the NHS is equipped to not only reduce waiting times but also tackle the big challenges we face, from cancer to heart-disease and dementia.”

Chancellor Rishi Sunak said the government would “not shy away from the difficult decisions” ministers need to take to “fix our social care system and slash NHS waiting times”.

He said the levy would also be used to cap the cost of care so “people no longer live in fear of losing everything”.

Under the current system, those with assets of more than £23,250 pay their care costs in full.

But under a reformed system from October 2023, anyone with assets under £20,000 will have their care costs fully covered by the state, DHSC said.

The cost of care will then be capped at £86,000, with the point at which people meet the full cost of their care rising from £23,350 to £100,000, nearly four times higher than the current system, according to health officials.

The government argues the levy is progressive, with the highest 15% of earners paying more than half the revenues.